In January 2000, Yahoo was worth $ 125 billion. In 2008, Microsoft made an offer to buy the company for $ 45 billion. Today, Yahoo has been sold to Verizon telecom operator for $ 4.83 billion. It is easy to see, therefore, that the company has undergone a huge financial disaster over the last sixteen years.
This huge loss of value was the result not only of a number of Yahoo bets that did not work, but mostly from a lack of firm action on a market that was changing a lot and very quickly. Below, we analyze some of the causes of monstrous devaluation Yahoo:
Internet Bubble
Yahoo was founded in 1994. Yahoo name meant “Yet Another hierarchically organized Oracle” or “one more hierarchically organized oracle.” That’s because the site was nothing more than a list of sites. Then, as yet there were many search services, discover a new site was difficult, and lists of interesting sites like Yahoo were very valuable.
For this reason, Yahoo is It becomes quite popular, and in 1998 he was the “portal” most popular internet. His home had almost 100 million daily views and over 30 million unique visitors per month, according to the BBC. In a quarter, the company’s revenue even increased 200% over the same period last year.
This astronomical growth, however, was at least partly caused by what became known as the “internet bubble”, or “bolha.com”. At the turn of the 90s to the 2000s, many investors were willing to throw your money in any company that had a minimal relationship with the Internet, in the expectation that they would generate profits ever. For many of these companies, however, it did not.
When some overvalued companies began to go bankrupt, investors pulled their money from companies in this sector, which made its market value plummet. The own Yahoo, whose shares came to be worth US $ 118.75 in January 2000 reached September 2001 negotiating their roles to US $ 8.11. – Less than one tenth of the value
that did not mean, however, that the company was particularly badly. Yahoo’s business at that time continued to generate revenue and profit, even with Google’s growth. The company started to use Google to search in 2000, but developed its own search technology and started to implement it in 2004. In 2007, it offered unlimited storage for their e-mail clients to meet Gmail.
social
in the mid-2000s, the internet began to change dramatically because of the networks social. Sites like Myspace, Orkut, Twitter and later (but mostly) Facebook radically changed the ways people interact on the Internet, and how they arrived at new sites.
This was a change that Yahoo simply did not follow. While Facebook grew precipitously, other Internet giants did their best to adapt to this change – Google, for example, even tried to have their own social network. Over time, the company has been increasingly focusing on online advertising technology that was his main source of income.
Yahoo’s attempt to have some great social platform would only very later, in May 2013, the company paid $ 1.1 billion on Tumblr. This agreement, however, did not have the expected results. Although the acquisition has meant that traffic on the social network grew expressively (growing about 33% in less than a year, according to Fortune), this growth is not reversed in revenue for the company.
it was the first sign that the company was not keeping up with the latest trends of the internet market. For a site that started as a list of sites and has evolved into a portal, the process of decentralization that social networks have brought was relatively destabilizing. This situation, however, would only worsen.
Mobile Internet
Another radical change that Yahoo failed follow was that of smartphones. Since the launch of the first iPhone in 2007, the way people accessed the Internet began to change. And it was not just a change of device that people used, but in the way they hoped to gain information.
In smartphones, users spent less time surfing “on the Internet and more time using dedicated applications of the sites and services that used more often. A portal like Yahoo, in which it was expected that people passed a long time, did not have the same efficiency of a news app with custom feed, for example.
And this change He joined the social networks to further aggravate the situation. First, because often what people were seeking was in own social network:. News of friends and pages of posts they followed, for example
But also because, even in cases people came to a site, they saw the site as a kind of “extension” of social networks. news portals needed, therefore, to use the networks as platforms to bring audience to you – it was not just the case of the “home” user. But Yahoo did not.
The company also failed to take advantage of the data generated by social networks to improve their advertising service. This, coupled with the fact that the audience of the sites and the use of Yahoo services continued to fall, caused the market value of the company plummet.
devaluated
These are some of the reasons that indicate why Yahoo depreciated so much in the last sixteen. Not that your business has changed radically – this is the main problem, in fact, according to TechCrunch. When Yahoo appeared, the internet was something entirely different than it is today, and the service that the company provided was, in fact, very valuable.
Today, however, it is indeed difficult to see value in the work that the company does. The company’s products and services, most of the time, are far from standard internet using a more common users. Compared to the company represented at the end of the 90s, this really is very little.
In addition to its core business, Yahoo also had shares in the Chinese giant Alibaba and Yahoo Japan , which belongs to another group. These investments were not included in the sale to Verizon, and worth nearly ten times more than Verizon paid by the main Yahoo business. When we look at the trajectory of the company in recent years, however, it is not hard to understand why.
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