Yang Exits, What's Next for Yahoo?

The tumultuous year and a half tenure for Jerry Yang at Yahoo (Yhoo) NASDAQ is about to come to an end.  Yang,  a co-founder of the once formidable Internet and search company, returned to Yahoo in July 2007.  He returned in what many considered as the “white knight” to replace former CEO, Terry Semel.  Semel, who was not a technologist, had tried to expand Yahoo into a media company as a way to compete with its prime competitor Google.  Semel’s efforts had been failing and Yahoo continued to lag and fall further behind Google.  Expectations on Yang’s return and leadership also failed to turn out as hoped.  During Yang’s short-lived tenure the firm has only seen its fortunes continue to decline.  According to a piece in CNN,

Things only got worse for Yang, due to both his own and previous management missteps and also external forces, including a hostile takeover attempt by Microsoft (MSFT), which was followed by a proxy fight by activist shareholder Carl Icahn.     

Yahoo also saw its search business decline and its strong graphical ad business suffer in the midst of the current economic meltdown.

There has also been an exodus of major executives over the last year, along with recently announced layoffs of 10 percent of the company, which are set to take place December 10.

In addition, Yahoo’s controversial search ad with Google (GOOG) recently collapsed, and its talks to merge with Time Warner (TWX) online unit AOL have dragged on.  

Yahoo has initiated a CEO search with the help of executive search firm Heidrick and Struggles.  Many names are being bandied about as a possible successor to Yang.  A number of the names being suggested include a former Microsoft executive and current Microsoft executive who according to some analysts might help to increase the likelihood of a deal with Microsoft.  Two names being raised are Kevin Johnson and Brian McAndrews.  Johnson originally headed Microsoft’s first attempt to buy Yahoo.  He recently left Microsoft to become the CEO of Juniper Networks (see earlier blog).  It is difficult to imagine he would leave that position at this point to head up Yahoo.  McAndrews is with Microsoft and is currently SVP of the Advertising and Publishing Solutions Group.   Other individuals include Susan Decker, the current president of Yahoo and a close associate of Yang’s along with Peter Chernin of the News Corp., Jan Miller former AOL head, Meg Whitman former head of eBay and others. Whoever is chosen to replace Yang will be on the hot seat.    

My own guess is someone from the outside will be chosen and possibly a name not yet being floated.  It is nearly impossible to conceive of any successor who will be able to run Yahoo as an independent firm going forward.  Some kind of deal will need to be made.  For the moment, Microsoft will remain on the sidelines until a replacement for Yang is found.  Once this happens we will see whether Microsoft jumps back into the fray.  Stay tuned, this sure to be an interesting but bumpy ride.   

For more:  

MarketWatch

Wall Street Journal 

ZD Net  

Minyanville  

SeekingAlpha  

Silicon Valley/San Jose Business Journal 

Cnet (Yang Memo to staff)  

Silicon Alley Insider  

Deal.com  

Meg Whitman of eBay to Resign

It is official, Meg Whitman, the decade long CEO of eBay will resign her position. She will be replaced by John Donahoe who will become president and CEO effective March 31.

See:

Seeking Alpha
Mercury News
Reuters
Marketwatch
TheStreet.com

Meg Whitman CEO, Ebay to Retire?

According to a story by Mylene Mangalindan in today's Wall Street Journal,

EBay Inc. Chief Executive Meg Whitman is preparing to retire.

Whitman is one of the most powerful women executives worldwide. For sometime now, it has been known that Whitman has intended John Donahoe as her likely successor. Donahoe, who previously worked for Whitman, at Bain & Co., is president of eBay Marketplaces. He joined eBay in 2005. In the Wall Street Journal story, Mangalindan states:

... retirement would come at a critical point for eBay. The company's auction business... accounts for more than two-thirds of eBay's nearly $6 billion in annual revenue but has experienced slowing growth rates for the past few years. Any efforts to reverse the slowdown could involve drastic changes that may be more palatable under a new CEO. EBay has already warned Wall Street in recent months that it may alter how it structures its fees for listing and selling items by collecting bigger fees once sales close.

Should the Journal be right, Whitman is making the correct choice. Despite being extremely successful in running the company, many people agree that much of the fun of using eBay has diminished over the years. While Whitman has been key in many successful acquisitions (paypal) she was also the person in charge during the Skype acquisition fiasco and the recent smaller acquisition of Stumpleupon another questionable transaction. The company needs new blood to find ways to make the site fun again for customers and to get the business model more in tune with changes in the market.

We will just have to wait and see whether the prediction is correct that she will retiring, and if it is, whether Donahoe ends up as the new CEO.

Keep a close eye on the upcoming financial announcements. Stay tuned.

For more:

Valleywag
Los Angeles Times
Business Week
Times Online
The Guardian
Mercury News
CNN Money