Yahoo axes 50 'non-core' products: What's next?

Yahoo will cut around 50 of its non-core products as part of efforts to refocus the company on "core" services. What the company needs is direction, execution strategy, and luck.
Written by Zack Whittaker, Contributor

Yahoo's chief executive Scott Thompson said during the company's Q1 earnings that around 50 products under the company's portfolio would be chopped from its offerings.

During the call, he said Yahoo will shut down or begin transitioning "roughly 50 properties that don't contribute meaningfully to engagement of revenue," as the company continues to scrimp the cents and pennies as it aims to turnaround the ailing business.

"Each of our products and services may individually generate more engagement than most start-ups or even mid-sized companies in certain markets," he said, "but that does not mean that we should continue to do everything we currently do," according to the investor's conference call transcript by Seeking Alpha.

Thompson did not say which products would be axed, but noted that Yahoo News, Finance, Sports, Entertainment, and crucially, Yahoo Mail were safe.


"How would we build Yahoo from the ground up if we were building it from scratch today?" he asked. One thing is clear. By cutting the unnamed products and services --- whatever they may be, as Thompson did not elaborate --- the company is trying to head back to its glory days of being a portal giant.

With Yahoo's falling search market share, ailing profits, and struggling momentum in the face of competitors, Yahoo only needs to succeed in one thing: delivery. Yahoo talks the talk, but can it walk the walk once more?

Execution and delivery

Thompson noted key "execution issues", and noted how the plans outlined in the past few weeks are the "first steps in executing on our plans to get back to our core businesses, execute and move faster." Clearly making something happen in Yahoo is what Thompson wants, and what the company needs.

Presiding over his first full-quarter in the boss' chair, CNET's Charles Cooper reported that Yahoo's revenue cleared the revenue bar by a mere 1 percent increase over the first-quarter last year. It comes in the same month that Thompson announced roughly 15 percent of Yahoo's workforce will be issued pink-slips as the company attempts to cut down on costs.

The chief executive wants to "refocus Yahoo on its core business", notably advertising. Beyond that, he noted the aforementioned services as key to Yahoo's future success. He noted what Yahoo's core business was:

"We're clearly defining our core media connections and commerce businesses, including News, Finance, Sports, Entertainment, Mail and a handful of others. Those properties that generate the majority of our engagement and revenue."

Outside of that 'core', amongst other things, Yahoo will be "moving engineers into our commerce businesses to put them closer to our user and dedicating some of our best and brightest Yahoo's to meaningful innovation in those core businesses." Also noted in Thompson's strategic initiatives was to make its platforms and technologies more flexible and scalable --- presumably its advertising platform --- along with leveraging the company's vast amounts of customer and user data.

On the search front, Thompson said the search alliance with Microsoft was "not yet delivering" the revenue results that had been expected. While Yahoo cannot renege on its partnership, nor would it be a wise idea to bail out at this stage, it reiterates the fact that Yahoo cannot rely on others to bail itself out.

What's next?

It seems there is one and only one direct path for Yahoo to take. Cut out the product hyperbole, focus its efforts on 'core' products that users want, need and rely on, customise content based on cookies and user preferences, and leverage its advertising platforms to direct ads at those preferences. Users get served with useful content they want, while Yahoo generates revenue from ads it directs and targets users with precision.

While it saves money through job cuts and investing in research and development to further fine-tune its advertising platform, it becomes a global powerhouse in scalable and flexible advertising, and revives itself as a powerful Web company.

The killer question to which Thompson may know, but was coy in his answer:

"Our goal is to have the number-one properties in our core businesses in every way our users choose to interact with us, on the PC, through tablets, on their phones or whatever comes next."

Yahoo's aim does not seem to be changing the world directly. It had its place on the Web, and the Yahoo name is still held in a high regard for many. But it seems to want to be an open company for its users to find, as well as it finding them through advertising.

Whatever Yahoo may have thrown at it, its model is now to adjust and adapt as best it can to whatever the industry throws at it. With ever-changing technologies and evolving platforms, if its core business products hold up, there's no reason why Yahoo can't stick around for another near-20 years.

Image credit: Yahoo/CNET.


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