Yahoo’s Jerry Yang to step down after Microsoft, Google deals fail

Font Size

Print

Feedback

Email

Discuss

Nov 18 : Yahoo Inc chief executive officer Jerry Yang will step down amid mounting pressure from investors after he botched takeover talks with Microsoft Corp and failed to broker an online advertising agreement with Google Inc.

Yang, 40, will stay on the board and remains CEO until Yahoo finds a replacement, the company said on Tuesday. He took the top job at the 13-year-old internet company in June 2007, promising to win back users and advertisers lost to market leader Google.

Yang's departure may be a precursor to new talks with Microsoft, which bid $47.5 billion for Yahoo this year. Shareholders criticised Yang and fellow co-founder David Filo for seeking a higher price while sales growth and profits continued to drop. The stock has lost about 60% since Yang took over, erasing more than $20 billion of market value.

"At a minimum, it signals that the board wants to reopen negotiations with Microsoft," said Jeffrey Lindsay, an analyst at Sanford C Bernstein in New York. "The board is frustrated with deteriorating performance and wants to move ahead."

There isn't a time frame on finding a replacement for Yang, said Brad Williams, a Yahoo spokesman. Yang had been in discussions with the board about seeking a replacement for "some time," he said. He will return to his position of chief Yahoo when the company finds a successor.

"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 the statement. The company has hired Heidrick & Struggles International Inc to help find a new CEO.

Yahoo, based in Sunnyvale, California, rose 47 cents, or 4.4%, to $11.10 in extended trading after closing at $10.63 on the Nasdaq Stock Market.

Microsoft spokesman Bill Cox declined to comment on speculations that his company might make a renewed effort to acquire Yahoo.

Yahoo investors withheld one third of their votes for Yang's re-election to the board in August. He sidestepped a proxy fight with Carl Icahn, agreeing to give the billionaire investor three slots on the board. Yahoo's net sales growth dwindled to 3% last quarter from 14% a year earlier. Profit has dropped in 10 of the past 11 quarters.

Google abandoned an agreement to sell ads alongside Yahoo's search results this month after US regulators threatened a lawsuit to block the partnership, saying it would give Google too much power. Yang had counted on the deal to generate as much as $450 million in operating cash flow in the first year.

"The strategic necessity here is for this company to merge with Microsoft," Larry Haverty, a fund manager at Gamco Investors Inc in Rye, New York, said in a Bloomberg Television interview. The company manages about $24 billion, including Yahoo shares.