Before Marissa Mayer came in as CEO of Yahoo, the company’s annual EBITDA (earnings before interest, taxes, etc.) was $1.5 billion, as of 2011. For this year, Bloomberg estimates Yahoo will produce $1.1 billion in EBITDA, a roughly 30% drop in profitability since Mayer took over. In the same time frame, Yahoo’s revenues have dropped 12%, from $5 billion to an expected $4.4 billion. This, as Facebook tripled its revenues and Google increased its top line 60%.
|Marissa Mayer (source: AP)|
Jackson sees no alternative but a huge layoff. Given that Yahoo (with one third the revenue of Facebook) employs more people than Facebook, it's hard to disagree with Jackson's analysis. He notes:
Of course, I have long argued that Yahoo’s core business is obscenely over-staffed. Not just a little, but a lot. I agree with Marc Andreessen's advice to Marissa Mayer back in 2012 that she should immediately let go of 10,000 people. Although Yahoo reports in their 10-K that they have 12,500 “full time and fixed term contractors,” they never state how many “variable term contractors” they employ. Yahoo has played this game long before Mayer showed up as CEO, but she has carried on the tradition with a vengeance.Yahoo's core problem, of course, is that it doesn't have a core business. It's a crazy-quilt of search, news, apps, e-mail, and social nonsense, without a mission statement. It's the new AOL (which is why the two companies should merge). Maybe AOL, which has grown its top line 3 out of the last 4 quarters without resorting to bizarre one-off patent deals, can teach Yahoo a thing or two about running a business.
Just for fun, I ran a Google Trends search on Yahoo, Twitter, and Instagram. The trend lines show Yahoo and Twitter peaking in 2009 and 2013, while Instagram (owned by Facebook) is uptrending nicely.
Personally, I look for YHOO to go to $38 and I'd be a strong seller of it right here, right now, based on the information in Jackson's excellent Forbes.com piece and Mayer's track record of abject incompetence.
I've made some improvements to my Twitter timeline-scraping code and can now thank even more people for retweeting me. The following list (of people who retweeted me yesterday) might still not be 100% complete, but it's more complete than it would have been with my old code. (You should follow the folks shown below. They retweet! Click their pictures; the pics are live links.)
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