This is class uncov flamebait. The author sets up several straw men, and then proceeds to valiantly strike them down. Yahoo, like all companies, has made a number of investments in startups. Some of them work out (viaweb, anyone?), some don't. Unfortunately, this article lacks a concrete analysis of all the investments yahoo has made. Instead, the author makes the argument that yahoo shouldn't have made $2.5bn in investments because three (totaling $0.248BN) haven't turned out well.
The author also fails to provide data that backs up the implied argument that the capital expenditures would've yielded a better return if applied towards the salaries of existing employees.
He's making classic "sunk cost" conceptual gaffe: Future decisions should be made independent of past ones. Even if yahoo had that extra $2.5BN, that doesn't mean the company should hold onto underperforming employees.
