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Yahoo dying a slow death

Yahoo dying a slow death

In January 1994, Yang and Filo created a website named “Jerry and David’s guide to the World Wide Web”. It was just a directory of other websites, organized in hierarchy format. Two months later, they renamed it to “Yahoo!” and a year later, they created the “yahoo.com” domain.

Yahoo grew rapidly throughout the 1990s. They soon added a web portal and by 1998, Yahoo was the most popular starting point for web users. It made several high-profile acquisitions and its stock price skyrocketed during the dot-com bubble, closing at an all time high of $118.75 a share on January 3, 2000.

In 2005, Yahoo purchased a 40% stake in the Chinese e-commerce company, Alibaba for $1 billion plus the assets of Yahoo China, valued at $700 million. This investment proved to be so fruitful that it was termed as “the best investment an American company has ever made in China.” Despite selling a portion of its stake in Alibaba for $7.6 billion in 2012, the company managed to make $9.4 billion in Alibaba’s 2014 IPO and it still holds shares worth more than $30 billion.

However, the burst of the dot com bubble proved fatal for Yahoo, as the company failed to rise back to the standard it once had. With Google and Amazon taking over the web and e-commerce market, Yahoo failed to catch up with them. Many blame the company’s lack of risk taking ability as the reason for its failures. As other companies evolved and expanded, Yahoo just stuck to its failing web domain business.

The management decided to change the course of the company, in 2012. Marissa Mayer took over as the new CEO. On May 19, 2013 Yahoo purchased the popular blogging site Tumblr. This was followed up by more acquisitions and take over. However, critics termed these efforts as ‘Too Little, Too Late.’ Despite having an online user base of 210 million, it’s still way behind Google and Facebook, which are the current social media titans.

In the January of this year, the company decided to spin off its stake in Alibaba into a separate company. The reason, Mayer stated, was that the money acquired from the spin off would be used in the development and expansion of the company. However, after a whole year of crafting a deal for the spin-off, Yahoo unexpectedly decides to halts its plans and shelf the deal before it ever existed. The board initially believed that the spin off would be tax free, but there was a risk of IRS stepping and forcing the company to pay for taxes.

Not long ago, made an unsolicited bid to acquire Yahoo for $44.6 billion. The board then decided that this is not the right time. However, despite Maynard Webb’s claim that the board has not considered selling the company or any of its branches, critics believe that it’s only a matter of time. With companies like Verizon and at&t already interested, there is a huge possibility that the company would soon be sold. It was also revealed that Mayer could earn up to $152 million if this happens and her job is terminated.

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About Sheheryar Khan

Sheheryar Khan

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