Yahoo's Stock Has Improved, But What About Its Direction?

Sure, we've all taken note of how Yahoo is down, but is the company really that bad off? Rachel Rosmarin over at Forbes raised an important point today -- even though the popular web portal has been taking a beating in the court of public opinion, the stock market has been much more forgiving in the long run. Whether or not that warrants a success for the company's direction is yet to be seen, however.

Yahoo's CFO, Blake Jorgensen illustrated this relationship best during a Q&A session on the company blog:

I think a key misconception is underestimating the value of the Yahoo!
franchise. Wall Street places an unfortunate emphasis on the short-term and thus on some of our competitors' successes and they underestimate the power of the Yahoo! platform, what we've built and what we can do with it. Our job is to manage the business for shareholder value creation, and we need to develop and implement strategies that leverage the power of our franchise.

The value in our business is driven by growth and we need to continue to find ways to drive growth in our business in a consistent, sustainable way. While the underlying costs are important and the margins are important, at the end of the day, we have to focus on balancing growth and profitability.

In many ways, Jorgensen is right. As we've opined in the past, Yahoo is undervalued for a number of reasons. However, the clock is still ticking. Yang and Decker have done a decent job of keeping the operation afloat, but PR fumbles like the underwhelming Yahoo For Teachers reveal at TechCrunch40 hint at a possible lack of direction for the company.

Furthermore, the potential comeback that the market and shareholders are holding out for may prove to have a shelf life as rivals like Google and Microsoft continue to jockey for position in both the social networking and search spaces. Yahoo's own potential and its recent slew of ad acquisitions may be enough to keep the stock prices from lagging, but it's going to take more than that for the company (and its executive panel) to take the lead.