Reporters' Roundtable Ep. 118: The big mess at Yahoo
-- everyone welcome to reporters' roundtable -- -- in San Francisco.
-- since Yahoo! launched in 1994. Has been a major factor in the growth of the web.
But looks like that growth that's coming to an end.
2000 Yahoo! employees will be losing their jobs that's about 14% of the company's workforce this company's -- rudderless and struggling to figure out which direction ago and getting hit it in all directions of its business -- Yahoo! began as a web directory it quickly diversified into several hundred sites trying to find a foothold as a search engine mail server and news of Yahoo!.
For 56 years has been this company that people keep saying what.
Do you do.
Right are you in search sort of but schools doing that -- -- social they tried to buy FaceBook didn't didn't happen experts say these layoffs won't affect Yahoo! web sites that -- 700 million users a month.
But to many consumers it's a non issue.
I don't use Yahoo! mail and also.
It's just not as school is Gmail -- the amount.
Has everything I need their searches and the best but the cells and things that they get --
-- -- -- -- --
Unfortunate that it seems like at the -- and analysts say this perception is what could be the final nail in the coffin Yahoo!'s reputation is terrible.
-- is this -- around it to people around the world -- -- Yahoo! mail fine to people who use Yahoo! Sports sites find new clinical properties.
But as a company and for the people who work there it's got a bad reputation and that's not helpful.
What will leaner Yahoo! look like we'll find out on April 17 when the company releases its quarterly earnings statement.
And San Francisco on car -- tsuboi cnet.com for CBS news yeah.
So to talk about what's going on today with Yahoo! and their patent suit against FaceBook with that two great guests first here in the studio.
CNET news executive editor Charles Cooper turning things are -- in my pleasure and joining ST in America of Skype.
Kara swisher co executive editor at all things.
Thanks for coming in our joining us -- appreciate it.
So -- -- first of all what happened where -- Yahoo! go wrong.
Well many places actually over the many years it's not been just one single event it's been like a series of continual events most of which are missing at major trends that are not changing when you need to add I think you could probably go way back into --
Into what they compete with Google when -- decided to focus and being at Google over.
Focusing on how they were found at which is at it as it distribution vehicle for Internet information.
And as a as a place that people it was easier to use the Internet and they focused on search and -- -- course they lost the battle to Google Eric.
Earlier had I think that's right and I would just add that didn't you know early on.
There were a lot of six incidents that didn't help their case at all -- after -- -- who.
The first CEO -- was forced out they brought in some folks -- decided okay.
And we're gonna go showbiz we're gonna open up and operations in Santa Monica we're gonna go.
More strongly to -- becoming a full fledged media company whatever that meant within the context of web one hole went too low.
Way back when.
And once they got rid of Terry symbol then there was another shift in an efficient and they've had what five CE moves over the course of seventeen years so what happened to the founders how did they let this and I'm very rich -- -- happened to the nature they cashed out.
-- not at all the lecture and opt -- gone -- since the beginning and I it's never been about money that is you get you know David Farrell even slightly and it's not even.
And you know I think one of the issues was that they are founders that may need a lot more al-Qaeda. Linked here committee are brought and other people.
Help them realize the vision of the day adding it probably needed that Eric Larry and Sergey Brin Eric Schmidt.
And they never had that happen as well as much as they needed to add and the big thing -- -- -- were all sorts of cross patent.
Ideas of what Yahoo! should be in one of the things they've never been able to do list is be able to define what the company is.
Even though everybody knew it was at the beginning and it sort of still is what it was when it started -- that was one of the problems I think that definition.
Charlie what is Yahoo! -- -- a big questions here I mean is it a search company media media company what is -- -- what should it be I don't know what I mean.
They bring in people are smarter than them and three of us who.
You know I've been charged -- trying to -- -- they haven't such a good job so what is well I think you know what they need to do and assumed responsibility goes -- -- -- -- --
It Jerry's fault but you know the board as well.
That they early on did not bring in somebody who had a really strong.
