Yahoo is a classic 1990s land-grab story: go public, use the inflated stock to grab as much territory as possible. In that game, they out-executed everyone else (Lycos, Infoseek, Excite ...) Keep in mind Viaweb was one of their minor land-grabs!
Inevitably, this process destroys the soul of the company. The people who sold them companies mostly didn't stick around (pg!) because they realized there was no soul.
It is very hard to repair such companies (I never say impossible, but very hard!). The comparison is not Apple, because Apple was never built that way. Even in its darkest hour, it had a soul. To give a more relevant contrast, I believe Sun can be repaired, but alas, the longer management fiddles, the more difficult the task becomes.
I would say things went wrong with the choice of Semel to Hollywood-mediaize the company, not with his departure. Yahoo lost its soul while Google didn't.
Yahoo had already gone bad before bringing in Semel. I think it started during the dot com craze. They had no focus or direction. They were basically becoming like AOL. In fact, that's most likely the primary reason they picked up Semel in the first place. The decision had already been made to be everything for everyone and he was supposed to be the leader to help get them there. Do you remember when they were also an ISP and had a lame magazine? When the crash came they were ditching services and divisions left and right and have really never focused on anything since.
Yahoo's failure is simple: they didn't stick to their knitting. I was a long-time user of Y mail and liked some of their other stuff (finance.yahoo...) but quit in frustration recently, the third time their search button failed to find emails I could see plainly in the Inbox.
Find something you're good at, do it better than anyone else, and keep doing it until it doesn't work anymore. Yahoo failed to do any of these things -- they've thrashed around for years, and don't bother to hire competent people to do the few things they were once pioneers at. Very sad.
Or he could have a product that people want to use. The problem with Yahoo is not middle management, it's that they are irrelevant. (Flickr is nice, though.)
Inevitably, this process destroys the soul of the company. The people who sold them companies mostly didn't stick around (pg!) because they realized there was no soul.
It is very hard to repair such companies (I never say impossible, but very hard!). The comparison is not Apple, because Apple was never built that way. Even in its darkest hour, it had a soul. To give a more relevant contrast, I believe Sun can be repaired, but alas, the longer management fiddles, the more difficult the task becomes.