So the fact that this memo was published suggests two fundamental problems at Yahoo:

• Terry Semel, Yahoo's CEO, is not listening to his people and employees feel like the only way to get attention is to leak memo's like Garlinghouse's to the WSJ.
• If Semel hasn't fired Garlinghouse by the time this appears, it suggests that Yahoo, as Garlinghouse suggests, is run with a lack of passion and discipline which I find somewhat shocking given how much its executives are being paid.

But beyond the management problems, Garlinghouse's memo raises a fundamental question: What is Yahoo's competitive strategy? And the simple answer is that Yahoo doesn't have a strategy. That's because strategy is about making choices and trade-offs. And in the case of Yahoo, Garlinghouse's memo suggests Yahoo isn't making them -- it's stuck in the middle -- spreading peanut butter evenly across all its businesses.

Here are some of the fundamental choices which Yahoo needs to make:

• Which Internet business segments should Yahoo seek to dominate, if any, given competition from Google Inc. (NASDAQ: GOOG), Microsoft Corp. (NASDAQ: MSFT), News Corp. (NYSE: NWS.A) and others?
• In which segments is Yahoo a laggard and unlikely ever to lead? Why doesn't Yahoo sell or exit these businesses?
• Will Yahoo's Panama project ever enable it to surpass Google in search-related advertising? If not, will Panama enable Yahoo to come close enough to the 11 cents a search which Google achieves to accelerate its earnings growth?
• Can Yahoo introduce any new services which will enable it to take the lead in Internet advertising rather than merely struggling to catch up with Google and other rivals?
• If Yahoo cannot accelerate its earnings growth through innovation, why doesn't it sell out?
• Would Garlinghouse or some other executive be better equipped than Semel to make these choices?

Due to its far more rapid earnings growth, investors are pouring money into Google and dumping Yahoo. Yahoo's market capitalization is $36.6 billion, and its trailing P/E is 34.1; whereas Google has a market capitalization of $152.7 billion and a trailing P/E of 63.3. While Yahoo's earnings per share (EPS) declined 35% in the last year and are forecast to grow 28% between 2006 and 2007, its stock has tumbled 37% over the last 52 weeks. By contrast Google's EPS spiked 74% in the last year and are forecast to grow 35% between 2006 and 2007 -- driving its stock up 23% over the last 52 weeks.

I'd rather bet on a stock, like Google, whose earnings have been growing faster than expected than one whose EPS have recently shrunk. If Bush's popularity was in the 60s -- instead of at 31% -- insiders wouldn't be leaking to the press. The same logic applies to business -- since Google is at the top of its game, its executives aren't leaking strategy memos to the WSJ, as Yahoo did. So if I owned Yahoo, I'd take the money and run.

Peter Cohan is President of Peter S. Cohan & Associates, a management consulting and venture capital firm, and a Professor of Management at Babson College. He has no financial interest in Google, Microsoft, News Corp., or Yahoo.