This is not a stock-picking blog, and I have never made investment recommendations here. I can’t help wondering aloud, however, about Yahoo’s decision to shut down for the holiday break. In an industry segment that plows ahead so consistently and with such vehemence, a decision to cut costs across the organization could be a more negative long-term statement than may broadly be recognized around the newswires these days.
While Yahoo! has determined that there is nothing at all of substance that can be accomplished in the last week of December, and so has given its staff involuntary and unpaid leave of absence, why have none of its competitors done the same? A dollar saved, a profit margin increased, are surely not goals monopolized by Yahoo!. But Google, for example, is busy redesigning its search page – yes, even the market leader without a close second in online search finds things to do during the slow time – and Apple is working on a cloud alternative for its business productivity suite, which is entirely remote from Apple’s core offering.
In short, whether in a company’s core or at its outskirts, whether a means to improve on an already distant leadership position, or just to make a dent in an area in which it trails, the industry competitor who has created the most value for its shareholders has been relentless and has not thought much about seasonal variations. Those who have done well by their shareholders, have usually done so with constant resourcefulness and inspiration. Contrariwise, those who have done the opposite, may have been more (or I should say, less) than mere victims of unfortunate circumstance.
Yahoo’s decision to trim cost in such a non-strategic way as taking a week off indiscriminately, is essentially a statement to its shareholders and other constituencies that there is no conceivable return opportunity from a dollar of capital invested at this time. It would thus be better for all involved if the company banked that dollar at almost zero interest. This is what the company is saying, and it’s a lovely shareholder message, no? It is a lovely employee message also, for that matter, to be told to stay home and not bother. And if there is no productive way for Yahoo! to work at the end of December, why should we see this outlook improving in January? Just asking…
Anyway, as this isn’t a stock-picking blog, (which can’t be emphasized enough), the purpose of this article is not to recommend any particular trade vis-à-vis YHOO or GOOG or AAPL. Rather, it is an illustration of a particular and unique situation, the case of which can be studied by entrepreneurs and other business builders and capital seekers, as we are all prone to look inward sometimes. The Yahoo! example can serve us as a reminder that our actions, and more precisely our inactions, can contain symbolic meanings to “outsiders” and “insiders” alike. Such potential messages should always be well considered, because the interpretation is not necessarily unfair.
