As a previous post on this blog had mentioned, the Yahoo-Google-Microsoft drama will not end so easily. The number of twists and turns this story has been taking are pretty dramatic, and forms a soap opera worthy of spinning into a hard-balled corporate story. For a matter of many months now, it has seemed clear that Yahoo does not have what it takes to challenger Google and Microsoft in the online space; the only logical path forward was to tie up with another party and then make a pitch to fight for the top. However, when Microsoft made its bids for Yahoo in order to form a much stronger team to challenge Google, it was the Yahoo Board led by Yang which played hardball, pitching for more money.
This was a traumatic situation for shareholders, since the Yahoo stock was around half the offer price, and here was this company offering a pretty good deal for shareholders. And then you have the Yahoo management refusing this deal, or finally holding out for a higher offer that never came. And then, the collapse. The Yahoo share, which was quoting close to $20 during this offer period, is now quoting around $10. Yang made promises during this period, and they have not come true, probably the reason why he is stepping down now:
Shares of Yahoo Inc soared nearly 15 percent on Tuesday on hopes that the departure of Jerry Yang, its embattled chief executive, would clear the way for a deal with Microsoft Corp. Yahoo announced late on Monday that Yang, whose leadership had come under growing criticism from shareholders after he failed to agree to a deal with Microsoft, would step down from his role as soon as the board finds a replacement.
Analysts said Yang's decision to step down is a sign that the board was frustrated with his efforts to turn around the company, which he co-founded. Yang took on the CEO role in June 2007. "Jerry's resignation as CEO reflects failed promises he made while fighting off Microsoft's offers, and the board's displeasure with his go-it-alone strategy," wrote Jefferies & Co analyst Youssef Squali in a research note.
Yahoo's board must be hoping that this new management decision may lead to re-starting of discussions with Microsoft, even though Microsoft is not likely to offer above $30 now. And given the collapsed deal with Google (due to anti-trust), Yahoo would most likely die down rather than reach a top position on its own.