I know people always make fun of Yahoo Answers, with good reason, but I think that when it comes down to it, Yahoo Answers is one of the web's most important resources, just because there are so many questions and answers that it covers quite a lot of popular topics. True that a lot of it is stupid or nonsense, but there is actually also a lot of useful and timely information in there.
I also remember using the Yahoo fantasy sports thing and it seemed pretty good to me.
And to be honest the Yahoo mail program is really attractive looking to me and very functional.
Yahoo Groups is extremely useful also.
I guess however its hard to compete with things like gmail, reddit and meetup.com.
So anyway since half of the comments in this thread are basically going on a 'pretend you are the new CEO of Yahoo, what would you do' thing, I want to play also. Actually Yahoo has so much going on, its kind of hard to NOT want to play that game.
One thing to focus on making Yahoo Answers better. Maybe more ajaxy and realtime. Maybe make the app better (ask questions? voice input?). Maybe even do a deal with stackoverflow or something (although stackoverflow users might not appreciate that).
It seems like they have a ton of useful applications and other stuff. I forgot one: Yahoo Games. I guess the hard part is making money from all of those things. I think to figure out what to do I would need to know how much each of those different parts of Yahoo cost to operate and how much money comes in (mostly from ads I assume).
I guess one big issue is the brand. Ever since my old boss told me a few years back that Yahoo search was better, I associate Yahoo with idiots. And even though I do think Yahoo Answers is very useful like I mentioned before, the large number of retarded Yahoo Answers questions doesn't help with that idiot brand image problem.
One random idea: its really expensive to build Android, iOS (especially), HTML5, Windows, OSX and Linux apps. Especially if you want to target all of the above. Maybe they could throw some money at Apple and Microsoft and make an application platform with WYSIWYG components, a little bit along the lines of Wordpress, but everything is a widget, and somehow make it work across all of those platforms, and built on Node.js (or something). I say throw money at Microsoft and Apple because they are always (as far as I can tell) spending money on throwing up roadblocks to prevent good cross-platform solutions from becoming popular and practical.
One more random idea: I think the easiest way to compete as internet giant these days might be to create products that cross into the 'real' world. For example, the Google Project Glass project to me seems very exciting. So are things like 3d print-on-demand. Maybe Yahoo could build or promote a product/service along those lines?
Of course, those product/service ideas are extremely expensive, challenging and risky, so I dunno.
Other random idea: try to merge with one of the giant evil cable or media companies, such as Time Warner, if the government will let them. Then maybe if the CEO and people are persuasive enough to the Time Warner execs with all of the Yahoo customer numbers (like 700 million visitors per month), we could finally get HBO GO without having to buy cable. I mean I am not trying to make more gianter evil companies, but.. HBO GO without a cable subscription.
Other random idea: start converting to mainly telecommute by telling most people they can work from home and then eventually shutting down campuses. Use that as a selling point for acquiring talent and also a way to save money.
OK last last random idea: find a way to defeat ad block. Which would probably involve advertisements that actually weren't really advertisements somehow. Maybe something like reddit, or reddit+twitter+facebook, a way for people to recommend/vote up/review/rate products/services or apps, possibly filtered based on the relevance of the current page.. then maybe you just charge all of the advertisers a small fee to be eligible and don't let any of them pay more, so its entirely driven by consumers rather than the amounts companies are willing to pay.
Anyway that was fun.