Yahoo Under Terry Semel: Towards a New Revenue Model

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Case Details:

Case Code : BSTA092
Case Length : 14 Pages
Period : 2003
Organization : Yahoo Inc.
Pub Date : 2004
Teaching Note :Not Available
Countries : Global
Industry : Computer, Internet, Information Technology

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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The Slowdown

Yahoo had traditionally been heavily dependent on advertising for the bulk of its revenues. In 1999, 90% of its revenues came from advertising. The company was accustomed to exercising high bargaining power. Many analysts criticized the company for its rigid attitude and a laid back approach to striking new advertising deals. Mallet commented : "We ran Yahoo to optimize market share. I make no apologies for that." "If there was a company that didn't get it [Internet advertising], we moved on very quickly." In early 2000, Yahoo got an opportunity to buy Time Warner (later acquired by its rival America Online Inc. (AOL) for $85 billion in stock) and strengthen its content...

Semel's Initiatives

Semel had built Warner Bros. into a movie industry heavy weight through the 1980s and 1990s. Yahoo's revenues were down by 42% in the first quarter of 2001, to $180 million. Yahoo's market cap stood at $11 billion, down 92% from its high in early 2000. The company announced its first ever layoff of about 400 employees (300 hundred more were added later). Semel realized the need for a new revenue model. Gaining employee acceptance was also a challenge, since he was replacing the well-liked Koogle...

Future Outlook

Yahoo planned to drive paid services up to 50% of revenues by 2004. It planned to strengthen its search traffic and the job listing business along with personal and premium mail offerings. An enhanced email service would offer greater storage capacity. Yahoo's Broadcast Solutions planned to offer web casting and streaming media, to attract new business clients...


Exhibit I: Yahoo: Comparison of Organization Structure
Exhibit II: Yahoo: Classification of Revenue Streams
Exhibit III: Comparison of Search Engine Marketing Strategies
Exhibit IV: Yahoo: Share of Net Revenue
Exhibit V: Yahoo: Services


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