Idea strategically and also was strong arm tactics could -- this is what we -- this is how -- can define our place.
And when the Internet changed when it became more about search.
You know they just.
We're not able to that that come up with a concrete plan that would you know get them going in this new world order -- and right now if you ask what he's -- who can get five different.
-- from five different people.
To rescue what Yahoo! was -- -- -- -- Yahoo! has nearly 700 million users to those users on it.
Is that AM.
Am -- gonna ask this --
It's analogous to whom I wouldn't make this it -- -- to in elegant analogy but you know Sun Microsystems for several years.
Just -- gone and they could have continued along the same merry path they really warrant.
Will be it but they had what 67 billion Catholics and non you know in in reserves.
You know -- not going out of business but you know the supply shrinking yes so they can hang on -- -- -- it's not a business that business model they really want.
Carolina took about two divisions and actually that Astro app.
-- -- -- -- -- -- -- -- --
And it's a very successful business it's a very good advertising is considering an audience business and they -- 600 million people using a lot of their -- things including email -- news that I think is number one Yahoo! finance is number one Yahoo! Sports is neither one -- -- so.
Is not a dead business by any stretch.
Ellison when I was suggesting -- I'm saying that if they want to again impress investors on Wall Street which may not be their first.
Aspiration they need to come up with a compelling story obviously they have those hundreds of millions of eyeballs and it's great Yahoo! Sports is wonderful -- use -- all the time but.
They need to decide what you want to be when their big boy.
We know what they are mean and advertising business it's just I think the problem is they never even so many businesses -- -- it would happen with Apple and they went down at or products.
-- have some core products that they're very good at and they're just not as exciting business -- search would be or social right now.
And so -- the problem is whenever they never been comfortable costing -- -- supposed where even very comfortable other -- don't fit them.
And so I think they always that Erie or business though that's that's just not been quite as exciting to -- -- --
-- and they haven't really had invested in it the way they should and what they're actually good at.
It's what's on and I don't think we're disagreeing what I'm saying is that if that story was compelling in their stock wouldn't be in what the -- teens.
Was a change as they change their model from being one thing to being another thing that's going to be -- wrenching.
A move is and that's gonna cost people's gonna cost market -- we'll discuss 2000 employees have cost them their jobs that's right and more to come is not right care.
I bet that the layoffs were inevitable mean they're they're too big for what other group that -- -- this is is negatives so.
It's not a question their profitable growth is not going well and so they're too big -- that sit at a company they've grown to date -- because of bad mismanagement.
Add these people shouldn't have probably been hired in the first place and so I think one issues is it that these things happened -- happens at companies all companies.
And and so they they free individual -- largest -- -- it -- -- their hand at this point and and yet it's a good business if they just you know get to the right side it it's terrific -- patent.
Way good business do you mean media do you -- -- steaming search or some combination of those what do you think is the good business here.
Needs immediate business I think the media businesses beside the thing they all my colleague Robert of the things that they're getting credit for at the ownership of other things that separate that's like owning a really nice -- and -- nice part of San Francisco whatever.
And they just happen to -- -- the right time.
But you know I think their business the core businesses immediate business really had -- media distribution business and not unlike.
You know what the Wall Street Journal does what you know all kinds of its kind to -- but CNET does.
And so it's just not as exciting -- -- search business and it's not it's sexy it's a social networking business and -- still a business world.
That's the what is the product division that we keep here are getting decimated at what did did -- do or does it do that the that didn't work for Yahoo!.
They do is they keep moving the chairs and so -- this system -- better this system and a lot is this does not.
-- a -- companies debate over where that product to market that other things.
And so what they did is that products where -- created within the individual units -- -- in Yahoo! finance you may be Yahoo!'s finance products.
And and send someone adequacy Decker decided it would be better -- one product organization serving all the units and so they created this mega product organization in the middle.
And serve the that product's -- in the individual parts to -- whatever lights flicker or.
Patent so that we have a product -- an add ons at me and -- managed nearly.
