What is Yahoo’s Fate?

The fate of Yahoo (NASDAQ:YHOO) remains uncertain and interim CEO Tim Morse is not providing anyone any clues to his intentions. Morse said on a third quarter conference call that the company values its interests in Yahoo Japan and Alibaba at roughly $20.4 billion, which is just over the market cap of all of Yahoo (NASDAQ:YHOO) — currently valued at $19.5 billion. The valuation is also just above the $20 billion that Alibaba Chairman Jack Ma has raised in cash in hopes of purchasing Yahoo (NASDAQ:YHOO).

“Morse declined to comment on Yahoo’s (NASDAQ:YHOO) ongoing effort to explore all its options, or provide a time frame for any results. He also refrained from talking about its search for a CEO to replace Carol Bartz, who was fired last month by the board,” per MarketWatch.

Mark Mahaney, a leading Internet stock analyst with Citigroup (NYSE:C) claims, “It’s very hard to see either of those companies [Yahoo and AOL (NYSE:AOL)] becoming sustainable growth companies again.”  The internet has changed quite a bit with Google (NASDAQ:GOOG) and Facebook reshaping the landscape.  Businessweek explains, “But unlike Google or Facebook, Yahoo and AOL earn revenues the old-fashioned way—by employing rafts of reporters and maintaining costly ad sales teams to make sure the articles and deals keep flowing. It’s a model with lots of competition.”  A perfect example of this was seen earlier in the month when Yahoo! joined hands with Walt Disney (NYSE:DIS) owned ABC to source the network’s news content – amongst other news, a “highly interactive” version of ABC’s Good Morning America program would appear on Yahoo’s internet portal.  Yahoo said that ABC would be the premier news provider on Yahoo News. The two organizations boast of a combined viewership of about a 100 million viewers.

Going forward Yahoo has its work cut out to maintain its number two position among the  US search engine market.  In September, Yahoo’s US market share declined from 16.3% to 15.5%.  Meanwhile, Google retained its top position with 65.3%.  AOL increased slightly from 1.3% to 1.5%.  Baidu (NASDAQ:BIDU), often referred to as the Chinese Google, is also looking to expand its internet empire by teaming up with Microsoft (NASDAQ:MSFT). No matter which path Yahoo (NASDAQ:YHOO) takes, the company will have to figure out a plan soon.

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