Yahoo! Inc. Chief Executive Officer Jerry Yang pledged in July to craft a turnaround strategy in 100 days. Shareholders say they're still waiting.
Yang, 38, replaced Terry Semel as CEO of the owner of the most-visited U.S. Web site in June. Since then, Yang has named a new sales chief, announced four acquisitions, and upgraded Yahoo's search engine with movies and photographs.
With nine days left before Yang's plan deadline, ``I'm not expecting anything very new,'' said Anthony Valencia, a money manager at Los Angeles-based TCW Group Inc., which oversees $150 billion in assets, including Yahoo shares. Yang's focus, he said, is ``improving the efficiency of their current assets and making sure they don't miss the boat.''
Sunnyvale, California-based Yahoo may report its seventh straight decline in quarterly profit today as it continues to lose ground to Google Inc.'s Internet search engine. Third- quarter net income dropped 24 percent to $119.7 million, or 8 cents a share, from $158.5 million, or 11 cents, a year earlier, according to a Bloomberg survey of 16 analysts.
Sales probably rose 11 percent to $1.24 billion, analysts estimate. Yahoo had 20 percent growth in the year-earlier period.
Yahoo's share of Internet searches fell to 19.9 percent in August from 24 percent a year earlier, according to New York- based Nielsen//NetRatings. Google, in Mountain View, California, rose to 53.6 percent from 50.2 percent.
Sanford C. Bernstein & Co.'s Jeffrey Lindsay suggests breaking up Yahoo or farming out its search service to Google or Microsoft Corp.
`Into Irrelevance'
``To stop the inevitable slide into irrelevance, the management team must consider more radical actions and strategies,'' Lindsay wrote in an Oct. 5 report. The New York- based analyst rates the shares ``market perform.''
Lindsay said he doesn't expect Yahoo to follow his recommendations. ``Management will at most make minor tweaks along the way,'' he said.
After tumbling 35 percent last year, Yahoo shares have climbed 9.1 percent in 2007, trailing the Nasdaq Composite Index's 15 percent gain. The stock fell 62 cents to $27.86 yesterday in Nasdaq Stock Market trading.
Lindsay predicts the shares will fall to $25 with management's current strategy. Of 39 analysts tracked by Bloomberg, 18 advise buying Yahoo, 20 have hold recommendations and one suggests selling.
Joanna Stevens, a Yahoo spokeswoman, declined to comment.
`Dramatic' Improvement
Yang, who will join a conference call after he releases the quarterly results, will address analysts today for the first time since his 100-day pledge. In July, he promised a top-to- bottom review of the business that would ``dramatically improve'' performance.
Yang co-founded Yahoo in 1995 when he was a doctorate student at Stanford University. In the 12 years before he replaced Semel, he held the title of chief Yahoo, helping guide strategy and technology focus.
After his return as CEO, Yang sparked an effort to improve Yahoo's search service, bolster products for mobile phones and draw more traffic and advertisers to its sites, such as the Flickr photo service.
Yang promoted Hilary Schneider, a former Knight Ridder Inc. executive, to the top sales position in August, replacing Gregory Coleman, who arrived in 2001 from Readers Digest Association Inc. The appointment followed his decision in June to create a single sales force, combining groups that sold graphical ads and sponsored Internet-search links.
Acquisition Spree
Yahoo agreed last month to buy San Jose, California-based BlueLithium Inc., the fifth-largest U.S. ad network by the number of users. Two weeks later, the company announced plans to purchase San Mateo, California-based Zimbra Inc. to bolster its e-mail service. Yahoo also acquired an online-news site called BuzzTracker in Chicago.
In July, Yahoo bought Right Media Inc., a deal negotiated before Yang's arrival. Right Media, a New York-based auction site for online advertising, may help boost revenue from banner ads. Yahoo lost sales in that market to social-networking sites MySpace, owned by News Corp., and Facebook Inc. In June, Yahoo added sports news site Rivals.com.
To close the gap with Google, Yahoo upgraded its search engine this month to include videos and Flickr photos in query results. This year, the company introduced software designed to make ads more relevant to the user and more likely to be clicked.
`A Nonstarter'
Yahoo has invested too much in the online search business to sell it, said Douglas Anmuth, an analyst at Lehman Brothers in New York.
``Outsourcing search is almost a nonstarter,'' said Anmuth, who rates the shares ``overweight'' and doesn't own them. ``There are probably businesses that can be trimmed. There are resources that can be much better allocated.''
Yahoo may need to fire employees and close some units, said Standard & Poor's analyst Scott Kessler in New York. He cited the company's music program, a subscription service that lets users download songs, as one that doesn't fit its online- advertising strategy.
``They need to take a hard look at a lot of their operations,'' said Kessler, who rates the shares ``hold'' and doesn't own them. ``That involves consolidation of the businesses and layoffs. I'm not entirely sure they're prepared for that.''
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