Turnaround CEO smackdown

Yahoo

CEO: Carol Bartz

The Rise: If you remember the "Yahoo yodel," you'll probably also remember a time when the Internet giant was synonymous with search. Founded in 1994 by Jerry Yang and David Filo, Yahoo rose to great heights thanks to effective search, email, and media services, netting a lofty stock price of $118.75 a share circa January 2000 -- the company's all-time high -- to prove it.

The Fall: After the dot-com bubble burst, Yahoo fell on hard times. Its once stratospheric stock hit a low of $4.05 in 2002, and the company eventually ceded its edge in search, email, and overall online traffic. As a result, the company laid off a chunk of its workforce -- more than 600 over the last three years or so -- as part of restructuring efforts.

As for management, CEOs have come and gone, including co-founder Yang. Yahoo's current CEO, Carol Bartz, was most recently selected to head up its turnaround efforts. Though she's brought in fresh talent like Microsoft exec Blake Irving to head product development, the company has also seen numerous high-profile employees depart.

The Plan: Streamline the company's resources, and shed areas no longer considered relevant to its core business, which includes outsourcing search to Microsoft, Yahoo Shopping to PriceGrabber and Yahoo Search to Microsoft. In exchange, Bartz is intent on expanding the company's editorial operations with the $100 million purchase of Associated Content and more recently, the launch of Livestand, a digital newsstand for tablets intended to compete against the recently-launched iPad-exclusive newspaper, the Daily.

The Challenge: Keeping Yahoo relevant in an age where Google and Facebook rule the Web will require constant innovation to at least keep pace, if not catch up.

MySpace

CEO: Mike Jones

The Rise: Flash back to July 2006, and MySpace was the most-visited Web site in the U.S., raking in 4.5% of all Internet traffic. Even more than Friendster, the social network founded by Chris DeWolfe and Tom Anderson in January 2004 blurred the lines between online social interaction and the real world. And by 2005, the social network had become so righteously hip, even Rupert Murdoch wanted in, so News Corp. scooped up MySpace's parent company Intermix Media for a cool $580 million.

The Fall: If ever there was an under performer, it would be MySpace. Despite a recent (and radical) redesign positioning it as a niche entertainment, it's failed to change its fortunes so far. According to Compete, web site traffic declined more than 27%, from 77 million to 47 million visits during 2010, and News Corp.'s digital division, which includes MySpace, posted a revenue decline for its fiscal second quarter of 29%, while operating loss grew to $156 million from $125 million the same time a year ago. To add insult to injury, 500 employees got pink slips in January.

The Plan: News Corp. has publicly stated that MySpace has performed below expectations. As a result, it has reportedly hired Allen & Co., a media investment banking firm, to explore options like a possible sale.

The Challenge: Though parties like mobile social network MocoSpace are apparently interested in buying the once-social network, the question becomes less whether anyone will buy MySpace, but can its current management do anything to effectively halt its decline and prove its worth what ever devalued amount it ultimately ends fetching.

AOL

CEO: Tim Armstrong

The Rise: Originally founded in 1983 as Control Video Corporation, the Web 1.0 company would eventually become the most popular online portal of its kind with more than 30 million subscribers in the 1990s. AOL also helped popularize email as a new media medium with the ubiquitous slogan, "You've got mail." Then in 2000, AOL bought Time Warner (FORTUNE's parent company) for $164 billion, bringing its total valuation to an all-time high of $240 billion.

The Fall: Like any failed relationship, the merger would end badly for both parties. Nine years later, AOL was spun off with a value of just $2.5 billion. Its subscriber base hasn't grown since 2002, and last year, the company reported $2.4 billion in revenues, a 25% drop, and a net loss of $782.5 million against net profit of $248 million. Meanwhile, its total share of online display advertising fell to 5.3% in 2010 from 6.8% in 2009. Current CEO Tim Armstrong recently cautioned that positive results won't come in until the second half of 2011 at earliest.

The Plan: Become a go-to news organization. To that end, Armstrong and crew have gone nuts with acquisitions. In June 2009, the company bought hyper local newspaper startup Patch; last September, it picked up the popular tech blog TechCrunch for roughly $40 million. And just last week, the company snapped up The Huffington Post for $315 million, the largest purchase yet during Armstrong's tenure.

The Challenge: While AOL's recent shopping spree should help beef up the company's presence moving forward, it remains to be seen whether all that traffic growth will outweigh the number of long-time subscribers signing off of the company's dying dial-up service in the long term and grow the company from its current market cap of $2.3 billion and 117 million unique visitors per month.

Nokia

CEO: Stephen Elop

The Rise: Though the Finnish phonemaker's roots arguably trace back as far as the early 20th century, when it dealt mainly in rubber products, Nokia as consumers know it today didn't really hit its stride until the early 1990s, when it gradually sold off its rubber, cable and consumer tech divisions and focused exclusively on mobile telecomm. Once it did, the company took off -- by 1998, Nokia was the world's largest mobile manufacturer.

The Fall: While it's still technically the largest mobile phone manufacturer with a 31% market share as of fourth quarter 2010, that market share has been on the decline, due in no small part to the introduction of the iPhone and Android devices sporting operating systems with better user interfaces than the company's own (creaky) Symbian OS and the stalled high-end MeeGo platform, a merger of Intel's Moblin and Nokia's Maemo projects, which has yet to find its way into many devices.

The Plan: Use Microsoft's recently-introduced Windows Phone 7 operating system as the primary platform for Nokia devices moving forward. According to company CEO Stephen Elop, recruited from Microsoft as the company's first non-Finnish CEO, WP7-loaded phones could find their way to market later this year.

The Challenge: Competing with entrenched champs like iOS and Android, not to mention getting consumers, particularly in the U.S., excited about a company that hasn't had a hit product in years using a fledgling OS that still lacks basic features like copy/paste and true multitasking.

Digg

CEO: Matt Williams

The Rise: Kevin Rose kickstarted Digg in 2004, and in less than two years, it was one of the most popular hubs for teens and young adults to crawl and discover news links. One of Digg's features proved to be its reason d'etre: users could vote up, or "digg," or vote down, (read: "bury") news links, which could potentially bring it to Digg's front page for utmost exposure or render it irrelevant. At its best, Digg.com brought in more than 236 million visitors a year.

The Fall: In August 2010, the content curation site rolled out a controversial site redesign called v4, or "Version 4," that initially gave more power to news publishers and took away user features like the "bury" button and "Favorites" and reduced the number of news categories. The backlash was swift. Visitor traffic plummeted 30% within 30 days of the redesign, while competitor Reddit saw its own traffic explode, likely due in no small part to disgruntled Digg defectors. The downward traffic spiral also likely contributed to the company's most recently round of layoffs: 25 employees, or roughly 37% of its staff, last October.

The Plan: Swap out interim CEO Rose, who replaced one-time leader Jay Adelson, with 11-year Amazon vet Matt Williams. Also, rectify some of v4's most grievous issues by returning some of the aforementioned Digg feature to users.

The Challenge: Revive Digg's fortunes by tweaking v4 to a point where current Digg users will be happy and persuade Reddit defectors to give Digg another look, a major challenge in the notoriously fickle consumer market. There's also the issue of money. With some $40 million in funding from investors like Greylock Partners, Highland Capital Partners and Marc Andreesen, Digg is still not turning a profit.