Yahoo’s announcement of Yang’s resignation notes that Yang also resigned from the boards of Yahoo Japan Corporation and Alibaba Group Holding Limited. It also includes this excerpt from a letter Yang wrote to Roy Bostock, Yahoo’s chairman of the board: “My time at Yahoo!, from its found to the present, has encompassed some of the most exciting and rewarding experiences of my life. However, the time has come for me to pursue other interests outside of Yahoo!” Yang also expressed enthusiasm for the appointment of Scott Thompson as Yahoo CEO two weeks ago.
Yang’s resignation crowns a tumultuous four months at the beleaguered search engine, during which it fired one CEO, entertained a variety of buyout offers, reportedly considered any and all options moving forward, and appointed a dark horse as its new CEO. While Yahoo’s press release offers few reasons for Yang leaving, speculation abounds. During Yang’s tenure as CEO, from 2007 through 2009, he turned down a $47.5 billion takeover bid from Microsoft – a misstep he may never live down. It caused Yahoo’s stock to tumble, to the point where the company is now worth around $20 billion.
Some believe, therefore, that Yang was pushed out, rather than leaving entirely of his own free will. Perhaps he simply saw the writing on the wall. A number of activist investors in Yahoo, such as Daniel S. Loeb of the hedge fund Third Point, have called for both Yang’s and Bostock’s dismissals. All nine directors on Yahoo’s board are up for re-election this year, and shareholders can nominate rival directors starting late next month. Yahoo has not scheduled this year’s shareholder meeting yet, but with matters aligned as they are, Yang may have realized that this might be his last chance to exit gracefully.
It’s a sad fall from grace for the co-founder of a company that once dominated the Internet as much as Google does now. To add insult to injury, Yahoo’s stock rose about four percent in after-hours trading right after the company announced Yang’s resignation. It might be the best move for Yang if he wants to see the company he helped start prosper. Evelyn M. Rusli,writing for the NY Times, reported anonymous sources close to negotiations as saying that Yang “played a heavy hand in discussions with potential investors,” and that “At times, Mr. Yang’s opinions seemed to diverge from the board’s consensus…creating a tense – and occasionally confusing – backdrop for negotiations.”
With Yang out of the picture, potential deals with Yahoo’s Asian partners – Softbank and Alibaba – may go through more quickly, releasing value for the company’s shareholders and capital for making changes. Yahoo’s new CEO may also find himself with more room to maneuver without the company’s co-founder looking over his shoulder. It will be interesting to see where this company from the pioneering days of the web ends up.