You'll have to forgive Yahoo shareholders for holding their applause after the announcement that the company they keep and Microsoft have, at long last, reached a deal to share search revenue and technology.
You can see their response on Wall Street: The deal is a dud. It's pretty clear that the company that could once do no wrong in the eyes of investors now can do nothing right.
Wall Street wants one of two things from Yahoo: a deal to sell the company, or, in the absence of that, a clear story. And Yahoo has neither.
I don't mean to throw stones at Yahoo here. I've written before about my respect for Carol Bartz as a CEO. I think Yahoo! has the right leader. I also cop to using Yahoo Finance as my home page. They do stocks, sports, maps, and several other things very well. But they can't seem to please Wall Street, and many long-time Yahoo investors tell me it's driving them nuts, to the point where they may no longer be investors at all.
This latest hookup doesn't bring back memories of Yahoo's glory days. The company used to be a crucial starting point for just about any web surfer. They snagged Inktomi and Overture when search was getting red-hot, and seemed poised to do, well, what Google ended up doing: making a ton of money by monetizing our desire to search for things online.
Google has a story to tell. It's simple. They make a killing in the lucrative search market. Wall Street can ignore all their speculative skunkworks projects. It's a simple story like Apple (gadgets) or McAfee (security). Companies that do one thing really well, make a lot of money doing it, and can explain themselves in one breath win fans on Wall Street.
Yahoo's story is still a good one, I think, but it takes a while to tell, and Wall Street isn't really listening. Investors who briefly saw Microsft dangle an offer of $33 a share (more than double the price of Yahoo's shares now) want a reason to hold on to their stake -- a good story. Until then, they'll keep feeling burned.