Time For Yahoo to Straighten Up or Sell Out

With Terry Semel's departure, the time has come for Yahoo (YHOO) to either grow up or sell out - no in between.

Semel did help this company emerge from the technology nuclear winter of 2000-2003, but was more than compensated for his efforts. Shareholder activists were and still are furious with Semel's recent annual earnings. They were simply not earned. Yahoo's Board of Directors needs to absorb that black eye.

What is puzzling is Jerry Yang's return. Sure, Jerry is an affable technologist--but that's it--he is a technologist and not a hard-charging, everyday CEO. Sure the interim moniker is attached, but is there no one on Yahoo's bench? Susan Decker, elevated to the role and title of president, is probably not on deck. If it were imminent, it would have been done.

What is more interesting, and I wrote about it back in mid-May, is the appointment of Blake Jorgensen as the new CFO. Jorgensen came from the investment banking firm Thomas Weisel Partners. I do not believe Jorgensen is there to build out the pension system at Yahoo. Investment bankers tend to believe that long term is 12 months or less, not 12 YEARS. It was an interesting choice by Yahoo, and it could be quite telling as well.

Investors are voting quickly about Semel's departure with a quick 5% lift in the stock post announcement. Semel was a polarizing figure and never had the consistency or even-handedness necessary with investors or Wall Street analysts. The die was cast and he needed to go.

Yahoo will occupy a fair bit of headlines going forward. Jerry Yang at the "helm" and Susan Decker having the president title, but not CEO, and a new CFO with a banking background; hmmm...this could be fun to watch. Yahoo carries a healthy $37 billion market cap, more a reflection of the industry's hyper-growth curve than Yahoo's past execution skills. The Yahoo properties are household names and valuable, but need to be managed and led cohesively and decisively. The longer it takes to find the "permanent" CEO, whether it be Yang, Decker or an outsider, the more shareholders will continue the nervous tick.

The time may be now, and right, for Yahoo to be acquired by Microsof (MSFT), or merge with eBay (EBAY). Yahoo needs to reach out with a mega-partner if it has any chance to chip away at Google (GOOG)....

YHOO 1-yr chart

Disclosure: none

Comments

[Tom B:]

"The time may be now, and right, for Yahoo to be acquired by Microsof (MSFT), " Combining two artherosclerotic, 20th century companies hardly seems a recipe for success.

2007 Jun 19 08:32 AM