And so you know it's it's it's one way -- running a company just didn't work here and so now they decided to change acts.
Just the -- HP just decided to now you bring Princeton at whatever the printer division with the BC division and and they brought it apart now expecting others as well companies do.
Let's talk a little about the CEO announced Scott Thompson who is this guy who does he have what it takes to rescue Yahoo! to -- -- turn the ship in the direction needs to go.
-- -- --
-- -- --
At I think he's you know we -- emailed his landed the job he was an on the list of that possible links there are looking at a little bit because he had been placed righty talent and search firm and at -- PayPal but he email equipment said he be great at it.
At which is kind of an interesting way to get a job -- but I think he's kind of like it like it adoption of it and east -- taught as a whole lot about media and but he doesn't tend to talk about it I think within -- he's -- little controversial that he's pretty -- problem.
And the meetings right layouts -- explained the existing management -- the disaster in two albums out.
Is that a good thing.
Probably is that a good thing at -- moment probably not and so he's an interesting character in terms of being very brash and at cutting things.
I would say is probably the biggest complaint and now I -- which stand -- articulated was that he did that cuts aboard the strategy.
That was unveiled patent so its -- -- -- -- one person Yahoo! said it's sort of like.
That rate of oral warts killing at your troops and then telling you this outage so does -- -- hurts morale with the rest of the living --
It must be tough to be -- Yahoo! right now I'm sure it is I got an email from my Yahoo! Yahoo! or overseas who was complaining that they hadn't received anything in terms of strategic directional what's next no word on what businesses are going to depart -- center.
You know in theory there's nothing necessarily wrong about bringing in an outsider and -- -- didn't work with Carol Bartz who don't have a lot of respect for -- -- was in the right person for the job.
In -- Lou Gerstner came to IBM and -- know squat about computers but he was expert at listens to customers who understood.
-- mechanics of business and he said about.
It was about four for six months of his own listening to work.
-- before he unveiled his grand strategic plan.
And he saved the company from remember back then its predecessors and the idea was well we're gonna break up IBM to.
Eighty I against and -- said no not gonna -- -- we're -- -- -- completely different direction so.
Thompson's been on the job what came in January this is now going on for months.
-- reaching the point where it via the company the people the employees really do deserve to know what the direction is going to be do you think they're gonna break it up.
I have -- to carry nuclear break up Yahoo! -- component parts.
And I think you're gonna.
Slid it down I would say probably you know I think probably be nice and they'll sell it and some people airline that's happened I just on Yahoo! -- a large company.
Honesty pretty -- and I mean he didn't make that acquisition. -- he said that in the house.
-- -- --
I think that they're they're trying to decide what what the -- -- company.
It certainly could if they sell a -- Chinese assets which make up a lot of their value at this moment at the from a financial point video.
And it could be sold to private equity company take it private that can be cut so many interesting what they could do privately -- -- probably added a public I am I think.
I'll be in the public -- so much is that -- on them and so that's gonna happen but certainly it's a big it's a big number at.
They could certainly Begin to sell up parts in the probably get rid of things like Yahoo! answers guessing they may even try to -- --
And all kinds of stuff we'll start it really -- this guy is gonna -- I think there's no and then I that this I think -- court to us that is in the areas just focus.
They -- very hopeful exit strategy for companies in the valley get it acquired by Yahoo! Microsoft.
Google -- -- Yahoo! that back in the day and you remember there was -- -- as well rumor hot and heavy delicious acquired CNET --
-- -- -- --
They're gonna sell their acts there at technology business that anchor something in any summer that get out of that business -- so there's people arguing that -- should keep it inside.
-- a lot of I think probably notes they'll -- -- in some way and then they'll probably get out of search.
I'm excited losing game for them.
They could buy a company just for their patents it's -- want to talk about briefly.
So Yahoo! sued FaceBook on ten what they say are fundamental patents than FaceBook countersued and it's gone back and forth.
That's an interesting strategy considering the timing I mean. As FaceBook -- said. He was confusing to be sued by somebody who they saw as a partner.
