Yahoo's Jerry Yang on a very hot seat
Joe Nocera gives Yahoo CEO Jerry Yang a very public drubbing in his New York Times column, accusing him of shirking his fiduciary responsibilities to shareholders.
Nocera, who writes about financial issues for the paper, concluded:
A takeover by Microsoft was your last, best hope of rewarding your long-suffering shareholders. Now that opportunity is gone. It says here Mr. Icahn is not going to go as gently into the night as Mr. Ballmer did -- and if I were a betting man, I would be taking odds that your days as Yahoo's C.E.O. are numbered.
It'll be better for everyone to have someone in that role who understands who he's supposed to be working for. Wouldn't you agree?
As I wrote Saturday, Yang and his No. 2, Sue Decker, are on a short leash, and will very soon have to explain and show how they are going create shareholder value above what a Microsoft marriage would have delivered. Yang and Decker might be on the right track with the changes underway, but they are now working in a negatively charged environment, with pundits and shareholders lobbing bombs into Yahoo's board room.
Yahoo board Chairman Roy Bostock
(Credit: Duke University)While Yang is taking the brunt of the criticism, Yahoo's board of directors, led by executive Chairman Roy Bostock, pulled the strings that led to Yahoo's miscalculation in handling Microsoft's bid to acquire the company. It was just about the money. Forget about Yang's bleeding purple, founder's desire to stay independent and antipathy toward Microsoft. For $37 per share Yahoo's board, or less, was willing to sell out. Microsoft's desire for a union faded as Yahoo's board played hard to get, and eventually Gates and Ballmer soured on the whole deal.
Corporate raider Carl Icahn is hoping to bounce the board in the upcoming proxy battle at the annual shareholder meeting on August 1, but that's not likely to bring Microsoft back to the negotiating table.
Yahoo is not on its last legs or unable to articulate a business plan. It's a profitable company with huge assets, but it's hard to look great compared with Google. The messaging has gotten out of Yahoo's control, which has put Yang and company in a perpetual defensive mode.
Speculation is starting about who might be the next CEO of the company if the founder is bounced. It will be someone from the outside who has loads of experience and credibility in running an large media and technology company. And many of the current board of directors will have gone on to other things.
Dan Farber is editor in chief of CBS Interactive News, which includes CBSNews.com and CNET News. He has more than 25 years of experience as an editor and journalist covering technology. E-mail Dan.
-R
The only people who lost money betting on the Yahoo-MS merger are total idiots who shouldn't be investing in the first place.
Sorry, but you're wrong. You're just wrong. The owners of the company are the shareholders... period. In the eyes of the *law* (I mean legal responsibility here), Yang works for them... period. That's why he and the rest of the board are being sued by a number of stockholders for not concluding this deal, as well they should be.
Imagine that you were the investor in a restaurant and you hired a manager to manage the place for you. Now, imagine that the manager decided that your prices were too high and that everything in the place should be 50% off. He decides this independently, without consulting you. According to your logic, that's ok... the customers are deliriously happy and he's working for them right?
Oh, and then he decides that everyone is pay too low and he doubles everyone's pay. He decides this independently, without consulting you. According to your logic, that's ok... the employees are deliriously happy and he's working for them, right?
And, at first, you're ok with this. You're not making nearly as much money as before, and you may grumble, but you're still making some profit and that's ok. Then a new competitor shows up on the block. He provides better service, even though his prices are higher and he pays his employees less.
All of a sudden you start losing a lot of money, because you're product isn't as good but also because you're paying your people way above market rate and you're giving your customer massive discounts. You tell your manager "improve the product", "cut the pay down to what our competitor pays" and "increase our prices to what our competitor charges". But the manager, like a 5-year-old child, says "No! I don't work for you - I work for the customers first and the employees second and I'm doing right by them so go away!". Are you now powerless to stop him?
I know Jerry doesn't like to face reality (obviously), but back in '96 when he took all of these people's money and became obscenely rich, he became nothing but a glorified manager. It is his *legal obligation* to put the owners of the company first. The owners of the company are the shareholders... period.
*That* is capitalism running its course.
Cheers,
- Bill
bedney42's analogy may be over-simplified but it points towards right direction. NYTimes has nailed it, how Jerry with his massive ego inserted insane poison pills in to HR policy and how childishly he acted. Jerry does not even own 5% of Yahoo! it may be his invention but he auctioned his baby to wall st (and is a billionaire for that reason)and firepad, as much an expert you are on corporate governance, I think for an average observer through out the deal talks Yahoo did not act in good faith esp. towards Microsoft or its own shareholders.
Great to see that cool heads have finally prevailed at Microsoft. Nevertheless, it was a seriously missed opportunity by Yahoo shareholders.
http://pacificgatepost.blogspot.com/2008/05/yahoos-board-and-its-shareholders.html
They should have been more vocal. Now it's too late. Their board did not serve them well.
The business people are ruining the tech world. They have no concept of what works in tech and why. These are the idiots crying about the failed buyout when if it had succeeded they would have been crying harder.
And know what, if shareholders who are dissatisfy, they can sell their shares in the OPEN MARKET. And know what else? If Microsoft wants to buy Yahoo, they can buy more than 50% of the shares in the open market. And know what Yahoo is a public company. There's nothing stopping anybody to buy up another company in the open market if it's public. And know what, the reason why Microsoft went to Yahoo to make that offer is because if Microsoft buys the shares in the open market, it would be more expensive for them!!!
Secondly, why is the hell would I take business classes? They are the least common denominator of college courses. I am a Computer Science MS student. Why would I demean myself and take college courses for retards?
Don't cry because you were not smart enough to sell those Yahoo shares. Short term investors get what they deserve.
Yahoo breezed past profit estimates the 2nd quarter of 2008.
The business people are ruining the tech world. They have no concept of what works in tech and why. These are the idiots crying about the failed buyout when if it had succeeded they would have been crying harder.
Yang works for the "customers"? when is he going to start??? when I am making money selling short, as a general rule that means that Google has most of the "customers". Yang needs to step up to the plate and do something that makes him look intelligent instead of self serving......then again, why? shareholders, by your account, mean nothing. Jerry might want to buy back the company he started? ROTFL
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by Thomas, David
June 15, 2008 5:38 PM PDT
- Muddy, muddy waters. Who's to say, that the decision to NOT go with Microsoft was not in the best interests of the shareholders in the long term?
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Showing 1 of 2 pages (35 Comments)Sure, there is a financial responsibility, but the make short-sighted decision, in which you see Yahoo breaking up, and speeding to an early end (as Yahoo) only gets shareholders money now. When the dust clears, in a short-term "now" decision, there is usually nothing left.