Why Twitter Should Be Studying Yahoo's History

 "Pride goeth before a fall..." JL (with a shoutout to Proverbs16:18)

Steve Russolillo reports in the Wall Street Journal:

Anyone buying Twitter shares now is perhaps banking on a white knight more than an actual turnaround strategy. If Twitter is smart, it will study Yahoo’s missed opportunities.

We’ve seen this movie before.
Twitter Inc. TWTR 10.97 % benefits from its 320 million monthly active users and a growing online advertising network. But how the microblogging service can effectively monetize those eyeballs remains unclear. The further the stock drops, the more that takeover speculation rises.
Twitter could learn a thing or two from one of its tech elders: Yahoo Inc. YHOO 1.05 %
Eight years ago this month, Yahoo received a $44.6 billion takeover bid from Microsoft Corp. MSFT 1.63 % The software giant, drawn to Yahoo for its sprawling user empire, hoped a combined entity would gain ground on search behemoth Google Inc.
Yahoo infamously rejected that offer. Now, the struggling company is considering a breakup.
Even before that bid, the market was punishing Yahoo for stalling as Google was thriving (much like Twitter and Facebook Inc. FB 0.10 % today). In the two years prior to Microsoft’s offer, Yahoo shares lost more than half of their value.

 While not a perfect parallel, Yahoo and Twitter both benefit from a large user base. Yahoo still has about one billion people a month visiting its various web properties. Many shareholders bought Yahoo during its long decline in the belief that it would come up with a way to get more value out of all those people. As the original tech bubble taught investors, though, eyeballs aren’t everything.

The risk as Twitter gets set to report fourth-quarter results Wednesday is that its trajectory might mimic that of Yahoo. Analysts estimate Twitter had earnings for the period ended in December of 12 cents a share. Revenue growth is expected to decelerate for a sixth consecutive quarter.
Yes, Twitter is attempting to juice user growth through tweaks to its format. Unfortunately, those ideas haven’t been well-received; #RIPTwitter was trending on, you guessed it, Twitter last week. The shares plumbed new lows Tuesday, down some 80% from the December 2013 peak.
As rumors swirl, management hasn’t indicated it would be open to a sale. Still, anyone buying Twitter shares now is perhaps banking on a white knight more than an actual turnaround strategy.
If Twitter is smart, it will study Yahoo’s missed opportunities.