Is It Too Late for Yahoo?

“You can’t place your chips on every spot and every color and every number,” said Dan Finnigan, an executive vice president who ran Yahoo’s HotJobs site and left last year. “Businesses like travel, shopping, music and even HotJobs were all great products, but none were going to make a huge difference in the fight with Google unless we used them to drive the main search business.”

Many other executives agreed that Yahoo had to focus on fewer things. To stress the point, Mr. Yang invited Steven P. Jobs, Apple’s chief executive, to give a pep talk to some 300 Yahoo vice presidents. Mr. Jobs told them that years earlier many Apple insiders wanted the company to compete with Palm’s personal digital assistants. Mr. Jobs said he decided against it, and noted that had Apple gone after Palm, it might not have been able to develop the iPod.

But cutting was not easy for Mr. Yang, who choked up in front of employees years ago when Yahoo made its first significant layoffs after the dot-com crash. When a group of executives presented options, he stalled.

“Instead of saying yes or no, there were no decisions,” said a person who attended many of the meetings. “These decisions are agonizing for him. It’s his caring about the people and the company that make him both great for this job and difficult for the job.”

One top executive countered that Mr. Yang had already shuttered some projects and turned Yahoo into a more efficient company, without jeopardizing profitable businesses.

Some analysts said the only move that could have averted Microsoft’s bid was for Yahoo to outsource its search advertising business to Google — something the company is now considering.

Jordan Rohan, an analyst with RBC Capital Markets, noted that this decision would have required Mr. Yang to admit defeat in a critical area. “It would also have required a sense of urgency that Jerry has not necessarily shown,” he said.

On Wall Street, patience was running thin. Yahoo shares kept declining, from a high of more than $34 in October to about $24 at the end of the year and a low of $18.58 last week.

“We are still trying to do too many things, and fund them in a way that we need to in order to win,” said a senior executive who has grown disillusioned with Mr. Yang. “With the stock at $24 or $25, we’d be having a very different conversation now. But there were decisions made that were naïve that have left us in a position where we can’t control our destiny.”

Copyright © 2008 The New York Times

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