SAN FRANCISCO -- Silicon Valley entrepreneur Sramana Mitra captured a common sentiment in the title of a blog post last week: "Yahoo, Please Put Up a Fight."
As its growth slows, Yahoo Inc. has taken steps to reorganize its management structure, narrow its focus and jettison some underperforming businesses. But it's still being outmatched in search advertising dollars by Google Inc. and in user growth by social networks such as Facebook Inc., which are rapidly gaining members and advertisers.
Observers expect to see evidence of a widening gap between Google and Yahoo this week, when the two companies report fourth-quarter financial results.
It seems everyone - former employees, industry analysts, disgruntled investors - has an opinion about what Yahoo should do: lay off 20 percent of its work force, flee the search advertising business, even put itself on the auction block.
Mitra and many others in Silicon Valley are rooting for Yahoo to roar back and capitalize on its status as the Web's most popular destination, if for no other reason than to keep Google in check. But, she said, she's not optimistic.
"Yahoo has a great opportunity still because it has tremendous traffic and a tremendous brand," said Mitra, who posted her analysis on the popular technology blog GigaOM. "But it can't figure out what it wants to be when it grows up."
A clear vision that plays to the Sunnyvale, Calif.-based company's fundamental strengths is what investors want from co-founder Jerry Yang, who replaced Terry Semel as chief executive over the summer. But instead of defining a bold road map, Yang offered broad strokes: Yahoo would aim to become the starting point for Internet users and a must buy for advertisers. It would also open up its technology to outside developers and publishers so it could dazzle consumers with more nifty features.
It was a start, but not enough to placate Wall Street. The investment Web site Motley Fool recently named Yahoo the "Worst Stock for 2008," predicting this could be the year it's overtaken by Google as the Web's most popular destination. Analysts have calculated that the sum of Yahoo's parts - in particular its investments in Asian Internet companies - is worth more than its current market value.
"Jerry Yang came in this summer with a strong overture for change, and we haven't seen much of that yet," American Technology Research analyst Rob Sanderson said.
