Too Bad Yang Doesn't Have the Guts To Just Split Yahoo Into Three Companies and Be Done With It

Yahoo should just break itself up instead. This is a company that's had no direction since Semel stupidly decided it wasn't a tech company but should copy media company business models from last century.

And today Softee walks away from the Yahoo deal. I'd expected this deal to get done, as I figured Softee would raise its bid. Which they did. But Yang et al, the same geniuses who can't seem to figure out what business they're in want to keep the company going in its present direction. Uh, what direction again?. Media content ownership company? Search company? Ad network company? Whatever you say, Jerry.

I mean, remember when Yahoo, after missing like 72 quarters in a row or something a couple years ago promised a revolution with their Panama upgrade? What a joke that turned out that to be.

Now we read in the papers that Yang felt "emboldened" because some ad-serving technology tests with Google didn't suck?

Throughout 2005 and 2006, as I held a large Google position in my fund, I often wrote about Yahoo as a short and sometimes paired that position with a Yahoo short position. It was usually a good trade as Yahoo fell consistently and Google rose consistently. I wouldn't short Yahoo any more, as I do think there's enough value in that brand and traffic and content that the stock can work higher from here.

Which brings us back to the idea of just breaking this company up. How about one split off is a media content company, with all the writers and video programs and other content ventures the company has stupidly hurt its credibility as a search engine with for all these years. See, if Yahoo Content sold out to News Corp (full disclosure: NWS owns my career and soul and all that), they could combine Yahoo Finance and tech and so much more under Dow Jones/WSJ and the music/social networking content could go to Myspace, etc.

Yahoo could spin off its ad-serving company, which about 20 different companies, from Microsoft to some old-school ad company might go after.

And then Yahoo could go back to being a search engine. One that doesn't try to control your actions by keeping you surfing on their own property and reading their own content as much as they possibly can. One that respects the idea that its users want to find the most relevant, germane information/content/video/story etc when they type something into a search box. Not a search company that strives to get me to watch one of my old friend, Aaron Task's, videos -- much as he's still my boy and I'll always have his back as he had mine in a pick up game of hoops a few years ago when I got tackled on a breakaway dunk -- simply because they own the rights to his content and they'll get paid if I do watch him.

Conflicts of interest don't work in the search world, as I've long argued as a reason to stick with Google since they do "get" this logic. (YouTube's an issue and I think a strategic mistake for Google because they now have a vested interest in making me go to YouTube rather than some other video-site...)

At any rate, let's summarize the trading ideas here. The MSFT calls I wrote about last week have mostly about doubled in price or more as the stock has run from $28 to nearly $30. I'd sell half which means you're now playing with the house's money (don't let the term fool you, the house's money matters every bit your P&L as any other money does, so don't think it's "free" money). I'd let the other half of the calls ride for now.

And I'd still stick with Google, but would want to have trimmed that position recently. And Yahoo? Eh, just stay away from those idiots.

Question: Do You Yahoo?

Answer: No.