Mobile services

Marissa Mayer & the Terrible, Horrible Day

Yahoo has finally allowed that, yes, the company is willing to consider buyout offers, which many investors and even some board members have been clamoring for. Yahoo is still also evaluating the possibility of a "reverse spin" -- spinning out its operations in Japan. And sale or no sale, the company will pursue yet another strategic plan. (See Yahoo to Spin Off Web Business, Keep Alibaba)

Yahoo Inc. (Nasdaq: YHOO) CEO Marissa Mayer announced a plan that includes selling assets -- she mentioned patents and real estate -- which the company hopes could bring in as much as $1 billion in cash. Another provision of the plan is a layoff of up to 15% of Yahoo's workforce, or about 1,400 employees.

The company will double down on the set of businesses it refers to as "Mavens": mobile, video, native and social. That means dropping even more products and services that just aren't showing results. Mayer said those include Yahoo Smart TV and Yahoo games. TV has proven to be a dead end for the company; it killed Yahoo Screens a couple of weeks ago. (See Yahoo Shutters Yahoo Screen.)

The revelations came as Yahoo reported a quarterly loss of $4.43 billion. That loss was due mostly to a staggering $4.46 billion writedown of goodwill.

As if Mayer didn't have enough on her plate juggling a new strategy, a spinoff and a possible sale, Yahoo will have to fend off an ugly lawsuit over labor practices she put in place when she arrived at Yahoo in 2012.

Yahoo now rates its employees and ranks them against each other. Rating and ranking (also known as forced ranking, forced distribution, and there are other terms) is a practice beloved by Type A overachievers and considered toxic by just about everyone else. Intel Corp. (Nasdaq: INTC) has long employed the technique. Adobe, General Electric, and Microsoft are among the companies that have used it and abandoned it as counterproductive.

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The suit (find a copy of the document at The New York Times) was brought by Gregory Anderson, formerly a Yahoo editorial director. He alleges Yahoo management manipulated results to eliminate employees unfairly. There are stories that Intel manipulates its results too, but Intel has apparently never been challenged in court for doing so.

As for Yahoo's new strategic direction, the company is going to focus on just six markets: US, Canada, the UK, Germany, Hong Kong, and Taiwan. That will mean withdrawing from all other European countries and from Latin America. The company intends to shut down facilities in Dubai, Mexico City, Madrid, Buenos Aires and Milan by the end of the first quarter.

Mayer is in a miserable place. She accepted the unenviable task of turning around an organization that has assets other companies such as AT&T Inc. (NYSE: T) and Verizon Communications Inc. (NYSE: VZ) think might nicely augment their businesses, but so far she has not been able to forge those assets into a coherent standalone business for Yahoo.

Yahoo will keep pursuing a holy grail for companies that specialize in search and advertising: the creation of a digital assistant, a Siri or Cortana that can not only render appropriate responses to a query, but can perform tasks on users' behalf. It's the difference between having your smartphone identify the closest restaurant and having it make reservations and arrange a taxi to get you there. There are intermediate steps to get there, and Yahoo claims it is taking them. It refers to these capabilities variably as app-based search or "assistive" discovery.

"As part of Yahoo's efforts to move search toward a more contextual, anticipatory and assistive experience, the company made the first in a series of ongoing updates to the Yahoo Search app," the company reported. "For iOS in the U.S., the Yahoo Search app experience is now more actionable and guides users to the information they need whether it's from the Web or their inboxes. Logged in users can now see Web and email results in one place, as the app can now search across email, contacts and calendar to help them find things like package delivery notifications, hotel reservation details and upcoming events, while partnerships with companies like Yelp and OpenTable allow users to take action directly from the search results page."

There were a few slender rays of sunshine peeking through the clouds. Yahoo's Q4 2015 and fiscal-year revenue figures were both up slightly from the similar periods a year ago. There are some encouraging signs that the mobile thrust might pay off, assuming the company isn't obliged to just sell itself off before that happens.

— Brian Santo, Senior Editor, Components, T&M, Light Reading

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