Yahoo CEO Jerry Yang To Step Down

JagsLive was one of several readers to point out Jerry Yang's departure as Yahoo CEO. He's not leaving the company; he will return to his former role as Chief Yahoo, whatever that entails. Yang has been under fire in recent months from investors for his handling of Microsoft's recent acquisition attempt."Yahoo, under fierce financial pressure, has begun a search to replace company co-founder Jerry Yang as chief executive, the company said Monday. 'Jerry and the board have had an ongoing dialogue about succession timing, and we all agree that now is the right time to make the transition to a new CEO who can take the company to the next level,' Chairman Roy Bostock said in a statement."

Isn't it kind of sad

when a company's main goal is to be acquired as soon as possible?

Re:Isn't it kind of sad

Well, in the case of Yahoo, sure, they've already gone public. But for startups? Getting acquired is the dream. You don't have to deal with those bastard accountants, and everyone gets a payout.

Re:Isn't it kind of sad

It's the dream for the investors. Employees who don't live near the new corporate offices, or who liked actually getting anything done, or the latest who weren't there long enough to have received options, often wind up really hurt by such corporate purchases.

Re:Isn't it kind of sad

Different shareholders have different dreams. And shareholders are hardly the only investors in a company: those who work there have legal rights as well, and may be served better by different corporate strategies. Being purchased by Microsoft, for example, has been the death knell of many companies with valuable products or even profitable businesses.

Re:Isn't it kind of sad

Seriously, the company you work for does not exist to enrich your life. It exists to enrich the life of the owner(s). You are paid a stipend to perform labor because the owner(s) believe that your work will further enrich them.

Re:Isn't it kind of sad

You seem to be missing a fundamental shift that has occurred in the U.S. and around the world over the last 30 years. You are right, the customer is king and that any companies primary goal should be to serve their customers. And in the case of Yahoo, as well as most other large American corporations that's exactly what they are doing...

What you are missing is the shift that has occurred as to who exactly the customer is. Now days, for most large corporations the customer is the stock holder. We, the consumers are the product that is being sold. With Yahoo, Google, MSN etc. it's about how many eyeballs they have looking at their pages. For companies such as Ford, GM, Target, WalMart it's all about the size of their consumer base. That's why Ford and GM don't spend a lot of time building cars that tomorrows consumers might want. Their only focus is to build as many of whatever cars the consumer is buying today.

In this new world, as far as the corporations are concerned we're just a bunch of whores and their all fighting to see who is going to be our pimp.

Re:Isn't it kind of sad

A company's main goal, seen from the shareholders point of view (that ultimately of course control the company) is to make money.

Microsoft offered $33 per share - the yahoo share is now around $10.

If I was a shareholder I'd be pissed as well.

Dividends?

I just looked at the YHOO numbers and noticed there is no dividend. Watching some prophetic videos of Peter Schiff [youtube.com], he seems to be saying that every American stock is basically a speculative gamble, and that there is no place to invest in a company with a real balance sheet in the states.

Can anyone "in the business" comment on what he's saying? Is there a possibility of returning to the more formal method of investing as a stake/stockholder and receiving a share of real profits?

Re:Dividends?

No- because investors today think the stock price means everything. Played that way, the entire thing is a giant pyramid scheme waiting to collape... oh too late.

Re:Dividends?

Can't watch video since I'm on a machine without flash (or sound for that matter), but it's Schiff.

So he'll be pointing out that the US economy is fake, that it's all borrow and consume, and the US dollar is set to drop by a huge amount. And hence you should invest all your money overseas, via his firm of course.

He's basically right in principal, though I think he underestimates just how badly the US bursting will hurt the rest of the world, and he doesn't seem to notice that the US housing bubble is a dwarf compared with the UK... On Asia he's probably right, for the end game anyway.

Owning "growth" stocks that pay no dividends is gambling pure and simple. See Enron for how easy it is to create phantom earnings - it's a little harder to do so when you have to pay that dividend out... But that isn't US specific.

I would expect Schiff to not have any huge problems with US miners (of all sorts), US agriculture, and US oil companies. He does have the reverse of the norm view that the US has more "government risk" than other countries.

As in the US is more likely to declare a "windfall profit tax" and steal your dividends when those companies do very well as the domestic economy collapses or to simply confiscate your gold, etc than say China is. The really sad thing is that he's probably right on that one...

