YAHOO Case Analysis
SWOT Analysis
Strengths:
1. Yahoo has become one of the leading computer programs on the World Wide Web.
2. Yahoo! is the second leading global Internet brand and one of the most trafficked Internet
destinations worldwide. (Marketing).
3. Yahoo!’s revenues from 2007 to 2008 increased by 3.4 percent to $7.2 billion (Marketing).
4. Also provides its advertising offerings and access to Internet users beyond Yahoo!
through its distribution network of third-party entities, who have integrated its advertising
offerings into their Web sites. (Production)
5. Yahoo!’s full-year 2008 revenues totaled a record $23.4 billion, exceeding 2007’s
performance, itself the former record of $21.2 billion, by $2.2 billion or 10.6 percent.
(Marketing)
6. Fourth-quarter revenues of $6.1 billion mark the first time the interactive (Internet)
advertising industry achieved, and surpassed, $6 billion in a single quarter. The
figures represent a $154 million or 2.6 percent increase from 2007’s fourth quarter,
which had revenues of $5.9 billion. (Marketing)
7. Yahoo ranked 2nd top of the most visited sites visited among the Top 25 Internet properties.
(Marketing).
8. It has more appurtenant products as compared to its competitors. (Production)
9. It has strong brand recognition and can be accessed easily by anyone. (Marketing)
10. International business presence. (Organization & Management)
Weaknesses:
1. Net income decreased by 35.7 percent to $424 million. (Finance).
2. Yahoo! posted a 78 percent first quarter 2009 profit decline. (Finance)
3. Reacted by eliminating another 675 jobs, or 5 percent of its workforce on top of 2,500 jobs
cut in 2008. (Human Resource).
4. Yahoo!’s revenues dropped 13 percent to $1.58 billion. (Marketing)
5. Yahoo!’s online advertising business is also deteriorating rapidly as the firm’s overall
revenue fell 13 percent in the second quarter of 2009 compared to the prior year.
(Marketing).
6. For that second quarter, aggressive cost cutting allowed Yahoo! to post a 7 percent
increase in profit up to $141.4 million, but the firm laid off another 700 employees to end
with 13,000 employees. (Human Resource).
7. In July 2009, Yahoo! closed its third video property, Maven Networks, based in Cambridge,
Massachusetts. (Production)
8. Yahoo! plans to close twenty video services, including its social network site Yahoo! 360
and its Web hosting service GeoCities. (Production).
9. Yahoo! lost 1 percent in rich media revenue, 1 percent in sponsorship, and 2 percent in
classified ads in 2008 as compared to 2007. (Marketing)
10. The organizational structure is confusing. (Organization and Management).
11. Fired five CEOs in five years
Opportunities:
1. Divestiture. Microsoft will acquire Yahoo!’s search engine and merging with Microsoft.
2. Market Penetration. Internet advertising continues to grow, albeit at a slower pace. This
trend confirms marketers’ increased recognition that consumers spend more and more of
their time online.
3. Product Development. As broadband prices fall, ISPs are pursuing new business strategies,
such as bundling Internet access with voice and video services.
4. Related Diversification. Explore mobile technology.
5. Market Development. Capture the international and emerging markets.
6. Differentiation. To remain competitive, Yahoo should adopt and initiate new projects. The
company should begin as a search engine and expand its offerings by including finance,
personals and hot Jobs and other activities.
Threats
1. Intense Competition. Competition with Google. During 2008, Google had 72 percent of
Internet traffic while Yahoo! only possessed 17 percent followed by MSN at 6 percent and
IACI at 4 percent.
2. Global Recession. Economic growth in the United States and around the world has slowed
amid crisis in the housing and credit markets.
3. High Commodity Prices. The prices of consumables, from fuel to food commodities, are
near all-time highs, yet the values of personal assets, like homes and property, have fallen
dramatically.
4. Unemployment. Add rising unemployment and problematic geopolitics to the mix, and we
have a difficult economic backdrop.
5. Uncertainties in the financial outlook related to Internet. In 2009, a number of Internet
content and advertising companies (including Bankrate Inc., Knot Inc., ValueClick Inc.,
WebMD Health Corp., and Yahoo! Inc.) reported disappointing financial results and
lowered their forward financial outlooks.
6. Deceleration in online spending. Google Inc. expressed economic-related caution in
conjunction with its second quarter results, and Internet media and market research firm
comScore Inc. expressed concerns about deceleration in online spending growth.
7. Technological Challenges. The industry, due to its low barrier entry—technical and
regulatory—makes the projection of its business viability for existing companies difficult.
8. Legal and regulatory hurdles. Due to changes in legislative requirements concerning
technology sharing, patent rights, and information security, future expenses and
profitability of the companies operating within this industry are harder to predict.
9. Challenging Internet Industry Innovations. Future innovations and shifts in technology
also make long-term strategies regarding the Internet and software services industry
difficult.
10. Negative Perception of the Community towards the Internet. The attitudes of consumer
towards online advertising may become more negative.