A key executive spills his guts in a corporate memo, lashing out at his company's complacency, lack of focus, and the evils of being spread too thin. In the world of Hollywood, that kind of memo -- "it was a mission statement" -- wound up with Jerry Maguire walking out of his office, dismissed from work, with goldfish and Dorothy "Renee Zellweger" Boyd in tow. Over at Yahoo! (NASDAQ:YHOO), it seems as if Brad Garlinghouse's four-page "The Peanut Butter Manifesto" is getting a much cooler response.

Maybe it's because Yahoo! shareholders find themselves repeating -- and in some cases paraphrasing -- some of the key lines from Jerry Maguire, such as:

  • Show me the money.
  • A positive anything is better than a negative nothing.
  • I've got a shelf life of 10 years, tops.
  • We live in a cynical world. A cynical world. And we work in a business of tough competitors.
  • You had me at how low?

A Garlinghouse in every pot
Yes, it's been tough for Yahoo! lately. Since Google (NASDAQ:GOOG) went public a little more than two years ago, its shares have gone from $85 to nearly $500. In that time, Yahoo! stock has gone from $28.48 down to $26.41.

It's unsettling. In a scene that repeats itself every three months, Yahoo! will post its quarterly results, only to find Google blowing it away a day or two later. Naturally, this isn't all about Google envy. In and of itself, Yahoo! remains a growing, cash-rich company. Overseas, it's cooler than you may think.

However, as long as it remains a niche laggard and treats its market share like fly-infested meat, I pity the Yahoo! executive who isn't jumping up and down while crying out for change and spewing constructive criticism. Garlinghouse should be cloned. He should be bottled.

The Boysenberry Jelly Manifesto
The only thing that I don't appreciate about Garlinghouse's memo is that he chose to pick on peanut butter. I get the metaphor. Peanut butter can be spread awfully thin on bread. However, even then it is still tasty, awfully sticky, and works well with jam. These days, Yahoo! isn't all that tasty, its site metrics aren't all that sticky, and it's trying to get itself out of a jam.

I don't have four pages of Yahoo! critique in me, but I don't want Garlinghouse to feel as if he's alone. So I'm turning to a fruit spread that's never agreed with me. With my apologies to Mr. Boysen and the legacy of Knott's Berry Farm, let me use boysenberry as a better illustration of the search engine's image problem.

The boysenberry, after all, wasn't a natural occurrence. It was cultivated by combining blackberries, raspberries, and loganberries. I argue that taste buds would have been better off if they had never come together.

Yahoo! began as a single berry -- search -- but quickly began crossing up with other juicy berries like auctions, job listings, online dating, and free email. They could all have been tasty fruits on their own, but the combination of ingredients helped dilute the flavor of the original berry. How else can one explain why Yahoo! had a head start in search and acquired the pioneer in paid-search sponsored listings, yet still found Google landing the wider ad network?

Yes, search engine superiority may have been an early issue. Even Yahoo! was delivering Google result pages at one point. Yahoo! was also beat to the punch by Google's AdSense program, which empowered third-party sites of all sizes with the ability to broadcast Google's ad inventory. Yahoo!'s response in getting smaller sites to promote Yahoo! stemmed mostly from archaic affiliate programs. It launched YPN (its AdSense wannabe) too late. A more nimble Yahoo! would have been able to dive in around the time of Google's 2003 AdSense splash and capture market share while it still had the more prominent ad network. Now it's in a pickle, as we've got the network effect in play. Webmasters turn to AdSense because that's where the targeted ad supply is rich, and sponsors turn to Google's AdWords because it's where they can reach deeper into the specialty sites.

This doesn't mean that Yahoo! is toast. If it was, both peanut butter and boysenberry jelly would be able to spread easier on the stiff bread. There is still time to make Yahoo! work, but it has to start by embracing the notion that its relationships with advertisers and third-party websites are as critical as the quality of its non-search features.

You can't have a PBJ sandwich without some bread
I interviewed the CEO of Marchex (NASDAQ:MCHX) over the summer. The company may be best known for its massive collection of popular domain names, which brings it 28 million monthly page views, but Marchex also owns Industry Brains. I was impressed at the company's ability, as a small paid search entity, to land deals with sites like Morningstar (NASDAQ:MORN), CNET's (NASDAQ:CNET) Tech Republic, and our very own Fool.com, when it's competing for billable ad space with the bottomless pit of leads that Google has become.

For Marchex, it's simply a matter of specializing in personal finance and IT. Despite Google's massive girth, Industry Brains is able to outgun Google by creating its own network effect in those areas.

It may be too late for Yahoo! to emphasize a few areas of lucrative monetization, but it's always worth a shot. Even seemingly shrewd moves, like snapping up The Knot (NASDAQ:KNOT) or Bankrate (NASDAQ:RATE) to draw eyeballs and Rolodexes loaded with lead seekers in the pricey wedding planning and banking services areas, may backfire if other third-party sites perceive a conflict of interest. However, sooner or later, Yahoo! is going to have to reverse-engineer everything it has ever developed to come up with ways to win over Yahoo! Search Marketing advertisers and YPN webmasters with the same kind of passion that drew audiences before.

Getting it right the last time
During one of Jerry Maguire's more trying moments, his star client Rod "Cuba Gooding Jr." Tidwell offers an unlikely compliment. "You are hanging on by a very thin thread and I dig that about you," he tells him.

Value hunters may feel that way about Yahoo!, too. The Motley Fool Stock Advisor newsletter recommendation offers a pretty spectacular opportunity to appreciate if it ever gets within earshot of Google's $150 billion market cap.

Contrary to Garlinghouse's argument claiming that Yahoo! is spreading itself too thin, what if the real problem is that it never planted the right seeds that would grow into promising catalysts in all of its subsidiaries? Google was the genius that monetized its own free email product by saddling it with relevant ads, but what if Yahoo! becomes the leader in taking those ads local? Really local. What if Yahoo! Toolbar became a tool that wasn't just useful but lucrative to the end user in a revenue-sharing arrangement? What if Yahoo! beats Google to the punch in monetizing digital video and music for the mainstream content creators? It doesn't take long before one realizes that Yahoo! isn't all that far away in awakening to its potential. It's got the audience. It's got the cash to spring for the makeover.

Once that smooth peanut butter becomes chunky peanut butter, it's going to be pretty tasty. It's all about substance, my friend. It's all about substance.

Yahoo! is an active recommendation in theMotley Fool Stock Advisornewsletter service. CNET, Bankrate, and The Knot are allRule Breakers stock picks.

Longtime Fool contributor Rick Munarriz is a frequent Yahoo! visitor, but he does not own shares in any of the companies mentioned in this story. He is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.