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10 Steps Yahoo! Must Take to Succeed

NEW YORK ( TheStreet) -- With a new board in place with Dan Loeb, and an "interim" CEO who is well-liked internally and externally in Ross Levinsohn, Yahoo! (YHOO - Get Report) seems ready to start taking a number of steps to unlock value.

The laundry list basically breaks down into two parts: internal fixes and external ones.

Yahoo
With a new board and interim CEO in place, Yahoo! seems ready to take steps toward unlocking value.

Internally:

1. Reiterate Yahoo's core business mission. Ross is the guy who came up with the line that Yahoo was "the premier digital media company" to finally answer the mission statement question. He needs to underline that and make it clear to advertisers, employees and investors.

2. Focus. Scott Thompson was right that the company can't be into everything. It clearly has to make hard choices on how it's going to spend resources. They can't be spread a mile wide and an inch deep. This means only doing stuff that Yahoo can be really good at and differentiated from Google (GOOG) and Facebook.

3. Reconnect with advertisers. Arguably, the best thing Yahoo has done in the past year has been its ABC News partnership and launch of original content such as with Katie Couric. Levinsohn has to go back to Madison Avenue and show them that Yahoo will be their best partner. This means launching premium, immersive ad campaigns that are customized and tied around interesting original video.

4. Focus on premium content that's unique. ABC worked. Yahoo needs to do more deals like this, but it has to be smart. These kinds of deals can be very expensive and Yahoo doesn't have unlimited capital. Premium content can be a differentiator for Yahoo, even with YouTube trying to build itself up.

5. Pursue user-generated content. Assuming Yahoo gets some capital back for its Asian stakes and/or a patent agreement with Facebook, a lot of that will go towards stock buybacks and possibly a special dividend to shareholders. Some of it should be used to bolster the core business and allowing it to buy some interesting companies. User-generated content would be a great fit for Yahoo. It lends itself to mobile and is different from Google and Facebook. Companies such as Yelp (YELP), Zillow (Z), HomeAway (AWAY) and TripAdvisor (TRIP) are all a good fit -- though getting more expensive by the day.

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