Re:Dividends?

Only very few tech companies that are huge and have been around forever pay dividends. The only examples I can find in the tech sector that pay dividends are IBM, Intel, Sony and HP.

The entire point of a publicly traded company is to increase shareholder value. One easy way to do this is to simply give the share holders money in the form of dividends. The other choice is to invest back into the company. If the company is still growing then there's a good chance that investing $X million into R&D/employees/capitol improvements/whatever will result in the company improving it's market capitalization by more than $X mill. If that's the case, then that produces more value for the shareholder and is the proper choice.

Basically dividends, and stock buy-backs which are effectively the same thing, are an easy way out when a company has more money than it knows how to make useful investments with.

Re:Dividends?

Basically dividends, and stock buy-backs which are effectively the same thing, are an easy way out when a company has more money than it knows how to make useful investments with.

Or basically dividends allow your investors the option to take part of your profits and either put them back into the stock or use them for income or other purposes.

One symptom the lack of dividends leads to is companies feeling compelled to branch out in order to make use of the money they have on hand; they usually aren't as good at their new tacked-on field, and the formerly well-focused company that the investors bought into no longer exists.

Re:Dividends?

I'm not sure what your question is really about. Certainly many companies -- and nearly all that have been around for any length of time -- are profitable. Yahoo is quite profitable, generating over $600M of profit last year. So in that sense I'm not sure what you mean by "speculative gamble". Yes the market moves quickly and companies' fortunes can rise and fall, but it's been that way since capitalism was invented.

With regard to dividend payouts. In a high-growth company, the investors often prefer the company to retain earnings to fund future growth opportunities. When there aren't enough high-value growth opportunities and the cash starts piling up, usually companies will then start paying dividends (Microsoft, for example).

Because of US tax law, it's actually better for most investors if the company uses extra cash to buy back its stock (thus reducing shares outstanding, and increasing the price of the shares that remain), rather than pay it out as a dividend. The former results in a capital gain, which presently in the US is taxed as low as 15%, while the latter counts as ordinary income. Many companies do stock repurchases, sometimes in addition to dividends: Intel and Microsoft for example. This is another perfectly legitimate way to give money back to the investors.

Re:Dividends?

If the companies don't issue dividends, the only reason to buy its shares is to sell those later, at a profit. That is a Ponzy scheme, it works on times of inflation and that's all, without severe inflation, if fails. Now, when the companies issue dividends, they can be avaliated on a P/E basis, and bought because of those dividends. There is no need to resell the stocks in order to make profit. That is a stable market (that can become a ponzy sceme sometimes, but doesn't need to be one).

That the US government encorages the first, and not the latter, tells a lot.

Something everyone always forgets, or just ignores

Jerry Yang was never meant to be Yahoo's CEO.

He took ever when Terry Semel took a gigantic shit on the company. He failed to act on Yang's and Filo's suggestion that Yahoo acquire Google when that was still possible. This was when they were still using PageRank, prior to their major search engine acquisitions. I rememnber at the time that this was going on, I was constantly talking to Yahoo people about how much sense it made for them to do so. I also remember the looks on their faces when they all came back with "Semel's not going to do it." He also amassed a private fortune at the company's expense while letting Yahoo go down the drain.

They kicked him to the curb and fell back on Yang as interim CEO. He finally stuck to the position when it looked like that was all that would keep the shareholders happy. But it was simply never supposed to happen.

If I blame Yang for anything, it's for ever letting Semel head the company in the first place.

I've been cheering his rejection of Microsoft...

...and I hope I'm not the only one. I actually use Yahoo Shopping on a regular basis, but if Yahoo were acquired by Microsoft I'd stop immediately, and find an alternate vendor-aggregator. Just a matter of principle (and maybe as much aesthetic as anything), but Microsoft just icks me out.

Kinda funny because it troubles me little to support an empire which would probably be just as evil if it had the same amount of power, Apple's. But Apple has an aesthetic sense, and has thus slipped perhaps-irrationally behind my defenses.

This whole Yahoo mess is also a fine example of the downside of going public -- you have amoral raiders screaming the battlecry "shareholder value" and using that to bludgeon anyone in a company who makes a principled decision which might not maximize stock prices in the short term.

(Mod me +2/-1 incoherent?)

Re:I've been cheering his rejection of Microsoft..

... a company who makes a principled decision which might not maximize stock prices in the short term.

