When Google introduced Instant Search, Yahoo quickly shot back saying that they had instant search 2006 – which is true. However Yahoo never did anything about it while rivals like Google, Facebook and Apple in the mean time innovated in search, social media and mobile. Is Yahoo destined to become the next AOL? In that a bigger AOL?

Yahoo CEO continue to say that it “still has a boatload”, but this isn’t 1998 anymore. Being a portal doesn’t make you a leader. Having eyeballs doesn’t necessarily make you a financial or technological juggernaut.

Yahoo’s stock is down 18% this year and Eric Jackson, managing member at Naples, Fla.-based hedge fund Ironfire Capital told CNN that Yahoo should have accepted the Microsoft‘s takeover offer in 2008, even though though it valued Yahoo at a 61.6% premium at the time, which looks very rich today.

Jackson told CNN that the biggest problem is that there doesn’t seem to be a focus on any specific type of product or area of technology and that the company lacks strategic vision.

“It struck me the other day how little we’ve heard about Yahoo in the past six to 12 months,” he said. “That symbolizes how the company is not as relevant with where the world is moving, especially with respect to mobile and social media. The company seems to be adrift.”

He also thinks that Carol Bartz was the right person to whip Yahoo into shape in the short-term but that a new CEO might do a better job of actually engineering a sustainable turnaround. Here is more of what he told CNN.

The best you can say about Yahoo these days is that it has done a decent job of partnering with, and occasionally even outsourcing functions to, other relevant companies.

Hence, links to Facebook and Twitter on Yahoo’s home page. And the decision to let Microsoft’s Bing power search results on Yahoo and give up control of its job listing service HotJobs to Monster Worldwide (MWW).

But Yahoo can only go so far by relying on the help of rivals. Even if companies like Facebook and Microsoft represent, to use an ugly bit of jargon, co-opetition as opposed to true competition, Wall Street is not going to get excited about Yahoo until it can find a way to really get sales growing again.

“The main part of Yahoo is languishing. Another shakeout is needed and warranted. Yahoo has to go beyond hacking away at things and focus on new products,” Jackson said.