Sell Search Now
YHOO gave its investors a tremendous return (and if you bought YHOO on the day of the IPO you're still looking at a nearly 10X return, in fact if you bought $1000 worth of YHOO on the day it went public and $1000 worth of GOOG on the day they went public, your YHOO shares are still worth a lot more than your GOOG shares).
There was a time in the late 1990s when Yahoo! was the most respected brand on the internet. It built tremendous products. Its communications products, its finance products, its news products, its entertainment products (which I had something to do with) were industry leaders (many of them still are).
The one thing that YHOO never did well in house was search.
Search was outsourced to Alta Vista (~1997)
Search was outsourced to Inktomi (~1998-9)
Search was outsourced to Google. (~2001)
Search was not a core competence of YHOO. They were NEVER going to beat Google at search.
Earlier this year Microsoft tried to buy YHOO. That fell apart. Then Microsoft tried to buy YHOO's search business. That fell apart.
YHOO tried to fight back, but frankly Jerry is too nice (I knew Jerry quite well 10 years ago, he is very nice). YHOO has a ton of dead wood and Jer doesn't want to be the guy to fire folks, but that's what Y! needed.
Now MSFT has expressed interest in buying the search business again. Please, for the love of everything purple; please SELL SEARCH!. Let Google kick MSFT's ass in search not yours. Focus on verticals. Focus on mobile. Pocket MSFT's money for the search business and watch them fail.
Fight the battles you can win, not the battles you will lose.