When blogs and regional newspapers trash Jerry Yang it’s one thing. But when the New York Times does it, people really notice. Public lynchings like this are few and far between from that bastion of traditional journalism.
Yesterday’s article by Joe Nocera, titled “Oh Jerry, It’s No Longer Your Baby” was a stinging condemnation of Yang. It’s presented as a memo from Nocera to Yang, with the subject “Shafting Yahoo’s Shareholders” and outlines the many ways Yang has failed Yahoo’s shareholders and employees.
In reference to the recently announced Google search deal, the article says “You’ve chosen to become a pawn of the most dominant company on the Internet. How exactly is that going to lead to a brighter future for Yahoo?”
Nocera also condemns Yang for purposefully killing the Microsoft negotiations even thought the deal was in the best interests of shareholders, watching as key employees walked out, and generally running with his emotions rather than taking care of business.
The article ends with “Jerry, you’re a billionaire because people all over the world bought your stock, and trusted you to do right by them..It doesn’t matter that you would like Yahoo to remain independent, or that you can’t stand Microsoft. Your feelings aren’t supposed to get in the way of your fiduciary duty…A takeover by Microsoft was your last, best hope of rewarding your long-suffering shareholders. Now that opportunity is gone…I would be taking odds that your days as Yahoo’s C.E.O. are numbered. It’ll be better for everyone to have someone in that role who understands who he’s supposed to be working for. Wouldn’t you agree?”
From what we hear from multiple sources close to Yahoo, this article may be the final straw - whether the board backs Yang or not, this is just too much negative press for the company to overcome. A fresh start is now a necessity for moving forward.
Yang will step down, our sources say. It may be next week or it may be next month, but it’s going to happen.
Who Will Be Yahoo’s Next CEO?
But who in the world would take the job given the state of Yahoo today? It would have to be someone there already, no outsider would want the job. Right? Well, maybe not.
President Sue Decker is considered to be too close to Yang, and lacking in operational experience. Other Yahoo execs are also unlikely candidates.
But the names of two ex-Yahoo’ers are being tossed around as people who may consider the job, and who may be able to fire up the troops enough to give Yahoo a fighting chance. Those people are Jeff Mallet, Yahoo’s former President. And Dan Rosensweig, Yahoo’s former COO.
Jeff Mallett
Jeff Mallett joined Yahoo as employee number 13 back in 1995, when the company was still privately held. He was there for seven years as President and COO. In the early days of Yahoo, Yang called himself, Mallett and former CEO Tim Koogle the “Three Amigos.”
Mallet moved on to other projects after he left Yahoo. He’s one of the owners of the San Francisco Giants, makes angel investments and was most recently the Chairman of SNOCAP, which sold to Imeem in February 2008.
Old time employees remember Mallett’s days as the golden age of Yahoo - at one time the company was worth $100 billion under his tenure.
Dan Rosensweig
Dan Rosensweig is another former Yahoo exec - he was COO until he left the company in December 2006. His departure was rumored to be largely driven by a power struggle with Decker, which he lost.
Rosensweig is now an Operating Principal at Quadrangle Group, a $6 billion private equity firm. My guess is that he’d strongly consider taking the job if offered - he’d relish the chance to show that he should have won that power struggle back in 2006.
Tim Koogle, Yahoo’s CEO before Terry Semel took over in 2001, would likely be another candidate to consider. But he’s long retired, and now (literally) sells high end real estate in Mexico with his wife. He may once have been part of the Three Amigos with Yang and Mallet, but don’t look to him to come and save Yahoo.
Not throwing this out as an option but Guy Kawasaki was invited to participate as a candidate in the original Yahoo CEO search according to a talk he gave in Houston a few weeks ago. I think the next CEO will definitely be a name that makes a splash but that is currently in no way affiliated with Yahoo. Funny right now I’m coming up with a good name for the search committee but not for the CEO: Mark Cuban.
David - I think they should add a blogger to the search committee and let that blogger live stream all the meetings.
What about Michael Arrington. Since some time now he has very strong opinion about Yahoo! and always knows better than all the others.
How much of Yahoo’s stock does Mr Yang own? Can’t he and his group of associates try and engineer a buy back, delist the company and then operate has a privately held enterprise?
