A little while ago there was a film on TV called Frequency. It’s a sci-fi/mystery film from back in 2000 with Dennis Quaid. Not great but not horrible either. It’s about a guy who can talk to people in the past via a two-way radio in his basement. He gets in contact with his dad and a zany adventure ensues. But one scene in particular inspired me to write this article. It was as scene where the guy from the future tells a friend from the past that he should ‘Invest in Yahoo!’.
Now, in the context of a movie from 2000, this made perfect sense and his mate can later be seen driving away in his convertible with Yahoo number plates, all because of how rich he got from buying Yahoo stocks.
What the movie doesn’t show you though is 10 years later, that same guy was likely back home crashing on his mum’s couch asking to borrow $10 for some petrol to get to his job at KFC because all that money he had in Yahoo shares disappeared along with Yahoo’s digital dominance.
In a very short time Yahoo! changed from a company that pretty much was the Internet, into being the search engine only used by your parents because they can’t figure out how to make Google the default setting on their browser.
So what happened?
Yahoo! began with a similar start-up origin storyline as most big web companies – created in a dorm room by two nerdy guys by the name of Jerry Yang and David Filo in the early 90’s. It actually began with the catchy title of Jerry and David’s Guide to the World Wide Web, but in 1994 changed the name to Yahoo!
This name change did pose a few problems though as it was also being used at the time by three other established companies. One that made BBQ sauce, one who made knives and another who made canoes. So in order to get past those copyright laws, Jerry and David added the exclamation mark to the end of it. And so Yahoo! was born.
A little over a year later the company floated on the stock exchange for a little bit over $13 per share. For the next few years Yahoo! went on a bit of a spending spree, purchasing all sorts of online businesses to build the Yahoo! universe.
By the end of 1999, Yahoo! shares were valued at nearly $119 each.
The year 2000 brought with it the dot com boom, and three weeks into a brand new millennium Yahoo! launched into Japan and became the first ever business in Japan to trade at over 100 million yen.
Yahoo! were now the world wide kings of the internet. Anyone in the world who used the internet was likely using Yahoo!
In June 2000, Yahoo! saw an opportunity to help build the effectiveness of their search results by partnering with a couple of nerds from California who were also playing around with search engine technology.
Those two nerds went by the names of Larry Page and Sergey Brin.
They owned a little business called Google.
Then the dot com bubble burst.
By September 2001 Yahoo! stock had dropped to a low of $8, a vast difference from the $119 from 18 months previously. The next few years Yahoo! started eating up all the other smaller competitors as well as forming a partnership with telecommunication business to form a direct ISP competitor with AOL.
In 2004, Yahoo! ended it’s partnership with Google. Later that year Google released Gmail.
Yahoo! kept on acquiring businesses, including Flickr and del-icio-us aswell as launching it’s social/blogging offering Yahoo! 360.
The En… The Now
In early 2008, Yahoo! laid off over 1000 employees (7% of it’s work force) due to financial difficulties faced by the Google juggernaut. Later that year Jerry Yang; one of the original founders stepped down as CEO. 2 months later, Yahoo laid off another 1500 staff.
The next few years saw many discussions about mergers and acquisitions, in particular with AOL Time Warner and Microsoft. In 2008, Microsoft offered to buy Yahoo for $44billion (in cash and stock). Yahoo ummed and erred about the deal and floated the idea of a merger with either NewsCorp and Google. Neither of these merger offers became a reality and Yahoo declined the Microsoft offer stating it was severely undervalued. Microsoft upped their price by another $5billion, which was also rejected. By the end of that year, Yahoo’s stock had once again plummeted to just under $9.
Microsoft came back once again with an offer of $20billion – almost $30billion less than their original offer not even a year earlier.
5 months later Microsoft and Yahoo! announced a 10 year deal that would see Yahoo! search be used in all Bing projects. Upon the announcement, Yahoo! stocks once again dropped.
The next 4 years saw 5 different CEO’s try their hand at running the show. The first was Carol Bartz, who publically said ‘I struggled to understand what Yahoo! was when I first took over as CEO’. She was fired via a phone call in 2011. Yahoo! CFO Tim Morse became interim CEO.
In 2012 came Scott Thompson. 3 months after joining, Yahoo! had laid off another 2000 staff (14% of its workforce). Scott Thompson’s resume stated he had an accounting and computer science degree. Turns out that the computer science part of that qualification wasn’t actually true and a little over 4 months after coming to Yahoo!, he moved on. Ross Levinsohn become interim CEO.
And now it’s up to Marissa Mayer, former Google executive and the youngest ever CEO of a fortune 500 company, to steer the ship back on course.
Can Marissa Mayer save Yahoo?
What does the future look like for the once ‘King of Internet search’?
Can it come back to the glory days or is Yahoo! now simply just a by-line of a joke from a Dennis Quaid film from 2000?
Perhaps the Internet can tell us.
But be sure to use Google when looking for the answer, because that Yahoo! thing is pretty average these days.