Quoted: Is Yahoo too old to grow?

“Sometimes companies have to act their age.”

Aswath Damodaran, professor at NYU’s Stern School of Business, on the nearly 21-year-old Yahoo. A New York Times Magazine story explores CEO Marissa Mayer’s efforts to restore the Silicon Valley company to its former glory. But Damodaran suggests Yahoo should be content with what it has become — growth-challenged — that not all companies can follow Apple, which made an incredible comeback.

Writer Nicholas Carlson examines what he calls “Yahoo’s decline from a $128 billion company to one worth virtually nothing.” (Its market cap is about $46 billion, but a bulk of that value is attributable to its stake in Chinese Internet giant Alibaba.)

Carlson’s portrayal of Mayer, based on accounts from unnamed executives, isn’t pretty. She comes across as a habitually late micromanager whose efforts have yet to bear fruit two years into her reign. (One high-profile mistake was the hiring and quick firing of her COO.) Yahoo in October posted quarterly earnings that beat estimates, but analysts did not jump up and down. The expectations were low. Sales grew only 1 percent.

What’s next for Yahoo? The article details an investor push for the company to merge with AOL. Mayer has said her turnaround efforts — which include a strong push into mobile — will take time, but it’s unclear how much time she will be granted.

And so we come back to Apple: “We have created an incentive structure where CEOs want to be stars,” Damodaran told the magazine. “To be a star, you’ve got to be the next Steve Jobs — somebody who has actually grown a company to be a massive, large-market cap company.” But “it’s extremely dangerous at companies when you focus on the exception rather than the rule. For every Apple, there are a hundred companies that tried to do what Apple did and fell flat on their faces.”



Photo from Associated Press archives


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