Yahoo: Does Jerry have to go?

Yahoo: Does Jerry have to go?

Summary: Yahoo got its wish. Microsoft is no longer a possibility as a purchaser.


Yahoo got its wish. Microsoft is no longer a possibility as a purchaser. The company improves short-term results by partnering on search with Google. Carl Icahn may give up on his proxy war. And the company lives to fight another day--or at least until Aug. 1 when shareholders unleash their collective rage at Yahoo's annual meeting.

The larger question: Can Yahoo CEO Jerry Yang survive? The Friday morning quarterbacking can be summed up with one word: Brutal.

Also see: Google: Yahoo's savior?

I've been batting this question back and forth with Dan, who notes that Yang's tenure is just about a year old and it has been non-stop chaos. Using the "what doesn't kill you makes you stronger" theory, Yang must be a helluva leader by now. Ultimately Dan concludes there's a battle for Yahoo's soul going on.

But even if Icahn walks away, the battle for Yahoo's soul won't be over for Yang as he tries to maintain control of the company he founded in March 1995 with fellow Stanford graduate student David Filo. The fight doesn't get any easier from here as key executives abandon ship, products continue to be slow to get to market and uncertainty hangs over Yahoo's Silicon Valley campus. In the immediate wake of the Microsoft out, Google in announcement, Yahoo's stock has slid 15 percent

Yang might be called a reluctant CEO, and this tangled scenario can't what the 39-year-old Yang imagined when he replaced Terry Semel as CEO almost a year ago, on June 18, 2007.

Dan notes that Yang has some time, but he has a short runway to deliver. But I question how much time Yang really has. I'd guess that Yang's tenure may be a matter of months following the Microhoo saga.

Patience isn't a virtue on Wall Street. Yahoo employees, who have options tied up in the company, can't appreciate Yang nuking their paper wealth. And morale can't be good when you're partnering with the enemy Google in some co-opetition agreement that will likely give the search giant more of an edge.


How do you value Yahoo's soul? If you're a shareholder Yang is a disaster.

  • Yang left a $31 a share and $33 a share offer on the table.
  • Yahoo shares are headed to the high teens--$18ish a share is the line in the sand.
  • Yang does a deal with Google that buys the company some time, but may have mortgaged the company's future.
  • Sanford Bernstein analyst Jeffrey Lindsay reckons that the Google deal is only worth 16 cents a share in 2009 earnings. That sum roughly equates to $3 a share, bringing Lindsay's target price to $27, well below Microsoft's final $33 a share offer.
  • Yahoo's deal with Google provides a few outs in the event of a change in control, but does deter all of the potential suitors of the company. An SEC filing names Time Warner, News Corp. and Microsoft.

Add it up and you have Wall Street questioning the Google deal. Employees worried about leadership leaving. A thin management bench. And at least a year in the penalty box for Yang. It's doubtful that Yang can recover from this debacle.

Topics: Social Enterprise, Banking, Google

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  • Icahn's here, Yang is gone and Microsoft will own...

    Yahoo before the end of the year.
    • Care to make a little wager on that?

      If you really believe Microsoft is going to own Yahoo in the next 6 1/2 months I'd b,e more than happy to take a little money off your hands. The Microhoo deal was a nonstarter from the very beginning. It's a nonstarter today, it will be a nonstarter in 6 months.
    • At least half right about Yang

      Yang will be gone at least.
      You dont throw MILLIONS of shareholders money away without them doing the same to you!

      Not sure if MS will ever want yahoo again, I hope, because I do want to see competition with google.
      I'm not too happy with Google's political agenda this last year.
  • RE: Yahoo: Does Jerry have to go?

    This guy is unbelievable to say the least! It seems that every decision Mr. Yang has made is for the benefit of Mr. Yang's ego, not Yahoo's future. What good does a deal with Google, their #1 competitor, do for Yahoo? It cannot be good for Yahoo in the long-term or Google wouldn't have agreed to it!

    Microsoft, on the other hand, would've pumped a ton of investment into the company while patiently waiting for the results. It would've worked out way better than what is going to happen now. Yahoo has the brand Microsoft needs and Microsoft has the money and computing Muscle Yahoo needs to break itself out. Instead, each is left with a weak model to compete against Google. In the long run, Microsoft will eventually catch up at Yahoo's expense.

    Whether good ole Jerry is truly an idiot will come to light in the next year, if he even has that long.
  • Yang: Bad for Yahoo, Good for Microsoft

    As someone who would like to see Microsoft product offerings improve, I am quite pleased that Microsoft didn't succeed in this deal. Microsoft would be far wiser to invest the funding into improving the numerous products that are lagging behind competitors (Windows Mobile, anyone?) or reduce the price point for its offerings (Office, I'm looking at you).

