Daily Debrief: Are the digerati missing the big story at Yahoo? Video

Daily Debrief: Are the digerati missing the big story at Yahoo? Video Transcript

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>> Ever since stepping out of his Bat Cave for a one-on-one interview at the Web 2.0 conference, Jerry Yang of Yahoo has been taking a beating in the press. But are the digerati missing the big story. Welcome to the CNET News Daily Debrief. I'm Charlie Cooper here with my colleague Steven Shanklin [Assumed spelling]. And Steven, I want to take the contrary point of view here. Much of the chatter has been pretty negative, especially since the Google deal fell apart. What is the conventional wisdom missing?

>> Well, I would say that certainly the conventional wisdom has it right that Yahoo has a lot of problems on its plate, in terms of growth, in terms of profitability. But I think it is overlooking to a certain extent some of the actual efforts the company is making to reform itself. The --

>> Specifically?

>> There are a few areas. They have a big advertising platform overhaul that seems to have some interest. They actually had a relatively bright spot with their search advertising in the third quarter, and they are doing some real work to make their content properties, mail, Yahoo.com web page, a bunch of other pieces of Yahoo, actually more compelling for users, and more compelling for advertisers as a result. So they're actually doing some real work there. The big problem with that is that none of that is going pay off in the next couple of weeks. It's all going to take a long time to turn into something real.

>> So short term, they're getting hammered in the market as are most stocks. Long term, the changes that they're putting into effect will have, presumably, a beneficial outcome.

>> Yeah, they have a big audience, and certainly that audience isn't going to vanish overnight, even if the company is suffering. So advertisers will continue to take Yahoo seriously. They don't have the profitability that Google has, for sure.

>> Who does?

>> Yeah. But when you look at a downturn, I think Yahoo can say with a certain amount of creditability that it's going to remain a player, even during a downturn. Certainly, a lot of the little web 2.0 start ups are going to be hit a lot harder by it. Small ad networks or little small social networking sites. Yahoo has 500 million users, or so, you know, people who come by. That's a lot of traffic. So people are going to be interested in Yahoo. Advertisers, third party developers, things like that. So they certainly have -- they'll certainly be a real force, even during a downturn.

>> Now, impossible to look inside the board room, whether or not there is a change at the top. How much is the company still bound up with Jerry Yang? If he should go would it make that much of a difference?

>> Hard to say. I think that Jerry Yang still clearly has a lot of clout on the board, and at the upper management levels. I mean, he survived a pretty gruesome year for the company with, you know, not fantastic financial results and you know, people are still very angry about the Microsoft acquisition saga, which a lot of people thought that was going to happen. And they were pretty close. Yahoo held out for a little bit more money and it all fell apart. Now in retrospect that looks like the best deal Yahoo shareholders could have gotten. So -- but you know, Jerry Yang has a lot of clout inside the company still, it appears, even though he's getting a lot of criticism from outside the company. If he were to leave I think a lot of the reforms the company has put into effect are well on their way, so I don't think the company would fall apart without him.

>> So if Yahoo's plan is to rewire itself reach fruition, as we look out over the horizon, how about that future Yahoo look different from today's Yahoo.

>> So what would happen is it would have more users, and the users would be more active. And therefore there would be a lot more places will advertisers could show ads. In addition, the advertising would be more closely targeted toward people where, you know, people who would -- want to see those ads. So the advertisers would get to the markets they want to reach better, and advertisers would be able to measure the effectiveness of their ads more easily. And they'd be able to place them more easily. So it would be easier for advertisers and there would be more stuff available for users to do on the site. So for example, if you like something on a Yahoo site you can say something about it and, well, I'm your pal. So I would notice that Charlie Cooper just said something nice about something, because we're all on this, you know, this Yahoo network. It's sort of adding a social component to how people use Yahoo. So it would be more users, more engagement for the users that are there, and more advertising, and more precision and -- for the advertisers.

>> And presumably, more value attributed to the stock. But of course everything is predicated upon the market meltdown -- or whatever you want to call it -- stabilizing.

>> Yes.

>> Thanks, Steve.

>> Yep.

>> On behalf of CNET News, I'm Charlie Cooper.