It's Official: Jerry Yang Has Won

Sure, at $19.80 a share, Yahoo!’s (YHOO) shares now find themselves below even where they were on the eve of Microsoft's (MSFT) unsolicited $44.6B offer.  But make no mistake about it: Jerry Yang has won.

Don’t get me wrong, the first thing you learn in finance is that the objective of the financial manager is to maximize shareholder value.  But that misses one major point: up until this year, Jerry Yang was never the CEO (or CFO) of the company.  He was Chief Yahoo and a legendary figure in web history.  From the get-go, he and co-founder David Filo hired experienced managers to run the company and worry about the share price.

As a former shareholder who bought thousands of shares in the $20-25 range and ultimately sold my entire position in the $28-30 range, I won’t lie, I was displeased with Yang (and the entire Yahoo! board, that essentially “won” too by being voted back on).

But as a fellow entrepreneur, I give Yang a lot of credit and yes, respect, for proving to be resilient, persistent, tenacious and ultimately, hard headed enough not to listen to everyone (including me) who said “it’s over, YHOO is MSFT’s”.

Yang supporters - and MSFT denigrators” will argue that MSFT would have ruined YHOO, too.  But that’s all moot now.  YHOO is in bed with Google (GOOG), Yang is in control… and having hinted at seeking to bring in former AOL chief Jon Miller to replace him - only to realize Miller was unavailable for at least one more year to a non-compete he signed with AOL upon his departure - Yang is in charge for some time to come.

Don’t get me wrong, Yang might very well seek a replacement anyway… and might very well do so now that he is in control, but that is the thing - Yang won the battle that he cared about: to retain control of an independent Yahoo!

Say what you want about all of this, but while it’s great to be aware of what others are telling you, remember that they are biased and have their own agenda.  To Yang - a billionaire many times over, born in Taiwan but now sitting on the most popular global web media brand - this is all icing on the cake… and sticking it to MSFT, Carl Icahn et al., the cherry on the icing.

Comments

[ksmithdc:]

Buy Yahoo now before any further events transpire with Google.

2008 Aug 03 11:00 AM

[techy:]

so you think its great that shareholders are getting screwed.....but yang won his ego battle.

did he really win?? i think everybody lost...except maybe MSFT cash pile, since it did not get wasted on yahoo.

Icahn and other shareholders have no choice since msft is not interested....so they are letting yang run the shop for a while.

but the ball is in their court...will they increase the value of shareholders or they will let yahoo share price slowly melt....so that MSFT comes back with $25/share offer next years??

2008 Aug 03 12:23 PM

[sf94127:]

As a Google shareholder I am pleased with Yang's victory because this shores up Google's leadership position.

2008 Aug 03 01:19 PM

[mouth:]

It is sad that an individual who destroys shareholder value is a "Winner". It reminds me of the CEO's of the Finance companies. Shares have tanked ....

2008 Aug 03 02:27 PM

[thku4grace:]

The sad fact is for the long term, Yahoo is a great long term----- short play. In the next couple of months it may rebound back into the low 20's but there isn't anything that will get it back to 30. Short some now, and some more if it gets to 22 or so. The Internet is a very mature market but can be better monetized by those that can identify those types of opportunities. Sadly, Jerry Yang does not have that ability, at all. This might be an early call, but the die is cast. Yahoo is done.

2008 Aug 03 05:06 PM

[James Z:]

Yahoo shareholders have spoken out: we can't let Microsoft to ruin Yahoo in such a way that full of lies. If you are sincere in acquiring Yahoo, show us the money. We are not stupid.

2008 Aug 03 07:54 PM

[220881:]

he has won a battle but not the war! Lets see how his leadership raises the dwindling yahoo stock prices to a more acceptable level before you award him the prize of winning, shall we?

2008 Aug 04 01:45 AM

[220881:]

Jerry Yang may have won this battle but not the war, he still has to contend with ill behaved employees that tend to abuse their authority on the yahoo internet and if he fails then yahoo will be facing severe financial problems from not only the FCC but the DEA as well.

2008 Aug 04 01:48 AM

[LocalHero:]

thku4grace, It would be a huge risk shorting YHOO right now. There's no certainty that MSFT is done trying to buy it.
I'd say YHOO is more of a short term buy as it is likely to go to low/mid 20's with the slightest of good news. MSFT bid $31 on it. That's a pretty strong argument that it's worth at least 20.

220881, I agree that we need to see Jerry prove/improve YHOO's value before he can be called a winner. He has a tough road ahead of him in this economic environment.

2008 Aug 04 12:38 PM

[wiseguy001:]

How do you "respect" a "entreprenuer" and "board" who have managed to take a $34/share guaranteed offer and whittled it down to $20 in less 6 months???? Forget about how likeable the guy is and that he founded this wonderful company...that's not the point now. He and the board have a fiduciary responsiblity to maximize shareholder value for investors. This obviously has not happened and the market is betting that it won't in the near to mid term...just look at the price today... Why would any investor support a weak management team and challenged company in place of a $34 firm offer??? It's no wonder a lot of these so called "institutional money managers" can't even beat the S&P

2008 Aug 04 02:04 PM

[truthinvesting:]

The winner of the rat race is still a rat

2008 Aug 05 09:02 AM

[Jason Rines...:]

Is it still a surprise the lack of management talent in many, many sectors? It's all about thyself these days in America. Those at the top have an additional responsibility to the tens of thousands of lives in the downstream. Yang's moves were typical technocratic. His experience of being a specialty manager in the dot com bubble created incredible wealth. But such talent is now replicated by Chinese and Indian managers whom also understand financials along with tech. Such principles in management in America will come again but not before the narcassistic turds are flushed. That will take time.

2008 Aug 05 04:49 PM

[Josh Thompson:]

You knew your own bias because almost all your ideas included a disclaimer that started with "don't get me wrong" Your final gratuity to Yang was all insults to others. All emotion and little logic. I'm sure your sermon worked with the choir.

2008 Aug 06 12:57 AM