Summary
Yahoo! has many obstacles in front of it in the near future - grow search business, find a social networking platform, build on sucess of Yahoo! Answers. But what anyone needs to see, anyone intereste in shelling out billions for Yahoo!, is that there is a core customer base that they need to retain by improving on the things that drew them in in the first place.
Analysis
I've been believer in Yahoo! as company that could outmaneuver the competition by delivering the best web services to customers. Yahoo! has had the best free mail system for years, it's fantasy games are hugely successful, and Yahoo! has had a strong relationship with Entertainment (built from the likes of Semel, Moloshik, and others).
Now those names are gone, Yahoo! sits at a crossroads. How do they even find a way to grow? For me Entertainment on the web is fractured. Facebook and MySpace compete with Youtube to compete for ad dollars they steal from Yahoo!, MSN, and others who house Entertainment. It all about the entertainment value of the sites. Right now, Yahoo! has lost its edge - its touch - with high traffic web users. Why? It just doesn't have the same entertainment value to users as it did. Email and Chat Rooms used to be the place for "it crowds" to socialize. Then MySpace made the experience more 3 dimensional. Facebook took it to a different demo, and then Youtube came along and added a 4th dimension: video sharing.
The Yahoo! experience is exactly the same as it was 5 years ago. For me Yahoo! has one chance to grow again. Build out the entertainment on the site. What does that mean? Tie up licenses to produce large scale wholly owened, high end pieces of entertainment. Do what the networks feared 5 years ago. Become a tru media channel - intermingled with all of the services people need on the web. Strike the deal with the NFL to stream games after they air on the network. Strike a deal with Bruckheimer or Speilberg or Silver to produce high end entertainment - online shows or interactive stories. Something desperately needs to be done to make the Yahoo! experience an entertaining one.
Until then, I wouldn't even consider buying it.
