The way I see it Yahoo is strategically stuck because they put their head in the sand and stopped "radical" innovation about 10 years ago and instead just focussed on doing what they do extremely well. While Apple, Facebook and Google were out there inventing whole new kinds of product Yahoo was just perfecting their existing stuff. Now they are in a tough spot because the world has moved on and they are fast losing end-user value because they don't have any foot holds in new markets.

Personally - I got a Yahoo! Mail account in 1997 and it was my primary "personal" mail account (as in, what I use with friends and family) until last year. Then I got an Android phone, and it blew Yahoo out of my life because the integration of Google services is simply unparalleled on there. This is slowly happening in all kinds of ways, and its not easy to see what the path out is other than to look 5 years ahead and restart the innovation engine and do some totally radical things, as you say.