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Yahoo CEO Jerry Yang
Internet giant hit by failures, poor economy, falls to lowest trading value since .com bust

Once offered $32/ a share to merge with Microsoft, Jerry Yang's Yahoo Inc. is in financial trouble. The giant's stock closed Thursday at $15.58/share -- a five year low.  Not since its meteoric rise and fall with the dot com boom and bust between 1999 to 2001 had its stock traded at such low levels. 

While today shares have risen slightly to just over $16/share, they still remain at lows not seen in at least 5 years, leaving Yahoo with very tough questions.  The latest fall is just an episode in a steady decline that has been taking place over the last several months.

Yahoo is betting big that its advertising deal with Google will go through, but there's much uncertainty there.  The Department of Justice is under pressure to oversee the deal and may nix it, if it feels Google is gaining too much advertising control from it.  Further, the deal may fare even worse internationally in places such as the EU, which have stricter antitrust laws.

Outside the advertising deal with Google, Yahoo has relatively little that it can hope will bring the big impact needed for a turnaround.  While Google has enough cash to throw millions at wild ideas and spend massive amounts to further its "do no evil" philosophy, Yahoo is struggling just to make ends meet.

Yahoo's search market share, along with Microsoft's, slipped again in the most recent Comscore analysis.  Only Google showed gains.

The company has already ruled out a merger.  Getting a fair deal from a jilted Microsoft might be hard.  And outside Microsoft, there's few that could hope to improve Yahoo's competitive position against Google by an acquisition.

While times are tough, Yahoo continues to plug away at little efforts.  It recently launched a new developer platform which it hopes will create some sort of positive change.  However, it pulled the plug on other efforts such as its latest attempt at a social network, Yahoo Mash.

One thing Yahoo can be thankful of, at least, is that billionaire investor Carl Icahn has been curiously quiet after investing big in the company, and voicing his intention to speed a sale to Microsoft or someone else.  With three board seats at his disposal on Yahoo's 11 person board, Icahn certainly could leverage some kind of influence, possibly demanding CEO Jerry Yang's ouster or a sale.  However, if Icahn has any plans for the troubled company, he's keeping remarkably quiet about them.

In the end, Yahoo's key dilemma is that it simply is not as big and does not have as much resources as Google.  Google already provides nearly every service Yahoo does, and has the means to implement them better.  And Google has name recognition with casual users that Yahoo currently does not. 

Perhaps most importantly, advertising, the life blood of the search engine business is now falling even more into Google's hands with Yahoo's advertising pact.  All this adds up to a big question for Yahoo -- as its stock and confidence slides, what can it hope to do to stay competitive? 



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The only viable solution...
By iVTec on 10/3/2008 11:18:17 AM , Rating: 2
...at this time seems to be selling yahoo to a big fish,possibly MS or Google...Mr.Yang is on the verge of ruining his own career...




RE: The only viable solution...
By Murloc on 10/3/2008 12:03:57 PM , Rating: 5
better to sell to MS, otherwise there would be some antitrust problems imho...


RE: The only viable solution...
By spluurfg on 10/5/2008 5:37:10 AM , Rating: 5
MS can probably wait a while, since Yahoo is still vastly overvalued.

Yahoo: Price/Earnings ratio = 35, Earnings growth = 0.3%
MS: P/E = 14, Earnings growth = 14.8%
Google: P/E = 25.4, Earnings growth = 26%

Highest valuation, lowest earnings growth of the lot. The share price is still factoring some likelihood of an acquisition IMO.


RE: The only viable solution...
By porkpie on 10/6/2008 7:15:26 PM , Rating: 2
I honestly expect Yahoo to see earnings shrinkage in the next 2-3 years.


RE: The only viable solution...
By tmouse on 10/3/2008 1:12:13 PM , Rating: 5
It's kind of grim when your best hope is to become a vestigial organ for Google.


RE: The only viable solution...
By heffeque on 10/3/2008 11:21:23 PM , Rating: 2
But does anybody use Yahoo anymore? Other than Flickr I really don't know about anything useful that Yahoo has. Can anyone tell me anything worth using in Yahoo that isn't Flickr? I know that Yahoo is still up there in Alexa but... how can it be so high? I just don't understand who uses Yahoo anymore.
(although I do come from the country were 99% of internet searches are made in Google, but that's another story :-P


RE: The only viable solution...
By Captain828 on 10/4/2008 5:25:49 AM , Rating: 1
yahoo messenger, yahoo mail, yahoo maps. yahoo news...


