Why No One Cares About the Plan to Save Yahoo!

NEW YORK ( TheStreet) - With Yahoo! ( YHOO) laying off 2,000 workers last week, it was only a matter of time before CEO Scott Thompson laid out his vision for the company.

On Tuesday, we finally got Thompson's plan. The only problem is that no one cares.

Thompson, who came from PayPal, a division of eBay ( EBAY), announced that the company will be realigning itself into three divisions; Consumer, (which is comprised of Media, Connections and Commerce), Regions, which targets emerging markets, and Technology, which focuses on the company's infrastructure.

This is nothing more than shuffling deck chairs on the Titanic.

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The Sunnyvale, Calif.-based Internet company still has an abundance of properties after the layoffs and restructurings, many of which time, or competitors, have passed by (think Yahoo! Messenger, Jobs, and Shopping, just to name a few). There have been reports that, even with 2,000 people unfortunately losing their jobs, there are still several thousand more that could be on the chopping block. Eric Jackson, co-founder of Ironfire Capital tweeted he expects an additional 3,000 job cuts by the end of May. Jackson is long Yahoo! shares.

The problem is that Yahoo! hasn't innovated in years. It lost the search war to Google ( GOOG), the social war to Facebook, and despite its audience of 700 million users, which the company and its investors like to tout, it hasn't figured out how to monetize them. There are two reasons for this. For one thing, the company's management has been incompetent for too long,, and there is simply is no good way to monetize Yahoo!

Media companies around the globe are struggling. Just look at the stock charts of companies like The New York Times ( NYT). Tribune has been in bankruptcy seemingly forever. Without an additional platform to subsidize the news, such as television, or specialized terminals from the likes of Bloomberg, media has become a business that's extremely difficult to make money in.

Yahoo! has consistently talked about generating value for shareholders. Yet shareholders, such as hedge fund heavyweight Dan Loeb of Third Point, have attacked the company for doing just the opposite. When the company announced it would name its own directors to the board instead of picking some of Loeb's, Third Point attacked the Internet giant in a fiery press release.

"Sadly for shareholders - who will once more bear the costs - the consequence of the Board's refusal to accept Third Point's shareholder-friendly proposals will be a time-consuming and distracting proxy contest that the Company can ill-afford," the release said. Loeb, who has never been known to mince words, referred to the board as "dysfunctional."

The majority of Yahoo!'s value at this point is in its Asian assets, yet no one has come forth with a viable plan on how to unlock this. Yahoo!, for example, tabled a deal to unlock value earlier this year. For his part, Loeb set up a website explaining that his board nominees could unlock value, but did not give a plan.

The transactions to sell Yahoo!'s 40% stake in Alibaba and a 34.9% stake in Yahoo! Japan would've been worth an estimated $17 billion to $18 billion. Yahoo!'s current market cap is $18.2 billion. That values Yahoo!'s core business, which Thompson spoke about in his memo, at $200 million. At a valuation of $200 million, does anyone really care what happens?

Thompson's plan may boost company morale for a bit as people know what's expected of them, but in the eyes of the consumer, Yahoo! is a dying brand. The inability to find a Chief Marketing Officer speaks volumes about the state of the company.

The commercials ask "Do you Yahoo!?" Don't be surprised if the response is "Do I care?"

Interested in more on Yahoo!? See TheStreet Ratings' report card for this stock.

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-- Written by Chris Ciaccia in New York

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