Yang to Step Down as Yahoo CEO - Is Nobody Happy?
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With the shareholders still in revolt in August, a vote-counting slip-up was uncovered that revealed support for Jerry Yang and company chairman Roy Bostock was much lower than initially reported. About one third of shares withheld votes for Yang, and nearly forty percent withheld votes for Bostock.
Just when Yahoo must have figured things couldn't get worse, they did. In late October 2008, the company reported a 64 percent decline in net income, and revealed that it would lay off at least 1,430 people. Even the one potential bright spot – the ad deal with Google, and the juicy revenue associated with it – couldn't help, as the Justice Department took a long, hard look at the situation. Smelling the threat of an antitrust lawsuit, Google backed away from the deal. Even the offer of a narrower deal couldn't satisfy the DoJ. Conspiracy theorists will be delighted to hear that Declan McCullagh, writing for CNet, cites “Microsoft's take-no-prisoners lobbying efforts in Washington, D.C.,” as one of the reasons for the Justice Department's heavy scrutiny, which caused the deal to fall through.
So what is left for Yahoo? Well, the company's stock rose – to $11.10 – on news of Yang stepping down. But Yahoo stockholder Eric Jackson noted that “This is a board failure more than it is Jerry's failure. These problems have been around at Yahoo for well over two years now.”
With Yang out of the picture, will Yahoo reconsider being purchased by Microsoft? That will depend in part on who the company chooses for its new CEO. Both internal and external candidates are being considered; Sue Decker is one potential contender, as is Dan Rosensweig, Yahoo's former chief operating officer, and Jon Miller, a former AOL CEO. Many analysts do think that Microsoft will now come back with an offer to buy Yahoo in the next three or four months, but there is reportedly no discussion of this at all at the software giant. (Then again, you'd expect to hear this; why fuel speculation and a rise in stock price when you can keep mum and possibly get the company for a bargain price?). And Yang's stepping down makes it more likely that a deal will go through; at the very least, it gives Yahoo's board a chance to change its tactics from Yang's insistence that they go it alone rather than be bought even in part by Microsoft.
The problem is, many of the arguments made back when Microsoft originally tried to purchase Yahoo haven't changed; if anything, they've grown stronger in some ways as the economic climate has worsened. The two companies have two completely different cultures, and even putting the two together won't raise their market share to anywhere near Google's. In fact, a merger could wreck both companies, because it would distract them from the things they both do best.
So what is Yahoo's future? A purchase by Microsoft still looks inevitable, one way or another. Too many at the company don't have the heart to go it alone – and even if they did, it would take someone of the caliber of Steve Jobs to turn them around. Many observed at the time that Jerry Yang took the CEO spot again that he was no Steve Jobs. But neither is Steve Ballmer. Yahoo's end may come, at last, not with a bang, but with a whimper...unless someone can find another Steve Jobs.
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