Yahoo made many mistakes before Microsoft bid

By Eric Auchard - Analysis

SAN FRANCISCO (Reuters) - Web pioneer Yahoo Inc's (YHOO.O: Quote, Profile, Research, Stock Buzz) recent history is a long series of missteps that leave it little room to maneuver in the face of an unsolicited $45 billion takeover bid from Microsoft (MSFT.O: Quote, Profile, Research, Stock Buzz).

Since its founding 14 years ago as the Web's first navigational guide, Yahoo has entered dozens of lines of business and become the online leader in everything from e-mail services to display advertising used by corporate marketers.

But many of its firsts have not panned out -- Yahoo was early among major companies to seize on the social network trend popularized by MySpace and Facebook, in which Web users share messages, photos and videos with select friends. But it remained too wedded to a decade-old idea of being a one-stop Web portal to embrace the new wave.

Promised changes, from new Web search advertising technology to do battle with rival Google Inc (GOOG.O: Quote, Profile, Research, Stock Buzz) to the hiring of Yahoo co-founder of Jerry Yang as CEO, have failed to yield big changes and Yahoo is cutting jobs while Google keeps hiring.

Yahoo is struggling with the legacy of former chief Terry Semel, who from 2001 to mid-2007 led its resurrection from the dot-com crash and diversified it successfully into advertising. But a push into entertainment was far less successful.

"Yahoo was backed into a corner because they passed up compelling acquisitions," RBC analyst Jordan Rohan said. "It had an opportunity to buy Google and didn't. It could have bought Facebook for less than a couple billion dollars and didn't," he said referring to two of Yahoo's biggest rivals.

Microsoft, which on Friday announced a potential $31 per share bid for Yahoo, says the company now has run out of time.

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