Yahoo's Shareholder Meeting (2012)

[Editor's note: this post was originally published on July 12, 2012.]

Yahoo’s shareholder meeting was bland.  No slides, no video, no new trinkets—just the basic CEO pep talk plus business jargon.  Apparently, Yahoo’s new catchphrase is “technology-powered media company,” which is short for, “Please stop asking us if we’re a tech company or a media company.”  At this point, the only job with more turnover than Yahoo’s CEO might be your local fast food joint, but interim CEO Ross Levinsohn seems nice enough, so that’s a plus.  Of course, he spewed the same pablum as every other CEO from Yahoo, but what do you expect?  It must be difficult getting respect from the troops when the company won’t remove the "interim" label before the annual meeting.  Still, it’s not about the CEO or whether Yahoo wants to become a media or tech company—it’s about execution.  As another person wrote, “[I]t’s increasingly hard to see what Yahoo uniquely offers to its audience.”  Combine a failure to execute with a failure to produce unique content or services, and you have a recipe for extinction. 

Levinsohn’s short speech highlighted Yahoo’s many partners, including NBC, ABC, and Spotify.  I may have misheard him, but Levinsohn said that more than half of the videos viewed online came from Yahoo, which prompted a surprised look from one employee.  Yahoo believes its election and Olympics coverage will attract traffic.  Levinsohn also mentioned the consumer several times, stating, “Consumers want interesting and informative online experiences,” and “It [all] has to start with the consumer experience.”  In other words, he said nothing new or unique.  Of course a public company that seeks consumers and viewers has to satisfy them.  Which is why Yahoo’s conduct over the last five years has been so comically tragic: Yahoo bungled its transition to a new email format (also botching its calendar feature); entered and promptly left the social media space via Yahoo Pulse; couldn’t provide a consistent selection of online media content, ceding that audience to Hulu and YouTube; couldn’t properly manage copyright infringement claims to prevent viewers from clicking on unplayable videos; and made the term “quality assurance” MIA.  In addition, Yahoo’s videos lack captions, whereas both YouTube and Hulu have some form of online captioning.  It could be worse—just two years ago, Yahoo’s homepage seemed to resemble the National Enquirer or TMZ, prompting some viewers to wonder whether Yahoo’s latest strategy relied on Kim Kardashian, Octomom, Justin Bieber, and hordes of lobotomized or low-IQ viewers.  Thankfully, Yahoo has reversed its descent into becoming the world’s largest online tabloid.  However, it now seems to be aiming for the “World’s Largest Linkfest of Content Already Seen by Everyone under 40 on YouTube and Facebook,” but as I said, things could be worse.   

Today, the CEO focused on Yahoo’s various partnerships with other media companies as well as its access to “700 million viewers,” but Yahoo doesn’t seem to understand that a) it doesn’t matter how many viewers you have if none of them are particularly loyal; and b) relying on content and partnerships from other companies with their own websites isn't a viable long-term strategy.  As I told the CEO during the meeting, “Think about it.”  If Company A--which has a vested interest in promoting its own websites and content--decides to partner with Company B, which is a mere portal for Company A’s content, what will happen?  Company A won’t license its best content to Company B and will use its leverage as a content provider to take as many users from Company B as possible and make them loyal to their own website(s).  It’s as if CNBC decided to partner with Bloomberg by linking to Bloomberg articles, thinking, “Well, if I got Bloomberg, Fox Business and a bunch of other business content, then people are sure to come here instead of going to those websites instead.” But of course, CNBC focuses on creating its own unique content and attracting its own viewers.  To the extent CNBC thinks Bloomberg, Fox Business, or the Motley Fool has an interesting idea, they do a story themselves instead of just linking or deferring to their competitors’ websites or channels.  In essence, Yahoo’s business strategy seems to be “As many eyeballs as possible, regardless of user time spent on the page or the quality of content displayed” (see Kardashian/Octomom reference above).  It’s a sad state to be in for a company that was once a top Silicon Valley innovator  (Speaking of which, am I the only one who remembers Yahoo’s funny commercials for its personal ad service?)  

Yahoo’s latest mis-step?  Hackers from “d33ds” disclosed about 400,000 user passwords, including many from Yahoo.  I downloaded the file to see if my emails were hacked, too.  They weren’t.  It looks like almost all the passwords taken are from deactivated accounts, so Yahoo got lucky this time.  And it wasn’t just Yahoo emails on the list—I saw hotmail and even gmail accounts apparently compromised. Besides, few of the exposed passwords had any capitalized letters, which violates Online User Security 101.  The hackers are definitely cheeky, though—they ended their email/password list with the following quote: “Growth begins when we begin to accept our own weakness.” -- Jean Vanier 

The Q&A session was short.  One shareholder asked about Yahoo’s role: was it a TV station, TV studio, or ad agency?  The CEO said Yahoo wanted to create a good overall consumer experience.  A CalPERS representative said the state’s pension fund supported the Board but not the way Yahoo was awarding compensation to its executives.  Another shareholder rightfully criticized former Yahoo CEO Terry Semel’s compensation of $ 600 million, which seems grossly high given Yahoo’s current stock price.  

Some final notes: Julia Boorstin from CNBC was there.  I didn’t like her, but her cameraman was nice.  Cory Johnson from Bloomberg was also there and looked like his usual professional self (did you know he founded the hip hop basketball magazine SLAM?).  I prefer Bloomberg, which has a more serious outlook than CNBC.  Maybe the “eyeballs at any cost” strategy works on TV, which is more visual and less interactive.  It might explain the mismanagement of Yahoo all these years by big-media executives. Boorstin asked me about the interim CEO issue (yawn) and the Facebook/Yahoo deal.  According to TechCrunch, the deal occurred “without money changing hands,” so I responded to her question with another question she should have been asking: “How much money is involved?”  She didn't seem to catch my point.  So much for television media as an enlightening Fourth Estate.  

Disclosure: I own shares of Yahoo, but my positions may change at any time.  My hunch is that a private equity fund will buy Yahoo at some point or the company will increase shareholder value by splitting up or selling off its various parts.