Yahoo is on the defensive here. There are two ways it can go: 1. Attack. Keep probing for new markets via acquisitions and new product development. Try to c

Yahoo is on the defensive here. There are two ways it can go: 1. Attack. Keep probing for new markets via acquisitions and new product development. Try to catch up to competitors by increasing investment in core competencies. 2. Retreat. Quit some markets by folding or selling business units. Focus resources selectively on core competencies. Return excess capital and sale proceeds to investors via dividends. I think the dividend warning is a signal that Mayer is planning on option #1. This is actually good news; most companies' stock value is much greater than their sale price. If Yahoo chose option #2, its decline would likely become irreversible as morale and reputation suffered due to the cuts, and investors would suffer enormous losses. With option #1, Yahoo has a decent chance of recapturing its former greatness, or at least stabilizing its position. The holding pattern Yahoo's been in since the early 2000's is the reason for its decline; it's time for them to either raise or fold.