The deal that Microsoft offered was anything but sweet, neither is the deal with Google doing the company any good. But isn’t a alive, albeit beleaguered, Yahoo better off for the Internet than one swallowed by the biggies. I fear that if Yahoo dies then the spunk would go off from the Internet ad market. It would be a monopoly that would kill innovation. I hope the deal falls at the anti-trust hurdle.
As I am neither have any interest in Yahoo stock, nor have any kind of association with it, yet I am paid customer for years of Yahoo (since 96 if my records are Ok) - Jerry had been fixing lately problems which were OUR problems for ages, and previous bunch of exec crap were NOT. Now, I do not say that shareholders shall not care about their value, but ultimately it is customer who pays the bill. There is a gap between customer interest and shareholder interest, and it has been growing due to accumulated troubles right before Jerry took over. Now, crucifying him for not-his-fault might be Ok legally, but then shareholders _might_ act non-pragmatical even for themselves. But… this is not my business, and hence I have nothing else but to prepare to pack my things (mail and other) and leave as soon as Yahoo shareholders scapegoat last hopes to get normal service. And then take my popcorn and see how bunch of idi… err, I mean greedy shareholders… peeling off and burning own value…
Totally agree with A.T.
And as said in comments to other posts. The Microsoft would have been the death to Yahoo!. The Google deal gives them a chance to find their way.
Go Yahoo! Go!
I wonder why someone doesn’t want to get pregnant, stay in the house for the rest of her life and not allowed to do date anyone else. Everybody focuses on the market value of the Microsoft deal but no one talks about the future of Yahoo! being Microsoftied. The only person that actually talked about it was Mike but his example was blunt enough, if not real.
If Microsoft failed to do online Search / Advertising business in a meaningful way (that is create a fat cash cow) who’s there to guarantee execution for plan C is going to be a success no matter, turning every single Yahoo shareholder the happiest man on this planet, assuming not all of them are going to sell if the future is so bright.
I wonder who is the one, not running with his emotions rather than taking care of business only and only that. If such a being exist is not human and certainly not very lovable by coworkers and employees in hte long run. Even Ballmer gets emotional and sweaty when does the monkey dance.
Painstakingly Elucidating Article.Turbulent times for IT companies in US.
http://tekno-world.blogspot.com
The current predicament Yahoo finds itself in is due mostly to Terry Semel’s dismal reign. What I find interesting is that most commentators were willing to give Semel the benefit of the doubt for far too long, but are pushing Yang to a quick decision.
The problems with Yahoo cannot be fixed in six months, and I think the Yahoo board and management are correct in ignoring short-term opportunists like Icahn, and journalists hyping for any kind of visible, rather than fundamental, change.
The current predicament Yahoo finds itself in is due mostly to Terry Semel’s dismal reign. What I find interesting is that most commentators were willing to give Semel the benefit of the doubt for far too long, but are pushing Yang to a quick decision.
The problems with Yahoo cannot be fixed in six months, and I think the Yahoo board and management are correct in ignoring short-term opportunists like Icahn, and journalists hyping for any kind of visible, rather than fundamental, change.
“…The article ends with “Jerry, you’re a billionaire because people all over the world bought your stock, and trusted you to do right by them..It doesn’t matter that you would like Yahoo to remain independent, or that you can’t stand Microsoft. Your feelings aren’t supposed to get in the way of your fiduciary duty…”
WRONG. WRONG. WRONG.
Jerry’s a billionaire because he helped create Yahoo and its attendant revenues to justify people buying the stock. People like Joe and Michael (as always) continue to have it backwards.
Michael and Joe’s too stuck in the get rich quick meme. As someone who creates software and companies that directly bring in revenue — directly to the bottom line. I know of which I speak.
The only fu*cking way you get shareholders interested is when you create something that has value and that rakes in the cash from user fees or advertising revenue month after month.
Mike and Joe have too long been stuck in the silicon valley mindset where you create a website which may be a cool idea, but that has no possibility of generating any substantial revenue — see FriendFeed and Twitter, and wait and pray for a big buyout by a clueless M&A group in a big company, and go into the “deadpool” if that wait comes to nothing.
They get brain dead investors to give the “Series A’s” and seed funding to brainy but non the less monetization-dead ideas and wait for the quick buyout from the guys who really produce something because they look exciting. Because you fu*cktards — only the guys who really print money (Google, Yahoo, MSFT, Apple, etc) can do those buyouts.