It's all well and good when there is any "long term" to think about... but in the case of Yahoo, there's simply none. So it was a bad decision no matter how you look at it.

Re:I've been cheering his rejection of Microsoft..

I look at it from the point of view of a Yahoo user (of various services) and I feel it was a great decision. Yahoo isn't going anywhere - they are a PROFITABLE company, even if they don't rake in billions per quarter. a few hundred million bucks is nothing to sneeze at.

Re:I've been cheering his rejection of Microsoft..

Companies continue to exist until they run out of money. Yahoo! made a $92m profit last quarter and they have assets worth over $11bn. They are growing, albeit slowly, so it will be a long time before they go away. They still have a recognisable brand and a lot of customers.

He's so screwed!

Should have sold it back when M$ was offering $33 a share. It's kinda pathetic he had to beg M$ to buy now. I don't think he has done enough "plan B" for Yahoo as a company. It doesn't take a genius to predict that regulators in US won't be too happy with this kind of merger with Google.

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Yahoo, under fierce financial pressure, has begun a search to replace company co-founder Jerry Yang as chief executive

"Your search did not match any documents."

Why aren't shareholders suing?

I think the Yahoo/Microsoft saga is one of the most shocking displays of directors' self-interest vs their shareholders' interests. For the sole reason of maintaining independence, Yang and the rest of the Yahoo board instituted poison pill defences worth millions, attempted to a deal with a competitor which was good short term but very bad long term and held out for a price (in the absence of any other interest too) that was way above their previous closing price.

In hindsight shareholders have lost $20 billion. At the time of the offer the premium was around $10 billion. Astronomical numbers to waste just so a board of directors can maintain their personal wish to remain independent.

Its an indictment of the USA's corporate law that shareholders have not sued for breach of fiduciary duty. If they can, but haven't, well they deserve all they got.

Jerry Yang - good riddance. Just becasue you can create an online yellow pages in your garage, (and get very lucky), does not qualify you to run a billion dollar company.

Jerry is too nice to be CEO

I know Jerry and he is smart and insightful, but way too nice to be a CEO in an industry where he has to compete against SOBs like Ballmer and Schmidt. Jerry is polite and considerate. He is thoughtful and modest. The other guys are rude, arrogant, aggressive, nasty folk.

Jerry did a lot of useful changes, but what he didn't get that it is all about perception of being a leader and being on the path upward. A lot of the issue for the market is PR versus reality. And, let face it, search and search advertising are the things the market views as keys to future success and Yahoo has fallen further behind in this area. The decision to outsource search to Google by Yahoo may prove to be one of the top 5 greatest business mistakes of all time and Jerry has to share blame for that as well.

Jerry didn't move boldly enough, but his Board should have known that his base style wouldn't allow it. He should have reorg'ed immediately and publicly, giving folks ownership and accountability. You get the job but you get fired if you don't hit the goals. He let key services stagnate. Yahoo mail took too long to fix their UI to match Google and Yahoo still charges for POP access. Yahoo was the calendar leader, but Google launches a slightly better calendar and is viewed as the leader, even without a customer base. Yahoo Groups is a leader but is old and stale compared to something like Ning. There are lots of examples of how to upgrade their services out there for Yahoo and they seem to ignore them and let others steal mind share and leadership from them.

I fear that it is too late. Yahoo is the AOL of Web 2.0. It is only a matter of time.

Ya...what?

I'm a former "Yahoo", and I've got to say that I spent much of my time hoping someone would buy the company, if only to mindwipe the boneheaded middle and upper management.

They could've been the AOL in an AOL/Time Warner sandwich — that "gem" that someone else paid too much for.

Now? Forget it. I did.

Yahoo search surrendered the search biz when they agreed to send search marketing results through google. Even with the Department of Justice shooting that down, well, it's a hell of a statement when even your competitor chooses The Other Guy.

Re:bye bye

Looked like his judgment was clouded by arrogance. He did not refuse to sell he just refused the price claiming it was too loo and claiming that Microsoft gravely overestimated Yahoo's problem hmmm... Guess what Yang, seems you were the one overestimating your value. John C Dvorak made an interesting argument about this deal "Yahoo! is not worth $44 billion. Period. You could buy General Motors lock, stock, and barrel for $14 billion, name all the cars "Google Sucks," and get more bang for the buck."