I remember hearing this when I was in business school, how in one case study a company "returning to their core competency" would be presented as a good thing while in another case study, "diversifying their business model" was also presented as a good thing. It took me a while to see that it all depends on context and ability to execute.
I'll refrain from making any comments about Yahoo's ability to execute.
Actually it depended mostly on hindsight bias. For those companies that succeeded, we invent a narrative and apply it backwards in time to decide that "core competencies" or "diversification" was the critical inflection point.
But it might have been due to the rise of the dollar against the yen, or the effect of an outbreak of gastro in the plant of a critical supplier in Guatemala, or because a supplier's supplier went bankrupt and your supplier is preoccupied trying to get money from the smoking ruins of a business you know nothing about.
I'll refrain from making any comments about Yahoo's ability to execute.