Yahoo is one of those companies where month after month the dollars keep rolling in. And even better the upside for further monetization is sizable and very possible with the right people doing the executing of good ideas.
You all seem quick to jump on the side of the shareholders. But those shareholders right now are like your mother-in-law in the back seat telling you how to drive (with Icahn beside her) — and you’re terrified because at any moment she maybe either tell your wife to throw your ass to the kerb — or you may blow up at her — leading your wife to throw your ass to the kerb.
Ignore your mother in law (nicely) right now Yahoo. And when you eventually buy a new house for that mother in law, she’ll never stop talking good things about you.
Journalists like Mike Arrington, and some stockholders are trapped in an echo chamber of stock prices without remembering what are the fundamental reasons for making those stock prices good or bad.
Let me say it again… Revenues. The ability to acquire his little brain dead companies that he writes about day after day — or not.
Wake up people!!! Users of your service create revenues, not the stock market. The day you as a company start noticing the stock market, is the day when you are really and truly f*ucked, because then your focus is turned away from what matters — your customers and the revenue they bring in.
Agree with Ericson in a way but can we really delink the whole stock market story from a companies actual performance. Maybe Yahoo should do a quick check with its stakeholders if possible and at the risk of repeating myself again, having a Yahoo around is good. Just need to give them some time.
I think this is a really sad spectacle to watch — the deliberate burial of one of the former kings of the internet. It really kills me to see Yang go by personal emotions, blocking opportunities, gutting the entire company in order to avoid the “evil” microsoft. Does he not see that he is now becoming instrumental in creating a much worse evil?
A lot of people regard what he is doing as high treason and totally illegal, as in going against the interest of the company and its shareholders. I feel the same.
Just had to vent a little there. I said once that Yang would rather burn the house down than sell it. That is precisely what he is doing; only it isn’t his house to burn. If I did this to my house, my bank would make sure I did hard time in some nondescript prison cell…
Yang will loose his job, and most likely also his finances and financial future once this is over. Is it really possible to be this stupid?
*company’s performance. My bad
I’ve enjoyed reading comments regarding Jerry Yang’s negotiations with Microsoft because they generally show a lack of understanding about his fiduciary duties as CEO of the Company. See, as the CEO of the Company, this is NOT about Jerry and NOT about what anyone thinks about Yahoo. Its about Jerry fulfilling his fiduciary duties to the shareholders and the Company (plain and simple, that means maximizing shareholder returns and the Company’s value). Prior to Microsoft’s bid, Yahoo stock was trading around $19/sh. Microsoft was willing to offer $33/sh to purchase the Company. Regardless of where you think Yahoo is going (no where in my opinion - Panama has never panned out), I question whether Yahoo is going to see $33/sh in the foreseeable future. Thus, by self-servingly working against the deal, Jerry screwed shareholders, the Company and employees (go read the First Amended Complaint in the Delaware litigation for more on this). Jerry deserves to get crucified for this. Anyone that says otherwise, says based upon a anti-Microsoft bias, anti-shareholder and anti-market bias.
@david_the_lawyer
Seems that you’re suffering from an anti-customer and anti-revenue’s bias there, ya think?
I will be the next CEO of Yahoo.
@Ericson
You seem to be under the impression that a private company and a public company operate under the same guidelines. They do not, and whatever personal problems you are having with your mother-in-law are completely irrelevant.
@frank_church
That statement just shows how little you value the creation of entities that generate wealth.
Its all well and good that your mother-in-law left a whole bunch of money for you so you can go buy stocks and have fun. Those of us who did not get that largesse end up having to build companies so that people like you can invest and harass us into making bad decisions
so yahoo was trading at $19 before the Microsoft bid?
then a lotta stuff happened.
then yahoo chose the google deal.
and now they are tradng at $23
see, it is all working, shareholders have gotten richer.
also lotsa people sold shares just before yahoo/google deal. they made money there.
if MS has taken over yahoo, shares would eventually have dipped below the initial $19. shareholders would have made some quick money but that leaves the company’s future with a bleak prospect in MS’s hands.
as it is right now, google can very well monopolize the search market. and yahoo could very well find itself in that viscious circle whereby its survival will increasingly depend on getting ads from google.
however, a crucial point is missing here. something that points yahoo to a different future and justifies Jerry Yang’s move.
