Yahoo Campus

Yahoo CEO Marissa Mayer is in the hot seat, some investors are calling for her to step down, others want the company broken up and sold for parts, still others are concerned that the value of their investment is less than zero.

First and foremost, Yahoo is not worthless. Financial engineers will argue about how best to maximize shareholder value, but with its ~$5.5 billion of net cash, its 15 percent share of Alibaba (worth approximately $30 billion), its share of Yahoo Japan (worth approximately $8.6 billion) and about $1 billion of EBITDA from its core businesses (which some analysts estimate to have a value between $2.2 and $4 billion), Yahoo has a non-zero value. And, I can assure you, it will be unlocked in favor of the shareholders.

That said, Yahoo is in real trouble. Its board is reportedly losing patience with Ms. Mayer as Yahoo’s share price reflects the Street’s disillusionment with her leadership. And, to make matters worse, there are seemingly endless amounts of armchair quarterbacks who are armchair-quarterbacking Yahoo’s next move – from the pragmatic, “spin off the core business” to the conceptual “acquire eBay.”

But for all of the analysis and punditry, I’ve yet to hear anyone ask the most basic questions, “Does Yahoo have a right to exist in 2016?” “What problems does Yahoo solve?” “How does Yahoo create value for its users?” And, maybe most importantly, “What does Yahoo do better than any other company in the world?”

Is Yahoo a Media Company or a Tech Company?

These days, “Beleaguered Tech Giant” is how most writers refer to Yahoo. Of course, this is a misnomer. Yahoo doesn’t compete with Google or Microsoft or Amazon or Facebook; it competes with news organizations and IP-delivered video businesses. At best, it’s a media company with a world-class tech stack, but it’s not a tech company.

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