Make Yahoo Sticky

If my company were producing $353,000 in revenue for each employee, I'd hire more.

I'm not Yahoo (YHOO).

CEO Scott Thompson looks at that figure only in comparison with Google (GOOG) and Facebook (FB), so he's cutting 14% of all employees in the first of what AllThingsD Kara Swisher breathlessly hopes will be "the first move of a larger purge to come." (It's easy to be perky about layoffs until one happens to you.)

You'd think from all this that if Thompson had no employees, he'd have infinite revenue.

The last time I wrote about Yahoo, in February, I suggested that what they most need is a growth strategy, something that connects the company more closely to Softbank (SFTBY.PK) of Japan and Alibaba (ALBCF.PK) of China, which it bought into a decade ago, when they were cheap.

They still need a growth strategy.

What Thompson has done, with these latest layoffs, is make it impossible to find such a growth strategy. If you didn't believe me in December believe me now - sell this dog.

Layoffs on this scale do beg the question asked by one analyst - "why any employee that is any good would stay at this point." After all, Thompson doesn't value employees. He only values strategy, as in the Boston Consulting Group, which is apparently managing the latest strategic turn. (Or as Will Ferrell once called it, "strate-gery.")

Consultants are great, and they're useful. But they are good for implementing visions, not creating them. If you don't have a vision a consultant can't help you. They are good at arranging things so your ideas work, not at coming up with the raw material of business growth. If they were good at that they'd be running their own companies, not yours.

So Scott Thompson hires consultants, fires a bunch of people who were making money for his company, sinks the morale of all the rest, and expects us to buy his stock? Who does he think he is, Mitt Romney?

(Sorry, couldn't resist that one. But now that I've got your attention ...)

Yahoo actually has some good assets. It has some decent radio assets, some good newsmen work there, and one thing it has never done with those assets is build anything like a community with them.

Compare the interactivity of this page with this one.

Note the difference. Note that Yahoo invites you to read while its rival invites you to stay and have your own say, then read what others have to say. Which page will someone spend more time on, see more ads on?

So I will close by offering Mr. Thompson something I've been saying for 15 years now, practically since the Web was spun. That IN in the word Internet? It stands for interactive. Either make Yahoo sticky or sell it to someone who will.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.