Can you guess what that is?
Can someone point me to a positive article ever written by Arrington about Yahoo?
I am still waiting on the negative article by Arrington about Microsoft and their failing search. As bad as Yahoo is they still have a bigger share than Arrington’s love Microsoft.
Jerry Yang’s ego has made him the Britney Spears of the tech world. With the Google deal he exposed his crotch to the world and now Carl Icahn (k-Fed) can just sit back and wait until the courts give him custody of the kids.
Decker needs to go too by the looks of it.
Dear Michael,
With all due respect, why would an article by the NY Times be ‘the final straw’ for Yang? He’s certainly had plenty of press over the years, both good and bad, so I don’t see this as having any weight whatsoever, sorry.
Ya Totally agree with A.T.
So, M$ stock hasn’t changed in a decade.
Why is it that Ballmer’s head hasn’t rolled?
I demand and alternate M$ board now!
M$ shareholders revolt!
Actually it’s the shareholders that pushed Jerry to wrong decisions targeting short profits. It always happens if a company stock don’t grow fast enough.
However I am sure that it really was worth to leave things as they were and let yahoo do what it does best. In inovation they are 3 steps ahead from all the other companies and they were really near the point where their search quality could overbeat google.
Yahoo is a profitable company that holds the number 1 position for years.
I would rephrase the whole thing: would Jerry decide to stay?
If Jerry leaves yahoo will be torn apart and die.
I’ve seen reporters write the darnedest things. I am in Yang’s corner on this one.
When you buy stock, much like Martha Stuart, you buy into the management.
When you buy a ticket to board a vessel, like a luxury cruiser, or an airplane, you buy into the skills of the chauffeur/captain that you trust to keep you alive until your destination.
Jerry, as the CEO has the right to make a judgment on the good standing of the company he runs. Corporations are NOT democracies. If he felt that staying independent was better for the company, then that is his call.
If the shareholders disagree, they can sell their shares or they can take a majority stake and fire Yang.
If these Y! shareholders are so fixed on driving up MSFT, then why not sell Y! and start buying MSFT directly instead to raise the share price?
Have I missed some piece of Arrington’s disclosure (not to mention Nocera’s)? These articles are just so vicious and biased. Not reporting at all, so I expect to see an equally smeary anonymous Op-Ed in some large paper RSN. TMZ 2.0!
Some above have it exactly right, and some are echoing Gordon Gekko. It’s not a breach of fiduciary to reject Microsoft and Yahoo will do just fine without them.
Oh, and articles don’t “reverberate” through an entire company on a weekend.
i strongly suppot A.T and Ericson Smith who are so right on their comments above - i dont understand why mike, icahn and other narrow minded people cant see the whole picture —- i remember michael dell once made similar comments about apple …. look what happened, apple is much more valuable than dell … if micahel dell who was an entrepreneur himself can go wrong then who are these people who have never created anything as big as yahoo …. people should give yahoo and jerry&co. a break and let them run the company the way they want and if you’re not comfy then sell your stocks and run (like a mice) , u will still profit as stock prices has gone up in last 6 months.
What i understand is Yahoo has too many money making properties and it can still make more prop and money out of it … following is my questions to all greedy people:
1. please explain me why cant yahoo make money from the text based ad (where they are not that strong) by temporarily leasing it to google - isn’t it a smart move where you make money from both kind of ads 9text and display)?
2. why did yahoo only made deal for north-american market and not for other markets which are much bigger than NA? do you think that jerry is stupid that he keeping other lucrative market i.e BRIC (brazil, russia, china, india) with him? - cant u see how intelligent he is that he is may be trying to roll out his strategy in these markets and eventually make a strong position?
3. do you think that the whole board of directors of yahoo is stupid to support jerry?
4. dont you know that the biggest losser (monetarily) is jerry himself, and if he is taking risk and let go millions $$ (for short term) then there has to be something in his kiity (the strategy) that he dont want to disclose it right now?, and may be this is the reason why the board of directors are supporting him because they know this internal confidential stuffs… there something called trade-secret that you shouldn’t give away no matter how much the pressure builds on you by stupid shareholders …
It is about time Yang is crucified. He is setting a horrible example for other CEOs of public entities–If he gets away with this dereliction of his duties, CEOs across the land will also feel authorized to disregard their shareholder welfare too.
