Valuing Yahoo in 2013 Harvard Case Solution & Analysis

Valuing Yahoo in 2013 Case Study Solution

Introduction:

Yahoo is one of the biggest internet companies that have ever formed, it has approximately 650 million users around the globe. The website was first developed by the young and enthusiastic electrical engineering students Jerry Yang and David Filo of Stanford University. Since its incorporation, the website grows at an exceptional rate and becomes as one of the most visited search engine shortly. The directors at that time were keen to expand the business and revenues of the organization, the directors pursue various strategies of organic and inorganic growth as well, after the successful IPO, and the company acquires many subsidies under its brand name which proves to be very beneficial for the organization.(Press, 2017)

The organization successfully capitalize the changing needs of the society and it also brings many diversification among its services. The dot-com boom remained as one of the best period for Yahoo and its share price reached to record $118.75 per share. After the explosion of dot-com bubble, Yahoo was one of the companies which survives in that difficult time.(Bennetts)

Problem Statement:

Despite the heavy profits which Yahoo generates in the years from 1997 to 2007, the company is facing difficult trading conditions with the share price reaches at its lowest level since its incorporation. The management is in severe stress and so does the shareholders because of the poor financial performance of Yahoo. The management had declined various acquisition offers from large companies, had the management approves the acquisition of Yahoo, the situation might be completely different. For their poor policies and strategies, the shareholders are considering to remove various directors. As some of the senior management is responsible for the disastrous performance of Yahoo, it can be justified that those directors should have to be removed from the board in order to restore the confidence of the shareholders. Furthermore, the management should have to seriously rethink their strategies regarding the mergers and acquisition and should have to critically evaluate the offer from the potential acquirer. The decline to acquisition bid from various biggest companies can be said as the biggest mistake by any company operating in the technology sector.(Caulfield, 2008)

SWOT Analysis:

Strength:

It can be said that Yahoo is one of the biggest search engine and internet company in the world and the number of users is also very high which can be consider as its one of the biggest strength, these huge number of customers plays an important role in generation of revenues. Furthermore, the high number of users also make the e-mail marketing attractive, Yahoo derives majority of the revenue from the e-mail marketing which is only possible due to high number of users of its services. Range of service offering is also more than many of its customers which is also consider as one of the main strength of the company. Currently the product portfolio of Yahoo includes messenger, maps, sports, finance and etc. In addition to this, the brand recognition is also very high among the general users which is also one of the unique strength of the company.(Hasseeb, 2015)

Valuing Yahoo in 2013 Harvard Case Solution & Analysis

 

 

Weaknesses:

The main weakness of Yahoo is might be its senior management, the senior management is responsible of the recent failure of the company to some extent because they fails to make the policies which maximize the wealth of shareholders. In addition to this, the Yahoo also fails to update their services as per the rapid changes in the technology. In addition to this the shrinking profit margin is also one of the biggest weakness of the company. The profit margins of the company are decreasing by a healthy rate which might reduce the pace of growth of the company, given the poor strategies of the management it is highly likely that the margins will further decrease. On the other hand the main deriving forces of the revenues are also failing continuously to contribute in the success of the organization...........................

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