Silicon Insider: Yahoo -- A Company in Crisis

Jan. 25, 2008 — -- There's no Yahoo! for Yahoo! these days.

The online giant, which has already survived one of the greatest melt-downs in high tech history and come roaring back, now once again appears to be looking down into the abyss.

The company's stock is plummeting -- down nearly 30 percent since the summer, when the company booted long-time CEO Terry Semel. The company is bleeding market share to arch-rival Google -- down 6 percent from a year ago (everyone in the search field is losing to Google, but none as fast as Yahoo). And when the company announces its fourth quarter financials Tuesday, they are expected to be bleak indeed, and it is widely assumed that they will be accompanied by lay-offs -- several hundred according to some sources, up 2,500 according to stock analyst Henry Blodget.

Meanwhile, Wired.com is predicting that the co-founder and current interim CEO Jerry Yang will likely soon get shoved out of the execs chair to be replaced by long-time CFO and current president Susan Decker. In other words, Yahoo is looking like a company slowing spinning down into disaster.

Needless to say, this is not a good time to be in trouble. Healthy companies get dragged kicking and screaming into recessions, they have war chests set aside full of money to fund R&D during the slow times, they manage their lay-offs instead of being managed by them, and they position themselves to come powering out of the downturn ahead of their competitors gobbling up market share as they go.

Right now, if Yahoo has anything going for it, it is that some of its current crisis is being camouflaged by the general economic slide, especially in advertising. Moreover, as I suggested recently, Google, whose own stock is also slipping from its nosebleed heights, is heading for its own fall -- driven not by a failure of the business model, but a growing internal character crisis -- and Google's decline may perversely buoy Yahoo's fortunes.

Finally, if this recession proves deep enough and sufficiently protracted -- and pray it doesn't -- Yahoo could also be a beneficiary of a widespread shift by consumers away from expensive entertainment like movies and towards comparatively cheap experiences on the Web.

But that's all grabbing at straws. The simple fact is that Yahoo is a company in crisis -- made all the more astonishing because it has been in such a crisis once before (during the dot com crash) and you might think that it would have the experience, the tools and wisdom --