RE: The only viable solution...
By kuyaglen on 10/4/2008 8:42:04 AM , Rating: 2
In the past I have used Yahoo Mail, but I just didn't like its interface (seemed too busy for my liking) and as for New, Maps & Messenger services, they would not be missed. I do like how in Yahoo Maps you can add a 2nd trip, but google's street views is just amazing and getting better (coverage wise).


RE: The only viable solution...
By heffeque on 10/4/2008 5:31:38 PM , Rating: 4
yahoo messenger = gtalk, skype, msn messenger, ichat...
yahoo mail < gmail
yahoo maps < google maps
yahoo news < igoogle + all the news feeds you add to igoogle


RE: The only viable solution...
By Parhel on 10/4/2008 5:41:24 PM , Rating: 3
Yahoo divided by Microsoft is the square root of Google.


RE: The only viable solution...
By MrSmurf on 10/5/2008 8:48:44 PM , Rating: 3
Agreed. Everything Yahoo does, Google does better with the expection of news which plenty of other sites do better.


By lukasbradley on 10/4/2008 9:51:42 AM , Rating: 2
When you have billions of dollars in assets, I feel it's a little hard to "ruin a career". Even if that net worth drops to a paltry.... say..... $100M..... I think Jerry will be fine.


RE: The only viable solution...
By Pavelyoung on 10/5/2008 10:12:35 AM , Rating: 4
It can't be sold to Google because it would violate anti trust laws. Microsoft wont even look at them again until the pps hits $9 or so, then they will step in and offer $13 - $15 per share. Which is less than half of their original offer.

Yang should have taken MS up on its first offer. Instead he rejected the offer because MS isn't owned by the right political group.


By DeepBlue1975 on 10/3/2008 3:57:40 PM , Rating: 3
quote:
Yahoo said:
Microsoft thinks they'll get as for pennies!
Lets say no to $32/share!
We wanna be richer than Carlos Slim and Bill Gates together just overnight!!
MS has deep pockets and will surely accept all our conditions muehehehehehe


quote:
Microsoft Said:
Ok buddies, say no to our offer. When your shares drop to $0.5 will reconsider if your company with a crappy name is worth buying it or if we might as well save our pennies for people who at least KNOW how to get easy money when they get the opportunity to do so


I say:

Ya... who??




By formulav8 on 10/3/2008 4:36:52 PM , Rating: 2
I'm definitely the type that love to see greed lose out, like yahoo is definitely reaping now. But the problem is there is ALWAYS some innocent peoples involved that get burned as well like shareholders and employees. :(

Jason


By DeepBlue1975 on 10/3/2008 6:50:11 PM , Rating: 2
It's inevitable.
No one of us is innocent, we all play by capitalism's rules and, while sometimes the darkest moments hit others and we just see it on tv, sometimes we have to bear our share, too.

I've been laid off by a shrinking company and I didn't die nor commit suicide because of that. I simply got out there till I found a new job.


By PhreakyMike on 10/5/2008 1:35:59 AM , Rating: 2
I disagree with you. Yang proved that his Pride ruled out the most important factor in this whole deal. Shareholders and net worth. Yes, they'd be controlled by MS, but sometimes a stumbling giant needs a bigger giant's helping hand. Not taking those MULTIPLE offers took a big toll as we can see.


By mindless1 on 10/5/2008 2:03:08 AM , Rating: 2
True, if I were a yahoo stockholder I'd definitely be seeing red right now but look at it from another perspective. If they're failing and MS buys them, then the loss hurts MS - a company that is already paying people just to use their service. The end result is what Google gain is always a loss to someone but that's how it is supposed to work.

Bottom line - they were overvalued, outperformed, and everything is as it should be. Wait and watch other overvalued companies that didn't burst lose more market share. We all knew this couldn't last, the wonderous part is really how well Google has done where everyone else fails but I suppose search engines are a bit like OS to the extent that people want to use one primarily, not switching back and forth all the time unless their preferred option has a serious problem in meeting a certain goal.

That's bad for MS BTW, cloud computing and online services will be a big market taking away from the OS market. Google could jump in with a minimal 'nix OS and put a giant dent in MS' profits if DRM started moving large enough percentages of users away from commercial software.


