Nearly 18 years after he launched Yahoo (YHOO) with a fellow Stanford student, Jerry Yang resigned from the company's board Tuesday and relinquished his other positions at the pioneering Internet giant, which has been struggling to find its way in a changing competitive landscape.
The 43-year-old Yang -- who had come under increasing fire from investors critical of Yahoo's performance -- did not indicate what he plans to do next. But analysts said his departure may clear the way for a sale of Yahoo's Asian assets and, potentially, a broader overhaul of the troubled company
where Yang has wielded significant influence for years. Some suggested other board members may step down as well.
"This could be the start of a new day," said longtime investor Eric Jackson of Ironfire Capital, who has been critical of Yang and the board in recent years. "I think we'll see other shoes drop soon."
Yahoo chose veteran PayPal executive Scott Thompson earlier this month to serve as the company's CEO, after previous CEO Carol Bartz was fired last fall. But even with new leadership, critics, including New York investor Daniel Loeb, one of the company's biggest shareholders, had complained that Yang had an unhealthy influence over the board and was responsible
for repeated stumbles, including the rejection of a lucrative $44.6 billion sale to Microsoft in 2008.
Loeb did not respond to a request for comment Wednesday.
Yang first teamed with fellow Stanford student David Filo to launch Yahoo as a much-needed guide to navigating the newfangled phenomenon that was the Internet in 1994. In a statement released by Yahoo on Tuesday, Yang said his years with the company "encompassed some of the most exciting and rewarding experiences of my life.
"However," he added, "the time has come for me to pursue other interests outside of Yahoo." Yang, whose personal wealth was estimated by Forbes at $1.1 billion last year, did not elaborate.
Yang added in the statement that he is "enthusiastic" about Thompson's appointment and the new CEO's ability to lead the company "into an exciting and successful future."
Making a clean break
In addition to his seat on Yahoo's board, the Sunnyvale company said, Yang resigned from the boards of Yahoo Japan and the China-based Alibaba Group, two Internet businesses in which Yahoo owns a significant stake. A spokeswoman said Yang will no longer hold the title of Chief Yahoo, a loosely defined
position in which Yang has helped to oversee company strategy in recent years.
The company has not commented on reports that it has been negotiating a sale of its Asian properties or that it had recently discussed offers by private equity firms to buy a sizable stake in Yahoo -- a move that Loeb and others feared would have helped Yang solidify his control over the company.
Despite the recent criticism, Yang was once regarded as among Silicon Valley's pantheon of visionary business leaders.
"You have to give this guy tremendous credit for creating this company, that became and really still is an Internet icon with global reach," said Scott Kessler, an analyst who follows Yahoo for S&P Capital IQ.
Yahoo has 700 million global users and reported more than $1 billion in revenue last quarter. But the company has been rapidly losing market share to Facebook and Google (GOOG) in digital display advertising, where Yahoo once was the global leader, according to advertising metrics company eMarketer.
Despite a partnership with Microsoft's Bing search engine, Yahoo has also been losing share in advertising tied to Internet searches. Bing recently passed Yahoo to become the second most popular search engine in the U.S. after Google, according
to data from comScore, leaving Yahoo in third place.
While many critics blamed Bartz for failing to turn the business around over the past two years, some have also blamed Yang and Chairman Roy Bostock for not anticipating major shifts in the Internet business, such as the dominance of Google's search engine or the rapid rise of social networking sites such as Facebook and Twitter.
"He cast such a big shadow over this board. They would not make any decision without asking themselves 'What does Jerry think?' That attitude led to indecision, and as a result we've seen what happened over the last six years," Jackson said.
"He's a figure who, rightly or wrongly, is associated with lost opportunities," Kessler added.
Filo, who avoided any executive position at Yahoo, continues to serve as what the company calls "a key technologist," a loosely defined role in which he advises and oversees some technical operations.
Yang, in contrast, has been involved in running Yahoo and served as its public face during key moments in the company's history.
He was chief executive for a very brief period when Yahoo was still a startup, before hiring a more experienced manager, Tim Koogle, as CEO in 1995. Yang also played a key role in a shake-up that replaced Koogle with veteran entertainment executive Terry Semel in 2001.
Microsoft offer rebuffed
After the company stumbled in 2007, Yang once again led a shake-up in which Semel was ousted and Yang emerged as CEO. He held the job for two years, and earned lasting resentment from some shareholders when he balked at Microsoft's offer to buy the company for $33 a share.
Yahoo's stock closed Friday at $15.43, less than half the Microsoft offer, although it rose nearly 3 percent in late trading after Yang's resignation was announced.
Some of that gain came after several analysts reported Yang's departure would probably clear the way for Yahoo to proceed with a sale of its Asian operations or some other transaction that could either benefit shareholders or allow the company to invest in developing new business.
"We're not sure that Yang stepping down was necessarily required for a deal to get done," Macqurie Securities analyst Ben Schachter wrote in a note to clients. But he added that Yang's departure "could remove a potentially complicating factor."
Some suggested Yang may have been unhappy with the direction the company is going. "I think it's the clearest sign we've seen that the company will be carved up in one way or another, and Yang doesn't want to be associated with what's going to happen," said Rick Munarriz, an analyst at the Motley Fool investment website.
Yang has been a Silicon Valley "institution," Munarriz added. "The company will miss him, but the company that will miss him will not be the same company that we've seen before."
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YAHOO THROUGH THE YEARS
February 1994: Yang and fellow Stanford University graduate student David Filo found Yahoo. April 12, 1996: Yahoo, with 49 employees, has a highly successful IPO. Jan. 3, 2000: Stock reaches all-time high of $118.75. June 26, 2000: Yahoo swaps its Internet search partnership with Inktomi for fast-growing rival Google, making Google the new engine powering Yahoo searches. Sept. 26, 2001: Stock bottoms out at $4.05. Feb. 18, 2004: Yahoo stops using Google's search engine and begins relying on its own search technology, deciding to compete directly with Google. 2005-2007: Bare-knuckles battle with Google bruises Yahoo. By January 2007, Google has a majority of core U.S. searches, while Yahoo's share has slipped to 27 percent. June 2007: Co-founder Yang becomes CEO when Terry Semel resigns. Jan. 29, 2008: Yahoo announces it will lay off 1,000 workers, its largest layoff since the dot-com bust. Feb. 1: Microsoft makes an unsolicited takeover bid to buy Yahoo for $44.6 billion in cash and stock, at $31 a share. Feb. 11: Yahoo's board rejects Microsoft's offer. June 12: Yang says Yahoo has rejected a third and final bid from Microsoft, and announces a 10-year advertising partnership with Google. Yahoo's stock drops 10 percent. The Google deal later draws opposition from antitrust regulators and is never consummated. Nov. 17: Yahoo announces that Yang will step down as CEO. Jan. 13, 2009: Carol Bartz becomes CEO. July 29: Yahoo and Microsoft announce a 10-year deal to collaborate on search. The next day, Yahoo's share price is at $15.14, about 60% lower than Microsoft's takeover bid a year earlier. Sept. 6, 2011: Carol Bartz is abruptly fired by the board of directors. Jan. 5, 2012: Yahoo recruits eBay executive Scott Thompson to be the new CEO. Jan 17: Yang resigns as company director, ending his tenure with the company he cofounded.
Source: Yahoo, comScore, Bay Area News Group archives
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