This could be the only way to save Yahoo

Almost four years into Marissa Mayer’s run as CEO of Yahoo, things are not looking so good.

She’s losing her top executives. 15% of Yahoo’s staff is reportedly bolting. Revenue continues to fall. Profits are relatively small. And the stock is collapsing.

There are no killer products that appear poised to break out and save Yahoo. Even more worrisome, Yahoo’s investment in original content looks like a flop. It took a $US42 million write down on “Community,” a show it picked up from NBC.

That means Yahoo is neither a product company, nor a media company. It’s just lost, trying to find its way.

On the company’s most recent earnings call, Mayer promised to narrow the company’s focus. That is unlikely to be enough to save the company, says Eric Jackson of Ader Investment Management.

I spoke with Jackson for a weekly podcast I do on the tech industry. Jackson has been a long time Yahoo shareholder. He is one of the most impassioned people when it comes to Yahoo. He’s a vocal critic of Mayer. He thinks she’s the wrong person to be running Yahoo.

While a lot of people are ready to throw in the towel on Yahoo and manage it down, milking it for what it’s worth, Jackson still think there’s potential for success at Yahoo. And he has a plan:

  • First, get rid of Mayer.
  • They need to be a lot smaller in terms of headcount. They have 12,000. Twitter had 3,600 and they did a reduction. Yahoo should be smaller than Twitter.
  • He thinks they should focus on the main engines that make money.
  • They should focus on Yahoo Sports, Yahoo Finance, and grow traffic.
  • He also thinks there is still an opportunity for internet-based video, despite the failure of “Community.”

Listen to our full conversation below.

You can subscribe to the podcast in iTunes here. Or just look for it in your favourite podcast app under “Jay and Farhad”. Here’s an RSS link to the show. We use SoundCloud as a host, so you can listen to the show over there, too.

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