Yahoo Shareholders Could Have Done a Lot Worse

Yahoo! Inc. is selling its operating business to Verizon for $4.83 billion. For a company that investors once valued at almost $115 billion, that's quite a comedown. It is not exactly the unmitigated disaster that many of the post mortems being written and spoken these days make it out to be, though. For one thing, that $115 billion valuation, achieved near the peak of the dot-com bubble in early 2000, was ridiculous. For another, when a company's business model stops working because the world changes around it, as happened to Yahoo about a decade ago, it's extremely hard to turn things around. And while Yahoo didn't turn things around, it's been far from a total loss.

First, a little history. When Stanford graduate students Jerry Yang and David Filo dubbed their internet directory Yet Another Hierarchical Officious Oracle (Yahoo for short) in 1994, they were kind of kidding, but kind of not. They really had built a hierarchically organized guide to what was available on the nascent World Wide Web, an online successor to the Yellow Pages and all the other printed directories, guidebooks and coming-events listings that the world had been producing for centuries. As Yahoo grew, it took on other tasks with analog precursors -- delivering news and sports broadcasts, for example -- and made money by running advertisements alongside its content.