As a tangible example, which company will be the first to follow his “retention” scheme? He really should be indicted for that scam.
But, Michael, your proposed replacements are no better. The problem with Yang and Decker are that they were consistently involved in all of yahoo’s terrible judgments while they were both part of the executive committee. Their hands were always deep in blood. Dan R. is more of the same, and Jeff M. is so lost in today’s web that yahoo would really crater.
Yahoo needs to act in a radical manner.
@32
Your last point is ridiculous–People often make unwise decisions due to ego. They often sacrifice financial gain (especially those who are already wealthy) for personal pride.
Good lord, DanR already contributed once to ruining Yahoo, it goes to show how little thinking people are doing out loud if they actually believe he should come back to continue his reign of destruction. Anyone who has ever witnessed a board meeting with him know’s he’s one of the korniest, un-professional guys around. And anyone who saw him walking around campus talking on his earpiece phone, mostly in URLs, know’s he’s a huge dick. The company needs someone with a lot more vision. The fact that he epically failed at Yahoo once should speak to his inability to lead.
Since there are people from Yahoo on here.
This is an example of what Wall street fails to understand.
http://www.flickr.com/photos/8.....3/sizes/l/
This is another example of what Wall street fails to understand
http://www.flickr.com/photos/8.....otostream/
When they bought seadragon it was for netscape and built with OpenGL. They took YEARS to completely rewrite it in DirectX and target it at internet explorer, and Google more than caught up to them in the meantime.
From a technology perspective, the merger was pointless.
Never forget that Google has, albeit quietly at times, never abandoned their interest in having a content play they could call their own. Starting around 3+ years ago they determined it was just too damned expensive, and too late to build their own. All the while, their share of search grew, and they made dependent junkies out of hundreds of thousands of content providers.
All the while, thorns stuck in their side like Y! News, Y! Finance, Y! Sports, etc., in terms of leadership in UV’s and PV’s.
Now, Jerry reaches out in desperation, and Google is able to slowly, inexorably, get those last pieces they wanted, and without spending a dime (right now). I’m placing my first bet that those crown-jewels of Y!’s traffic will someday, and in the not *too* distant future, become Google’s properties, not just in ad inventory, but in name.
Jeff Mallett is the best choice !
there is something like loyalty and integrity and that counts at the end of the day and i think Jerry’s loyalty and integrity towards Yahoo is unquestionable… while at the same time Icahn’s (and other journalist/analyst) integrity is for sure questionable …
Holy crap at this rate Steve Ballmer moves them into a Redmond building and hands “The Yahoo Project” to a 3rd string manager.
Decker??? God no.
i agree with Chris who made a most fantastic comment in a most simplistic way, that:
“Jerry, as the CEO has the right to make a judgment on the good standing of the company he runs. Corporations are NOT democracies. If he felt that staying independent was better for the company, then that is his call.
If the shareholders disagree, they can sell their shares or they can take a majority stake and fire Yang.”
Thanks Chris …
Why does anyone care? This site is now right up there with AOL. Shut the damn thing down and move on. No smart person wants to oversee a funeral for a career move.
ericson smith, good comments
but, ericson smith, fun advice? yikes
@41,
No problem, please check out the pics in my comments @35 and @36 as well.
In LA, I have met ex-Wall street bankers and investors who wanted to hire me to manage these unrealistic projects for them with very small teams. One wanted to create a Google competitor with 8 coders in a small downtown LA office.
People on wall street, sadly have no idea of the technologies that are used in Yahoo and Microsoft and how incompatible they really are. So much of Yahoo’s infrastructure would literally be scrapped by a merger it’s not funny.
Billions in development costs would be laid waste to, and thousands of developer hours will all have been for not.
People on wall street can not fathom the interoperability problems that would arise between a technology merger of Yahoo and Microsoft. They would surely be settled but at huge costs and years of time which would set back both companies.
AOL-Time Warner.
Yahoo is a dead company, who cares anymore. You know as a shareholder they don’t give a fuck about you, so Yahoo will fade away.
Someone mentioned taking it private - well they would basically have to take it private at a minimum of $33 per share now, so that seems unlikely. If they tried to take it private for less than that they would be clearly in breach of their duties, because if the company takes any bids they must take the highest bid, and it would sure look like they favored themselves over MSFT, even if the deal is now “off the table.”