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No. of Recommendations: 2
There has been a tremendous amount written about the uncertainty of Yahoo's future earnings potential. Most of the concerns mentioned relate to the downturn in online advertising. Here some additional concerns regarding the uncertainty surrounding Yahoo's future:

- The foundation of any successful company is strong leadership. Yahoo's
current leader, Terry Semel, lacks the vision, instincts, urgency, and necessary advertising sales experience to turn the company around.

- Semel is most well-known for his days at the Warner Brothers movie studio, where he was Co-CEO with a guy named Bob Daly. Very impressive. However, Semel has absolutely ZERO experience selling advertising or subscriptions. What makes Mel Karmazin such an excellent CEO for Viacom? At the core of his skill set, Mel is an accomplished advertising sales guy. The only thing Semel has ever sold are movie tickets and compact discs (I believe Semel and Daly also ran Warner Music for a brief moment).

- Semel also lacks the proper marketing instincts and experience to build out the Yahoo brand. Marketing movies is not the same as marketing a media property that is advertiser supported like Yahoo. The fact that Semel thinks they're similar exemplifies his lack of marketing sophistication. For the most part, movie marketing consists of producing press junkets and buying local newspapers ads (although the process has recently become a bit more sophisticated). The movie studios (except Disney) have no desire or interest in building company brands.

- Semel's current strategy is to provide additional content offerings that are subscriber based. Nice idea, but with the exception of the Wall Street Journal and porn, no online media site has had any earnings success selling content to mass market Internet users.

- Does Semel know what the word "urgency" means? He's been CEO of Yahoo for over 6 months and what does he have to show for it? Real-time stock quotes and analyst reports from 2nd tier investment banks for $15 bucks a month. Yahoo might have something up their sleeve here, but this whole subscription idea is a HUGE question mark/concern.

It's also worth mentioning that it took Semel 5 months to hire a new head of sales and 6 months to bring on a new head of marketing. Shareholders who have stuck with Yahoo have seen their equity fall over 90% in the last 2 years. Hey Terry...Wake up and do! This is not the high-barrier-to-entry movie business. I'm sure there are hundreds of college-aged kids who are currently plotting the demise of your company right now.

- One additional note...Prior to joining Yahoo Semel used the experience and knowledge he accumulated in the entertainment business to invest in a handful of failed Internet start-ups. One such company was the Digital Entertainment Network (, an embarrassing flop for all those involved. In fact, the founders of this company are currently under investigation by the FBI.
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