Yahoo CEO Yang stepping down

Posted by admin

November 17, 2008

Jerry Yang, Yahoo’s CEO and co-founder is stepping down today. He will continue as the CEO until they find a ’suitable candidate’. Yang will return to his old position as ‘Chief Yahoo’.

Yahoo! shares went up with news that Microsoft may once again be interested in acquiring the company at $17-18 a share. Microsoft, who offered the dwindling company $33 a share in February 2008 at a total cost of $45 billion, can now buy the company for less than one-third of the cost and in it’s own terms.

One of the biggest questions plaguing shareholders is ‘What exactly does Yahoo! do?’.  It is the #2 search engine but not in the same league as Google. It is a poor multimedia/entertainment company. It is a second-rate news outlet and content-provider. Its contextual-ad program Yahoo Publisher was a dismal failure. Yahoo Video is a non-event.

Yahoo does have some good services like its directory, Yahoo Mail and does get a lot of visitors. However, it does not have a working business model to successfully convert those hits into cash. As Larry Kudlow of CNBC pointed out, Yahoo does not have a ‘retail click-though’ business model which means that it does not have a steady stream of revenue like Google’s highly successful AdSense program. Even Microsoft’s Live Cashback program is gaining popularity.

Yahoo’s failures are colossal: Yang messed up a deal to be purchased by Microsoft. Google pulled out of a search deal with Yahoo. It looks like Yang cannot face the pressure of being a miserable failure and has stepped down. Is Yahoo is running out of ideas? Unless they can define what exactly the company does and more importantly, how they intend getting close to their competition, it does not look like they stand a chance. Most of Yahoo’s top managers have already left the company. Does the world need a mediocre Yahoo?