Reviving Yahoo! - Strategies that Turned Around the Leading Internet Portal|Business Strategy|Case Study|Case Studies

Reviving Yahoo! - Strategies that Turned Around the Leading Internet Portal

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Case Details:

Case Code : BSTR064
Case Length : 13 Pages
Period : 2001 - 2003
Organization : Yahoo
Pub Date : 2003
Teaching Note :Not Available
Countries : Japan
Industry : IT

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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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Introducing More Subscription Based Services

In order to bring Yahoo back into profits, Semel believed that the company must increase the number of paid services as well as the number of paying subscribers base.

However, he was taken aback when it was brought to his notice that the company did not possess the technology to handle increased demand for premium services such as online personals. During his initial months in Yahoo, Semel focused on putting technology in place so that the company would offer premium services. Semel then took concrete steps to diversify Yahoo's revenue stream by building a portfolio of new premium consumer services including online personals, e-mail forwarding and Internet access to its customers. The company also charged for certain consumer services it earlier provided free. For instance, Yahoo's subscribers were asked to pay money for downloading digital music, playing online games, participating in matchmaking services, job listings and value-added e-mail services offering extra storage capacity...

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Acquisitions and Partnerships

One of the major problems with Yahoo was that it did not own most of the content posted on its site. To tackle this problem, Semel felt that Yahoo should enter into long-term content and advertising deals with diversified media companies.

He also felt that by acquiring smaller content providers he could strengthen Yahoo's premium services portfolio. With a vast experience in movie business, Semel used his deal-making skills to enter into major acquisition and partnership deals. According to analysts, under Semel, the most profitable partnership deal that Yahoo entered into was with Overture Services (Overture), an Internet advertising provider, in November 2001. The deal involved a revenue-sharing agreement with Overture, which provided its paid search services to Yahoo. The partnership was highly successful for Yahoo as it generated $130 million in revenues in the fiscal 2002, representing 14% of Yahoo's total revenues...

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The Future

Semel was able to turn Yahoo around by successfully executing the focused strategy of pursuing those projects which had a high chance of achieving success while eliminating doubtful ones, reducing costs, laying emphasis on subscription-based services and entering into profitable partnerships. According to BusinessWeek estimates, the new initiatives introduced under Semel were expected to generate 50 percent of Yahoo's revenues in fiscal 2003...


Exhibit I: Yahoo's Consolidated Statements of Operations
Exhibit II: Yahoo's Stock Price Chart (1998-2003)
Exhibit III: Yahoo's Quarterly Financial Performance
Exhibit IV: Yahoo's Content and Services
Exhibit V: Terry S.Semel Career Highlights

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