Sighs of relief as Yahoo CEO resigns
Posted
Nov 18 2008, 11:57 AM
by
Kim Peterson
Rating:
To see how badly investors wanted Jerry Yang out of Yahoo, look at the market reaction today. Shares jumped 13% on news that Yang would step down from the CEO spot.
Investors have called for Yang's head for some time now, and it's easy to see why. Since Yang took over the CEO spot last year, his company -- and its stock price -- have suffered one setback after another. Yahoo's search business stumbled as Google surged ahead. Advertising money slowed. And key managers -- not to mention rank-and-file employees -- fled.
Perhaps the low point was when Yahoo spurned Microsoft's $33-a-share acquisition bid, saying the company was more valuable. As Yahoo's stock price plunged below $11, it's hard to imagine that anyone involved in that decision doesn't regret it.
But we can't lay all the blame at Yang's feet. The economy and the competition were already pushing Yahoo down, and previous management had set bad decisions in motion before Yang jumped in.
But as CEO, Yang must take responsibility for Yahoo's failures. He could not turn the Titanic around. Yang was too slow to react, and when he did, it wasn't enough. He
was too distracted by Microsoft and an ugly proxy battle with Carl Icahn. He could not assuage big investors and lost their loyalty.
The board must now find another savior. And Yahoo can be saved. It's still profitable. It had $1.8 billion in revenue last quarter. Its free cash flow was $215 million. It has a massive online user base.
But it's a company in steep decline. It faces huge threats from Google and the spiraling economy, and needs a steady, decisive hand to steer it through the storm.
Here's what others are saying about Yang's departure:
Portfolio: "It seems like he did do what's right for Yahoo by stepping down. Hat's off to Jerry. Not every company founder is that self-aware. Now Yahoo has to hope that Yang and the board do a better job finding an appropriate CEO than they did the last time, when they hired Terry Semel."
Wired: "Yahoo says it is looking for a successor to run the company. But that seems to be more spin than reality. With its search business decimated by Google and its display ad business gasping thanks to the global financial crisis, it's hard to see why anyone would subject himself to that kind of abuse. My bet is that Microsoft, despite its claims to the contrary, offers to buy the company for $20 a share by Thanksgiving."
RBC Capital analyst Ross Sandler: “It’s definitely a positive from a shareholder perspective. Jerry has done less than a stellar job since taking the reins from Terry Semel last year, not just completely botching the Microsoft deal, but with poor execution and multiple company restructurings that have done little to restore confidence for any of Yahoo’s shareholders, employees or customers.”
CNBC's Jim Goldman: "Yahoo needs a baby-sitter now. More an operational whiz-kid than visionary. This company will be taken over. There simply is no other exit strategy."
Disclosures: I own a very small number of Yahoo shares. And while Microsoft owns this
blog, Microsoft does not control, censor or otherwise have any
editorial influence over what I write.
