With Bartz Banished, Yahoo Board Not Prioritizing CEO Search

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News Posted: Mon, Sep 12 2011 7:27 PM
One of the near-cardinal rules of Wall Street is that companies who dismiss their CEOs typically fall all over themselves to reassure investors that they're hunting for new candidates and/or have tapped great interim leaders to fill the gap. Yahoo has opted to take a different approach and is reportedly focused on whether or not the company should be sold, rather than soliciting resumes.

The move is an understandable one given Yahoo's long-term difficulties, but it could undermine the confidence of investors who feel the company's best course is to remain together. It's been a little over two years since Microsoft and Yahoo inked an agreement to share Microsoft's search engine and web results, but Bartz had trouble turning the cost-savings into improved revenue despite downsizing the company's sales force, launching new services, and cutting new agreements with the advertising firm By2Clicks.



Yahoo's troubles were front page news earlier this spring when its partner, the Alibaba Group, spun off its online payment business (Alipay) without bothering to inform Yahoo first. Bartz also took substantial flack for the Microsoft deal's perceived failure to deliver as promised--an accusation that isn't entirely fair, given the fact that it was her predecessor, Jerry Yang, who turned down Microsoft's offer to buy the company for $44.6 billion. Yang scorned the offer as 'undervalued'; as of this writing, Yahoo's market cap is $17.7B.

Rumors Fly: AOL And Yahoo Could Mean "You've Got Fail!"

Right now, the two leading rumors regarding Yahoo's future revolve around a potential buyout by onetime CEO and company co-founder Jerry Yang or an acquisition offer from AOL. Yang currently owns 3.63 percent of Yahoo, but might find allies in fellow co-founder David Filo (5.8 percent) and possibly Daniel Loeb. Loeb, of Third Point LLC, recently acquired 5.1 percent of Yahoo stock and has called for much of the board to resign, writing:
From the failed Microsoft sale negotiations, to a subsequent bungled and disappointing search deal with Microsoft, through a series of misguided CEO selections, and most recently the Alipay debacle, this Board’s failures have destroyed value for all Yahoo stakeholders…Against this background, it is evident that merely replacing the Company’s CEO – yet again – will not be enough to alter the direction of the Company...

We insist that Mr. Bostock, who championed Ms. Bartz’s hiring and led the charge against the Microsoft deal, promptly resign from the Board.  We also demand that fellow Directors Arthur Kern and Vyomesh Joshi, who have stood by silently during these last five years of woeful performance, join Mr. Bostock in resignation. 

Finally, we can only assume that Director Susan James, the President of Tri-Valley Animal Rescue, will also resign, given her close relationship with Ms. Bartz.  If she does not do so voluntarily, the Board should request her resignation as well.
Loeb's acidic comments regarding the failed Microsoft acquisition may make him a poor ally for a potential Yang/Filo team-up, but the three men would control a significant voting block.As for AOL, it wouldn't be the first time the beleagured company made eyes at Yahoo, but analysts are skeptical. For one thing, AOL's decision to acquire the
Huffington Post earlier this year for $315 million hasn't stopped the company's financials from continuing to decline (revenues fell 8.4 percent last quarter, to $542 million). Michael Arrington's just-announced departure (following a spat with AOL leadership) isn't likely to inspire a sense of security in the company's long-term chances, either.

AOL looks to be an abysmally poor fit and it's hard to imagine Yang having any credibility with shareholders. Microsoft could end up with the opportunity to cherry pick the bits of Yahoo it would've wanted all along, for just a fraction of what it offered to pay three years ago.
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omegadraco replied on Tue, Sep 13 2011 12:59 AM

I find it a bit sad to see what once was the place to go on the internet for everything slowly crumble. It sounds like it has been mismanaged time and time again. I guess we all know they should have taken the Microsoft deal at this point but hindsight is 20/20.

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AOL/Yahoo - Bad mix. No need for Yahoo to slum with AOL, and their CEO wants to run both companies...into the ground? Both are already there, why should anyone give you the wheel?

At least I have a plan for Yahoo and have a team that's ready to rock and roll and make that company better than it has been in recent memory.

Nobody else can say that, and nobody else can step in at the price I am willing to come to work for and actually get something done. Fixing Yahoo is not about a Million dollar signing bonus or a Million dollar salary. It's about a company that's lost faith in the leadership. It's about families that are not sure if they're going to have a paycheck, it's about a piece of internet history being mismanaged which deserves better.

Read more and get Loeb and his friends to invest backing ME as the next CEO of Yahoo. I can do this and am more than ready to go:

http://docmurdock.posterous.com/why-would-you-want-to-be-ceo-of-yahoo

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