Yahoo’s Revenues Slump Amidst Increased Competition and Staff Turnover

by Matt Klassen on July 21, 2011

It was only a short four or five years ago that Yahoo seemed to be everywhere, a company on the bleeding edge of Internet-based success stories. But things seem so different now, despite the fact that Yahoo still remains America’s most popular web portal, as the Internet giant seems to be almost fading into obscurity right before our eyes.

To wit, Yahoo’s diminishing presence is beginning to have a direct impact on the company’s sales, as second quarter revenue reports failed to meet estimates, causing the company’s stock to a take a disconcerting dip.

But what’s to blame for Yahoo’s slumping stocks, its fading market presence, and its falling revenues? It turns out that there are no shortage of scapegoats in this story, it’s simply a matter of determining where the blame should really lie.

While its clearly far too early to roll out the doom and gloom end-of-days prophecies about Yahoo, there are some clear signs that the largest U.S. web portal may be entering the twilight of its existence. For many popular companies one of the first indicators that things may not be copacetic is the sudden departure of key staff, something that Yahoo has been experiencing in spades of late.

The company recently underwent a reshuffling process, changing up the key leadership core of its U.S. sales division. This shuffle, however, has had some deleterious consequences, as many of the company’s field staff and other key sales personnel have fled the company for the greener pastures of Yahoo’s key competitors. This lack of staff, according to Yahoo, is one of the key reasons for its lacklustre revenue results.

As Yahoo Chief Executive Carol Bartz explains, “We underestimated how much the changes would increase turnover,” meaning, simply enough, that the company didn’t have enough bodies to market its brand, to sell advertising space, and to generate revenue. As expected, the company has explained that with the right team in place, Yahoo’s future prospects are considerably brighter.

But staff reshuffling aside, the reality may be that Yahoo simply isn’t prepared to keep pace with its closest competitors, as both Google and Facebook boast longer user usage times than the web portal, a stat that is directly linked to advertising revenues. The bottom line seems to be that Facebook and Google are working hard to diversify their brands, branching out into tangential markets in an effort to spread their respective influence over the average web user, something that Yahoo is notably unable to do.

So where does Yahoo go from here? With its shares having already fallen 12 percent this year, its clear the company needs an aggressive strategy to hold its current user base, it needs more staff to sell advertising space, and it needs to demonstrate more versatility in an ever-changing market, otherwise things could go very wrong for this Internet powerhouse.

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Written by: Matt Klassen. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Facebook, or YouTube.

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