I’d like to apply for the job of running Yahoo. It should be a doddle (English slang for a cinch). All I’d have to do is call someone at Microsoft, agree a price much lower than the last bid Microsoft made, but above the current share price, and then go and cash in my share options. Unfortunately that may not be quite the type of CEO that the company is looking for as the news settles in that co-founder Jerry Yang is standing down as CEO.
But the question is what other kind of applicant can Yahoo possibly expect to get? Everyone who thinks they can run Yahoo profitably, can’t conceive of making it worth $47 billion again (the price of the first Microsoft bid offer) inside the next few years, and the disillusion among Yahoo shareholders is certain to force a sale to Microsoft or some other merger transaction, way before then.
A more important question is just how long has the company got, given that its share price is in the basement at $11.5 (a valuation of $16 billion), although it went up considerably on the news, but has reached nowhere near the share value it had six months ago. Where will it be in another six months?
What is the point of Yang standing down if he a) Waits to hand over power until someone is appointed and b) if negotiations with Microsoft don’t start in earnest immediately.
Of course the appointment of a head hunter and statements about staying in charge for the time being, all may simply be face saving for Yang himself and the rest of the board may understand that they need to get a faction over to Microsoft before any further share price erosion sets in.
Yang’s departure was triggered by the failure of an advertising deal that he engineered while also courting Microsoft for a takeover. That deal would have meant letting Google sell Yahoo search advertising, and would have placed too much market power in the hands of Google, and such a deal was never going to clear anti-trust hurdles.
Once the anti-trust hurdles become more obvious and as the market and Yahoo’s performance failed, then Yang was on borrowed time.
Most US analysts were predicting this week that despite recent statements by Microsoft that it was no longer interested in acquiring Yahoo, that it will cut a new acquisition deal before year end. The only other option is looking for a brilliant internet entrepreneur to take over Yahoo, and engineer a turnaround, but given that Yang could not manage that itself, that sounds increasingly unlikely.
Another option that has been discussed is keeping the structure of the Google search advertising deal but deleting the name Google and replacing it with Microsoft. That would not give Yahoo the revenue that the Google deal would have given it, but it might just keep Yahoo shareholders patient enough to await a new CEO and a new strategy.