Charlie. What do you think of this patent suit in the timing.
Over in particular room -- speculates with cows come home and -- want one thing that FaceBook did they help themselves with the purchase of patents from IBM.
Few weeks ago which protected them against saga.
Well give them on a way to bargain with Yahoo! with Yahoo! is -- a -- to bargain.
You know whether or not they'll be able to extract this -- acting me.
I'm that they are looking to extract whether or not it was a cynical move just prior to. The FaceBook IPO -- mean again we can speculate as to motive.
-- anything of the -- Yahoo!'s patent suit against FaceBook.
-- was fascinate and they really did there I don't know what -- and someone who managed to commit Scott Thompson it was a good idea.
And add edit as it is timing -- they could under their partnership with FaceBook you know here's a there's a company can really help -- it has helped Yahoo! recently.
With a lot of this stuff they've been doing Adam with that with integration is that really -- --
At Yahoo! doesn't have a social strategy -- strategies FaceBook has been FaceBook.
So I don't think you kick a partner in the -- quite like that at -- time that is particularly inopportune right before IPO.
And you know when it happened I was targets and relatively -- but the Yahoo! and its base that is.
Really it -- back and they only know meanwhile -- -- that they're gonna get our act and that's that they did this week they have their own Ross and I think we'll drag it out as long as they can't.
I was managed to drag this thing out that's --
They can be surprised that that FaceBook.
Slammed back at them I mean this is the way this dances danced.
You know one that says that company and -- -- --
His -- and it's someone there and I -- you know this this guy who rents space that doesn't mind being sued there was absolutely about him being sued in it won an Oscar.
Like you might notice this guy doesn't mind there are a little bit litigation and use from the film -- don't -- I don't care is at FaceBook in that regard.
But one thing it's done it's it's made --
I'm but it's helped some competing companies hammer put 125 K 25000 dollar bounty -- to get engineers coming from Yahoo! as well.
Interesting is that it's it where's where's it gonna go and I think.
It's really hard to make FaceBook as victim and believe me -- -- to make FaceBook look this good it is really typical thing to do.
About Yahoo! victim of their own success -- victim of their own user base of all the time of the water under the bridge -- the Internet can Yahoo! rise again.
In 1969 Mets on the world championship by you know never seen effort is Smart people.
On you know they made mistakes but you know you can cry overall for the mistakes and not get to anywhere.
If they get people in -- -- Thompson shows is his -- -- is good -- he apparently thinks he's at the board thinks he is.
He comes up with the strategic plan takes the hard decisions yadda yadda yadda --
Sure I mean does it just a ton of this course there -- ton of this but you know -- tough business.
-- -- absolutely it's a fantastic brand.
And it -- here in Silicon Valley it seems like you know that it -- the image -- that you know crazy old man shaking -- is that the Internet.
And but it's not it's a great brand globally a lot of people use it there's a -- anything -- that many users.
Can be turned into something valuable as far as I can tell it -- still in Great Britain.
This is not AOL here this is not.
You know I think about it while still hanging around Adam you know and it's got a whole bunch of problems similar -- on similar -- on different.
Ready worldwide it says it it's a wonderful -- it's got a lot of users who are very happy with -- services.
Wonderful employees I mean probably Yahoo! has -- a crisis of leadership leaders matter.
And the problem is you Yahoo!'s employees have not been well served by -- --
At and they deserve better leaders consider some fantastic people who work there and I at you know one of the reasons I write about so much -- the thing.
One I think it's offensive to shareholders that they've been doing into and -- it's -- to -- really good employees.
It's so -- on that note.
Kara swisher I'd like to thank you for your time. This is the eight codes that -- better editor of all things.
After reaching and you need to -- that's a great site. And also you do this fantastic -- conference the coming right up Tom Austin conference I'll see you there thank you very much Charlie Cooper.
-- at at CNET news thanks for coming in.
Nasty things are producing we'll -- -- next time and reporters' roundtable.
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