Alongside Netscape, UUNet, and Spyglass, Yahoo! (Nasdaq: YHOO) was one of the first Internet-based companies to sell stock to the public. In part due to that, it had all the buzz, boy. It still has plenty going for it, including a monstrous 192 million unique visitors in the month of March. However, despite Yahoo!'s best efforts to profit on auctions, retailing, and other revenue generators, advertising dollars take center stage by representing more than 90% of the company's revenue. That was great during the sunny days of online advertising.

Now, however, we're into the rainy season, and this season might last a long time. In the midst of the downpour, Yahoo! is trying to drum up new revenue streams at the worst time. Its existing business is losing money, it has cut staff, and the industry in which it operates is undergoing massive growing pains. But the largest hindrance is that Yahoo!'s stock price is now so deflated that acquisitions are much less feasible. Yahoo!'s bargaining power has shrunk from $120 billion to $10 billion.

Shakespeare naturally has words about this:

There is a tide in the affairs of men,
Which taken at the flood, leads on to fortune;
Omitted, all the voyage of their life
Is bound in shallows and in miseries.

Ol' William was more pessimistic than need be with that prose from Julius Caesar, because second chances usually do arrive, as do, often, third and fourth chances. But not always.

When Yahoo! was valued at $120 billion, talk was that it would buy Disney (NYSE: DIS) or eBay (Nasdaq: EBAY) or... something. It could have bought just about anything using its stock.

Now valued at $10 billion, Yahoo! is more likely to be acquired than to acquire. Plus, its current advertising business may not even be strong enough to maintain today's valuation. To help boost long-term prospects, Yahoo! is launching subscription businesses, including premium content. It is also signing deals such as last week's agreement with Consumer Reports, whereby Yahoo! gets a cut of revenue (although the reports only cost $2.95 apiece). But the question remains...

What will the big business be?
Yahoo! is in a Catch-22. Its ad revenue is still large enough that revenue from its new businesses is comparatively slight, but its ad revenue isn't large enough to justify higher stock prices. So, Yahoo! must add new businesses even though those profits are dwarfed by ad revenue. And those new businesses add new costs and risks, such that they may not be worth the eventual reward anyway.

Yahoo! needs to find a large subscription business that it can sell to millions of people to make its subscription efforts truly successful. Launching several niche content subscription services, as it seems intent on doing, puts Yahoo! against a wall. Each new service has new costs, and each has limited market reach.

When you get down to it, Yahoo! may be a jack-of-all-trades and a master of none. Unfortunately, few businesses become giants with $100 billion market values without being masters of important, specific businesses that you can readily name. AOL (NYSE: AOL) is Internet access. Microsoft (Nasdaq: MSFT) is software. Pfizer (NYSE: PFE) is drugs. Yahoo! is a Web portal.

But "Web portal" doesn't cut it, not when being a Web portal is synonymous with "free." So, what is going to be the big business of Yahoo!? Where, outside of ads, do the fat tires hit the pavement, the big dollars change hands, and all that jazz?

All this uncertainty persuades me to rename the company "Yawho?" Who are they? What do they stand for? What is Yawho?'s area of expertise? The company serves "light" Web pages that are quick to load, and it is a great directory for content and services. But as more people obtain broadband access, having a light Web page won't be important, and visiting your favorite specialized sites will be quick and easy. Given this, portals may attract fewer regular users -- especially users willing to pay.

Either way, Yahoo! has great challenges ahead. Instead of trying to be everything to everyone, I believe that it needs to determine a few very large potential businesses to focus on and charge for. It needs a meaningful off-line presence, too, if it doesn't want to become a distant third fiddle to AOL Time Warner and Microsoft. Increasingly, those two companies are controlling, containing, directing, and profiting from more and more online traffic.

We close with questions for you, the thoughtful reader, investor, and thinker: Outside of ads, what large, profitable business should Yahoo! try to build? Or will ad revenue indeed prove enough in the long run, as with a newspaper? What do you think? What does Yahoo! need to achieve great success? Share your thoughts.

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Jeff Fischer is in the business of asking questions. He owns enough shares of AOL that he could use them to buy a good kite for the summer. You can see his others stock holdings and the Fool's disclosure policy online.