Yahoo! Is Better Broken Than Whole, Says Analyst

Reuters published an interview with a market analyst a few days ago concerning Yahoo!’s present health status as a giant Web portal, and I think some of the points mentioned in the piece are worth highlighting here on Profy. Let’s get right into it.

The analyst, Jeffrey Lindsay, an associate of Sanford C Bernstein, spoke of what many in the past have argued in the past, which is that Yahoo! “would be worth far more to shareholders if it broke up its Internet businesses” or overhauled its operations as a whole.

To which I respond saying that while the company’s disarray may, from an outsider’s viewpoint, seem unmanageable as one semi-(but-not-really)-cohesive mass, and better controlled and manipulated as a series of unique entities, companies or whathaveyou, Yahoo!, is best off working out its problems as a single pie, keeping things together as much as is possible.

Yes, absolutely, the company has very significant problems. Not the least of which is the performance of its search and advertising components. (Ars Technica roughly a week ago spoke about the company’s “new” search plans, but I’m not buying the enthusiam. Even if it is “better,” the Yahoo!’s going to have to put together one hell of a publicity push to put its engine on a sustainable upswing worthy of mention once again.) And with so many acquired items on its plate, it seems difficult for the Web giant’s management to sort out and piece everything together in something of a coherent fashion.

There’s its social bookmarking website, Del.icio.us; its popular photo hosting and sharing service, Flickr; it’s nifty but mostly unnoted mashup environment, Pipes; the list goes on. But no matter the widespread acceptance of those sites and services the company has purchased over the years, it’s still, well…lagging. Clearly, the problem is elemental, very basic.

I don’t think its problems reside with things brought from the outside in. It’s not that Yahoo! hasn’t done “enough” with those things it’s purchased. Sure, the company could make its various businesses play together a bit more, make some fun matches and whatnot. But they’re not all that intrinsic to the company’s overall performance.

No, the company’s ongoing struggle to get kicking again is directly attributable to its continued failure to attract the numbers of advertisers it’s main competitor has thus far amassed, and because advertising is very much the bread or butter (which do you think it is?) of a Web presence like Yahoo! (same goes for Google and the rest of the big guns on the Internet) grim ad sales figures put the whole operation – everything under the proverbial roof - in a funk.

While some things seem rosy and sweet, the operation as a whole is kind of futzing about like it doesn’t know what the hell it’s doing or where it’s going.

So pulling its various pieces from one another to try to remedy the situation isn’t going to help. Only some good ol’ R&D (a whole effing lot of it, I should emphasize) in the area where it’s making its money is going to put it back on track. Company management has to see its problem for what it is, and try its absolute hardest to fix what it let slip many years ago. No miracle drug is going to bring it back to superstardom. Putting the most of its money into what matters most today is what’s going to help it go up, up, up once more.