    Yahoo shareholders would have benefited from the high purchase price, but there is no doubt in my mind that the long-run outlook for Microhoo would have been poor.
  • RE: Yahoo: Does greed over progress have to go?

  • Rejoice, dear hearts!

    If you eat out of Microsoft's hand, and don't mind being slapped around by Microsoft, the destruction of Yahoo is a milestone to celebrate.

    One less element to oppose the Borg, the behemoth Microsoft.
    Ole Man
  • Does Jerry have to go? In a word YES!

    He has screwed over every stockholder (they have good memories) and now has handed over Yahoo's revenue to Google. Top it off with massive lay offs and people jumping ship and the writing is on the wall, Yang is Toast.
    • Blah blah blah...

      So, where are you considering how many serf's have left/are leaving, and have you considered the recent Wall St view on Microsoft? No, you're just ticked that all your predictions are shown to be the flatulent outbursts of a person who in their heart of hearts know that they want to ditch Microsoft and really really want a Mac, with a dose of Linux on the side.

      That being said, I'd find it hard for stockholders to forget Icahn's history of tanking companies that would probably have done ok if he hadn't decided to mess with them. Seriously, Icahn's ego probably eclipses the combined egos of Ballmer and Yang and makes them look like they're still trying to work out what ego means.
    • How have they screwed the stockholder??

      OK, since 1995, they've split stock 5 times and are still today 30 times higher than the $1.00 that was asked during their first year. So, basically if you were a stockholder at the time of offering of a few thousand dollars, you'd probably be a millionaire now. So how are you screwed?
  • He's overpaid and incompetent. Cost the owners billions

    Only a fool would care that he's saved the company millions in salary when he and his idiot management team have cratered the value of this company to the point where it's now worth about 20% of what it once was.

    Wake us when he offers to refund lost market cap out of his own pocket, then we'll know he's serious about his shareholders.
    Johnny Vegas
  • RE: Yahoo: Does Jerry have to go? ABSOLUTELY NOT !!!!

    Stop Bashing the only guy who had balls enough to say NO to Micro$oft!
    Why does Micro$oft have get their way all the time ?
    All they were really after was to stop the Yahoo's open office package dead in the water - and to ultimately garner that technology and file it into their already overbloated monopolised OS platform - then they would have thrown what remained of Yahoo on the scrapheap. Sure M$ also wants another foot in the door for controlling the internet search and web sales platforms as well ...
    I just hope the dollar signs will fall from the eyes of the yahoo investors and they will see past the fog and look at the real rose they are holding ... not just the illusion of a fast dollar ...
    Stick to your guns Jerry ...
  • Too much reliance on Wall Street

    Let's face it, 99% of stock holder have no clue how to run a company. And, far too many of them base their views of Yang, or any other CEO on sensational news stories rather than their tenure or abilities. Gripe all you want, I guarantee NOBODY here could run Yahoo as well as Yang. Could it be run better? Sure, any company could. But Yahoo still makes a profit, and as far as I'm concerned while they do have operating profits, then all other cannon fodder about any role inside Yahoo's doors is unprovable poorly driven bias and basically pure rubbish.

    What's next? Basing a company's performance on the CEO's sex life? They way is it today, that wouldn't surprise me at all.
  • RE: Yahoo: Does Jerry have to go?

    dont shoot the messenger.
    I have been through more buyouts and mergers than fingers on your had and NONE were good for the stock holders nor the employees.

    Look at when AOL bought? Time Warner. They were cash rich and after the merger the brains/talent left now whats left? Time Warner management?
    I never worked for these companies but you can see patterns here and there.

    They bring in a new leader to chop, they fail to merge properly and people go scampering.
    So who made out the axeman and the billionaire.

    I have been in the PC industry for 25 years and 20 layoffs/mergers so take it from me keep your company off the stock market and dont listen to the experts they will destroy not rebuild.
  • Jerry Yang?s Salary Is Only $1

    But Icahn Still Wants His Head

    Icahn may want to get rid of Yang, but he is not going to find a less expensive CEO. According to Yahoo?s proxy filing, Jerry Yang?s salary in 2007 was only $1, and he received no other compensation (he does own 3.9 percent of the company, though). President Sue Decker?s salary alone was $658,000.

    Although, it is not going to cost much to get rid of Yang either. His severance agreement in case of a change of ownership calls for him to get only $2. Sue Decker would get $1.6 million, plus an automatic acceleration of unvested equity and options worth another $6.7 million. If you add up the severance of the top five officers, including the value of accelerated options, it would come to almost $25 million.

    Sit down, Jerry. Let the dirty rascal stand up, so everyone can see who he is!
    Ole Man