Having failed to adjust to environmental changes, IT dinosaur Yahoo is on the brink of extinction.
Yahoo has been put up for sale. Suitors have been narrowed down to several. Yahoo decided to sell its Internet business (e.g. search engine, news, email) and it accepted bids until April 18. In the beginning, roughly 40 companies had designs on the ailing Internet giant. However, according to many media reports, Google, Time and Comcast backed out halfway through and bidders have been narrowed down to US telecoms group Verizon, Yellow Pages publisher YP Holdings, the British publisher of the Daily Mail newspaper and three private equity groups.
Above all, Verizon, which bought AOL last year, is viewed as the leading contender to take over Yahoo. Verizon is reportedly exploring ways to incorporate Yahoo’s resources (the website, email and users) into its user base (112 million Verizon subscribers and 2 million AOL subscribers).
A rough road ahead before Yahoo changes hands
However, The Los Angeles Times predicted that the process of selling the struggling Web pioneer would be rocky. Yahoo suffering an identity crisis as an Internet company serves as a drag on the process.
Yahoo was founded in 1994 by David Filo and Jerry Yang who were electrical engineering graduate students at Stanford University.
Yahoo caught on by providing a variety of information during the dot-com boom, but the emergence of Google sent Yahoo going into a tailspin. Google overtook Yahoo to dominate the search engine market and people started talking about "googling" and "being googled. " What’s more, while its rivals, Google and Facebook, were keen on building a mobile service environment, Yahoo concentrated on desktop-based services and refused to build a mobile environment. Yahoo’s decision to buck the trend of going mobile hastened its decline.
Besides, Yahoo’s disappointing first-quarter earnings statement poured cold water on its attempt to raise the value of its core business.
Yahoo CEO Marissa Mayer is on course to become a victim of the glass cliff.
After churning though five CEOs in five years, Yahoo hired Marissa Mayer away from Google. However, as Forbes predicted, she seems to have ascended to the pinnacle of the glass cliff, a phenomenon in which women are more likely to be put into leadership roles under risky and precarious circumstances when the chance of failure is highest.
Marissa Mayer strived to turn Yahoo into a media & tech company. Unfortunately, her efforts haven’t paid off. Yahoo bought blogging service Tumblr for $1 in 2013 and video-advertising platform BrightRoll for $640 million in 2014. Yahoo even dabbled in making sitcoms and movies to evolve into a media company, only to suffer losses.
Marissa Mayer had made Yahoo 42 percent smaller over the past three years: she took as little as two weeks of maternity leave. She has been a forceful leader, but failed to turn around the company. As a result, Yahoo shareholders including Starboard Value CEO Jeff Smith called for a major management reshuffle.
Though Yahoo has become a has-been, it is holding up well.
Though Yahoo has become “so last season,” it is still hale. The number of visitors to Yahoo USA tops 100 million monthly. Thus, Yahoo still looks charming to the bidders.
Yahoo aims to close the sale in June. In June, the 22-year-old Silicon Valley company has to leave behind its legacy as a search engine.
Scientists posit that the mass extinction of the dinosaurs was caused by the impact of a large asteroid on the Earth and dust from the asteroid impact may have blocked the sun and caused temperatures to plummet. On the other hand, small, furry mammals survived the collision, fiercely adapting to the environmental changes. The same is true of IT companies. The upcoming extinction of “IT dinosaur” Yahoo, which has failed to skillfully respond to constant changes in the IT environment, seems to give us some food for thought.
