Yahoo! is on the brink of reinvention, while analysts wait for news of layoffs and details on the hunt for a new chief executive.
With its advertising-based business model in trouble and an ongoing management shake-up, Yahoo faces a painful reinvention as it seeks to build new revenue streams and prove its staying power in a tough landscape for online media companies.
Wall Street will be listening closely when the Web portal makes its financial report on Wednesday. But analysts for now say they are more concerned with the company's long-term outlook and news about a replacement for outgoing chief executive Tim Koogle than whether it hits drastically reduced earnings and revenue forecasts. Many say they are primarily watching for a layoff announcement.
"I don't think they're going to [announce] a new chief executive, which in many ways would be the biggest news that people are looking for right now," said Jeffrey Fieler, an equity analyst at Bear Stearns. "They took away most of the suspense" for the first quarter.
Rise and fall
Yahoo's rise and fall has mirrored the fortunes of the Internet stock bubble, growing in a few years from startup to online media powerhouse with sales of more than US$1bn in 2000. In hindsight, analysts fault the company for becoming overly dependent on advertising - a weakness that became all too apparent when the bottom dropped out of the dot-com economy, wiping out many of its biggest customers.
The pullback has forced an industry-wide reassessment of early business models based on giving away content for free to attract "eyeballs" and ad dollars.
Yahoo is now seeking to diversify its business, developing for-pay services such as a portal creation business and signing up partners such as Sony Music Entertainment and Vivendi Universal's Universal Music Group to promote a planned subscription music offering dubbed Duet.
In its last earnings report, Yahoo said it drew about 85 percent of its revenues from advertising - a number that helped contribute to its tough quarter.