Yangs ego will cost shareholders
By gemsurf on 10/3/2008 5:39:05 PM , Rating: 2
Jerry Yang cut off his nose to spite his face. Unfortunately, he pissed away his shareholders chances of coming out OK.

Nice move Jer! I wouldn't attend any shareholder meetings, without a bodyguard!




RE: Yangs ego will cost shareholders
By Myg on 10/4/2008 4:29:18 AM , Rating: 2
Shareholders knew the risks of buying stocks, they deserve everything coming to them.


By mcturkey on 10/4/2008 6:33:06 PM , Rating: 2
They also have a right to expect the leaders of the company to look out for the best interests of the shareholder. Jerry Yang and the board of Yahoo did not do so when they declined the Microsoft buyout offer. I said it then, I'll say it again - every one of them should be out of a job right now, because Yahoo's shareholders will never again see the sunny side of $32 per share for many many years, if ever.


Hoping for a bailout?
By therealnickdanger on 10/3/2008 11:08:46 AM , Rating: 2
In all seriousness, though, Yahoo could very well turn into junk stock. If there was blood in the water before, now there's a mutilated bloody stump that nobody wants. Microsoft would do well to come in and offer them $10/share.




RE: Hoping for a bailout?
By Ammohunt on 10/3/2008 1:39:35 PM , Rating: 2
That much? $5 a share would be fair


Mmm...
By Oralen on 10/3/2008 1:28:26 PM , Rating: 1
As the great Robin Williams once said about AOL:

"You've got mail !"
(Mimes a crash")
"I hope you don't have stocks !"

Seriously though, it's a pleasure to watch.
With Jerry Yang so hooked on his ego, and Icahn in love with cash...

Pride and greed, finally rewarded.

And as for those who have always seen Microsoft as the evil empire:

They had money, and they had a plan (unlike their ridiculous "pay for search" scheme)... I don't see that as "evil".

And they got kicked in the nuts.

If they finally buy what remains of Yahoo, after Yahoo as tried to poison the deal every way they could, it will be at such a low price that Icahn will weep, and that Yang will get punched by every shareholder who sees him in the street.

So it's even sure it will happen.

And, as an internet user I couldn't care less about what happen to Microsoft search or Yahoo.

They both kind of suck, don't they?




RE: Mmm...
By Hare on 10/4/2008 2:53:24 PM , Rating: 3
quote:
And, as an internet user I couldn't care less about what happen to Microsoft search or Yahoo. They both kind of suck, don't they?

Ultimately, you should. Competition is good for the consumer.


Not only Yahoo.
By Clauzii on 10/3/2008 3:14:50 PM , Rating: 2
Most shares are falling these days :-/




RE: Not only Yahoo.
By Clauzii on 10/3/2008 3:28:55 PM , Rating: 2
Sorry, forgot a link to a realtime trade-page for NASDAQ:

http://www.euroinvestor.dk/Stock/showindexinfo.asp...


Mr. Yang...
By Mark Gupta on 10/3/2008 4:55:38 PM , Rating: 2
Jerry your time as CEO is running out.




RE: Mr. Yang...
By Alias1431 on 10/3/2008 11:01:41 PM , Rating: 2
That's why he has his sad face on.


I'm shocked. SHOCKED!!!
By amanojaku on 10/3/2008 11:11:17 AM , Rating: 2
Here I was ready to sell my non-existent Yahoo! stock so I could get rich!

Actually, the only shocking thing is that Yahoo! hasn't folded yet considering the economy and the company's leadership.




pathetic
By Aberforth on 10/3/2008 2:58:14 PM , Rating: 2
He said MS undervalued the company and asked $36 per share- now look what happened. All those years in business school, just wasted. It was never his company to hold a personal grudge, the moment you ask a bunch of people to invest in your company- it's gone, you have to take into consideration the feelings of other people. And what about the share holders- no one talks about them.Yahoo= bunch of losers.




Time to move on
By jodhas on 10/4/2008 3:37:59 PM , Rating: 2
Yahoo, nice knowing you. Its the natural evolution of things, survival of the fittest. Thanks for pioneering the web but it seems like Google out influenced everyone.

See ya.




Got some change?
By xeddit on 10/3/2008 11:28:42 AM , Rating: 1
Yea, I think his career is in the dumps. So much for holding out w/ M$.

BTW, great pic!




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