Without commenting on Yahoo! specifically, I think it's the case that sometimes companies become so dysfunctional they're beyond redemption. One company I worked at used to do contract work for Nortel. At one time it occurred to me: "you know this seems like stuff they could do in house, why are they paying us to do it?" Apparently the institutional bureaucracy was so bad no R&D-type project could get done internally. Of course the company filed for bankruptcy like a year or two later.