Wednesday, December 06, 2006

Yahoo Groove Shopping

Yahoo (Nasdaq:YHOO) finally announced what many have long suspected, a corporate reorganization. The CFO Ms Decker acquires more responsibilities and seems to be within reach of the CEO's office. Several very senior officers have pulled the rip cords on their golden parachutes and will be leaving within the next few months. They certainly will not be making major decisions in the interim. Not a good thing as momentum approaches stone cold.

Consider this analogy to the old automotive industry when they were the leaders, movers and shakers in our economy. When a car guy was in charge usually the company rocked and had excellent sales. When the numbers guy was in charge the sizzle was not the same. The numbers guy was there to fix until the car guy got his groove back. What the auto companies did have was large teams of car guy's, numbers guy's and other guy's. Usually referred to as management depth.

Yahoo has had to reach outside for key talent. Yes, I know the company is rather young but they have been around for over a decade with approximately 10,000 employees. They are supposed to be the internet revolutionary with the killer vision. If every top key position keeps going to outside white knights who interview well, the troops will get the career message. Investors will also get the message that there is no new vision but Yahoo is shopping extensively for it.

Shopping you say. If Yahoo cannot make it they will have to buy it. Make it momentum seems to have stalled. Watch for acquisitions paid for in stock. Yahoo's stock is at the lower end of its two year trading range. If you believe in turnarounds smaller companies will want to vend themselves into Yahoo and ride the stock up. So will the new guy's be good at operating in their fields or will they be well connected in their fields and good at doing deals? What kind of groove will be hired? In any event their stock options should be priced attractively.

Hopefully Yahoo will not become just another conglomerate with problematic valuation and ambiguous potential begging to be unlocked somehow someway?