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5 Web titans that withered under Yahoo

Mark Milian
Yahoo has acquired dozens of companies over the years. Some turned out to be expensive flops.
Yahoo has acquired dozens of companies over the years. Some turned out to be expensive flops.
STORY HIGHLIGHTS
  • Yahoo has a mixed track record with companies it acquires
  • Social-bookmarking site Delicious could be sold or spun off from Yahoo
  • Yahoo has a history of expensive mistakes
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(CNN) -- For King Midas, as the Greek legend goes, everything he touches turns to gold. Yahoo's stroke is decidedly less effective.

The Sunnyvale, California, internet giant has acquired more than six-dozen technology companies in its 15 years. Many of those once promising rockets fizzled under Yahoo's supervision.

Yahoo plans to shutter several services, including Delicious, which was at one time the dominant social bookmarking site, according to an internal memo that leaked on Thursday. Upcoming.org, a promising start-up Yahoo bought that chronicles events in major cities, will be collapsed into other products, the memo said.

Yahoo may try to sell Delicious, formerly known as Del.icio.us, if it finds an interested buyer. Or it may spin off the group, suggests a company statement. And Yahoo recently expanded its blog network, showing an emphasis on news and original content.

A Yahoo spokeswoman notes that the company continues to focus investments on mobile, local and communication services. That doesn't bode well for the various start-ups Yahoo has acquired over the years that don't fit into those categories.

That's not to say that every purchase has been dollars down the drain. Acquisitions have morphed into some of Yahoo's most successful properties.

The 1997 purchase of Four11, which made a Web e-mail client called RocketMail, became the top U.S. e-mail site in Yahoo Mail. Less than a year later, Yahoo bought Sportasy, which propelled it as a leader in fantasy sports.

But in many other instances, Yahoo's touch turns new allies into stone.

GeoCities

At the turn of the century, GeoCities seemed an unstoppable force on the Web. The service, which allowed anyone to create their own free website, housed a sizable portion of the internet's contents at the time.

GeoCities made a promising debut on the stock market in 1998, and a year later, Yahoo paid about $3 billion for the company.

"The Yahoo sale was sort of bittersweet -- obviously, financially, it was great," said GeoCities co-founder John Rezner last year. "Nothing ever happened. GeoCities stagnated from day one."

In perhaps the most spectacular folly for Yahoo, the company closed the service about a year ago.

"Yahoo never knew the value of GeoCities," Rezner said.

Broadcast.com

The audio-streaming company that made Mark Cuban a billionaire turned out not to be a sound investment for Yahoo.

Broadcast.com seemed like a promising company, certainly to investors who poured money into it during the initial public offering, and for Yahoo, which spent $5.7 billion to acquire it.

Broadcast.com had little groundbreaking technology to defend its vulnerable market position, and Yahoo broke it into separate divisions. The current iteration of the online radio service, now called Yahoo Music, bears almost no resemblance to Cuban's cash cow.

Musicmatch Jukebox

Yahoo has made a few purchases of music companies that didn't quite pan out. LAUNCH Media and Webjay were fruits of Yahoo's attempts to muscle into digital music retailing.

But at $160 million, Musicmatch Jukebox was an expensive company that never quite found its footing under Yahoo. Its problems were compounded by the explosion of Apple's iTunes.

For a while, Musicmatch was the anointed software for Windows users who owned iPods. But Apple eventually released its competing program for Windows.

After taking on the name Yahoo Music Jukebox, the software was eventually scrapped in favor of a partnership with music subscription service Rhapsody.

Zimbra

Perhaps in a fit of Microsoft or Google envy, Yahoo bought Zimbra, an enterprise software developer, for $350 million. In January, Yahoo sold the division to VMware for a price "well below" what Yahoo initially paid, according to a report in AllThingsDigital.

HotJobs.com

In another case of depreciated value, Yahoo bought job-recruiting giant HotJobs for $436 million in 2002. At the time, Monster was still seen as the dominant force.

In February, Yahoo unloaded HotJobs to Monster for nearly half what Yahoo originally paid.

Which is next?

This tainted track record leaves many industry observers whispering about Delicious facing a similar fate.

It's also prompting questions from bloggers and insiders about the future of photo-sharing site Flickr, another Yahoo property.

As far as online image sharing goes, Facebook quickly zoomed past Flickr and never looked back. Yahoo CEO Carol Bartz says Facebook is Yahoo's "greatest competitor."

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