A Reuters headline proclaims today that
New Yahoo CEO lacks Web and deal-making chops." The story then goes on to note in paragraph 5 that "(Carol Bartz) is credited with increasing Autodesk's revenue from $285 million to $1.5 billion during her 14-year tenure, as well as diversifying its business. Bartz, 60, built the company by buying small and medium-sized businesses.
Accordingly, she quadrupled revenues through her "deal-making chops." You know, the ones the headline says she lacks.
Yahoo! is a company whose market value, at nearly $17 billion, would appear to be undervalued given the assets in its portfolio. With annual revenue of $7 billion it is valued at little more than twice sales, low for a tech company. For example Google is valued at nearly 5 times sales. Yahoo! has relatively little debt, and generates $500,000 in revenue per employee. GE generates $143,000 per employee, and Microsoft around $600,000.
Yahoo!'s HotJobs is equivalent to Monster, whose market cap is $1.2 billion. The dating site Match.com is worth at least $2 billion, and Yahoo! Personals is worth at least half that. Other than Bloomberg, whose terminals are $1,500 per month, I believe Yahoo! Finance leads the financial research space.
Yahoo!'s photo sharing site Flickr kills Googles Picasa. Yahoo! has just not been able to figure out a good way to monetize it yet. When they do, watch out. People spend way too much time on Flickr, myself included.
The list of Web properties in their portfolio goes on, and I haven't even brought up search, where Yahoo! is second to Google. In that market, second is not a bad place to be. Especially once Yahoo! gets its ad placement service easier to use. My point, obviously, is that Yahoo! is undervalued.
Pressure will be put on Ms. Bartz to quickly make a deal with Microsoft on search, given the scuttled deal under CEO Yang, who famously turned down around $40 billion for Yahoo!. But before she does so, she should take a look at MSFT's new pride and joy Songsmith, and ask herself if she really wants to be in business with a company who would, with a straight face, bring out such a software abortion. Do a search on "Songsmith and David Lee Roth" and you'll see what I mean.
What Yahoo! needs is a grown up to take a rational look at the company and its portfolio, and make intellectual as opposed to emotional decisions about its future. Yahoo! is a great company, but it is horribly unfocused. Autodesk was similarly challenged when Ms. Bartz took over, and she grew it by being tough and practical. Henry Blodget notes she interviewed a prospective Autodesk employee from her hospital bed the day after having a breast removed.
Every once in a while a great company awakens with the hiring of the right CEO at the right time. My bet is Yahoo! has done just that.
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