The Internet business is about ideating and innovating constantly, not only to keep ahead of your competition but also to do the most basic of all things a business needs to achieve – survive in the long run. If you are having any troubles visualizing what I just said, look no further than Yahoo – an Internet giant which is dying a slow death year after year.
Here are the factors that are contributing to Yahoo’s decline:
Market Cap:
From $55.6 billion in January 2006 to $18.8 billion in January 2012, Yahoo’s market cap has fallen considerably. Also the company’s enterprise value has fallen by 68.5% in the last 6 years.
Revenue Growth:
Yahoo reported a 132.3% revenue growth in early 2004, but in 2012 their revenue growth has fallen to (hold your breath) below zero. For the last four consecutive years Yahoo’s revenue growth has been in the negative, which means there hasn’t been any growth at all. Couple this with expenses at Yahoo which have risen from $589 million in early 2004 to $1.02 billion today, and you get the picture.
Workforce:
To compensate for financial losses beginning in 2008 Yahoo started two significant rounds of layoffs. In 2008 the former CEO Jerry Yang laid off around 1,500 workers, which amounted to about 10% reduction of their workforce. Fast forward to 2012 and the new CEO Scott Thompson has already laid off 2,000 workers in April this year, which accounts for a 14% reduction in their workforce. By these layoffs Yahoo is expecting to save around $375 million annually.
Stock Price:
Despite their best efforts Yahoo’s stock price has dropped by 6% since Thompson’s hiring in January 2012. Also Yahoo’s shares have not traded above $20 in over three and a half years.
Web Traffic:
Quite incredibly Yahoo’s web traffic has roughly fallen by 35% in the last one year. Also the percentage of daily Internet page views has decreased by 0.7%. Earlier in 2011 it was 2% and now it is down to 1.3%.
Credibility takes a hit:
Adding insult to injury have been recent controversies such as the news about CEO Thompson lying on his resume and claiming a Computer Science degree which he does not hold. A lot of people in the industry corridors have already started calling for Thompson’s firing.
You put all these facts and figures together and what you get is a pretty grim picture of Yahoo’s future. There is absolutely no doubt that Yahoo is still a force to be reckoned with, as indicated above, Yahoo still controls over 1% of Internet traffic, how many company’s can claim that?, very few indeed. But if facts and figures could ever predict the end of a great story, then I am afraid, this might be it.
It remains to be seen whether or not Yahoo can recover and survive the long haul. For in today’s massively competitive environment, the need of the hour is to ideate and innovate, that’s probably the number one reason why Apple is number one, Yahoo would do well to take a leaf out of its rivals Google’s books and start to make a foray of some kind into industries other than search and entertainment.
Then again they could just do what they do best, and improve on their existing products and bring some quality to their users, because the fact is, that at the moment I am using a Google search to learn more about Yahoo’s future. Period.
Note: All trends, facts and figures have been derived from HighTable.
