Yahoo: The Road to No Deal

The following is a timeline of key events leading up to Yahoo’s Aug. 1 annual meeting.

2006 January – Yahoo Inc begins to report a string of weak quarterly results, reflecting competitive missteps by the company, market share gains by rival Google Inc, changes in the online advertising landscape and weakening spending in some ad segments.


2006 – Microsoft Corp and Yahoo begin preliminary talks on various partnerships, including a merger.

Semel2007 February – Yahoo, under the leadership of previous Chief Executive Terry Semel, tells Microsoft it is not the right time to discuss a takeover, as the YangYahoo board sees great potential in its new advertising technology and by making internal organizational changes.

2007 June 12 – A strong minority of Yahoo shareholders challenges the company’s direction, as CEO Semel comes under fire. Nearly a third of votes cast at the company’s annual shareholders’ meeting oppose some of Yahoo’s directors.

He said, she said

If you’re getting lost in all the nasty rhetoric between Yahoo, Microsoft and Carl Icahn, here’s our primer on what the fuss is all about.

They’re trading insults (again) after the latest deal talks broke down (again). Microsoft’s top lawyer is pressing the antitrust issue in Yahoo’s Google search partnership in Washington today, while Yahoo’s top lawyer accused Microsoft of trying to force a fire sale.

Don’t forget, this comes after Monday’s war of words over the latest Microsoft proposal to acquire Yahoo search, which was floated with the help of billionaire activist investor Icahn and rejected by Yahoo (again). Here’s what they’re saying about that deal:

Sue Decker’s Super Powers

decker.jpgYahoo’s not-so-secret reorganization got its official nod today, with three new divisions created to centralize operations and report to Sue Decker.
Jerry Yang still stars as Chief Executive in the company’s statement, giving his blessing to moves he said will accelerate Yahoo’s ability to make money off the web.
Decker herself told us that the new organizational structure reflects absolutely no change to her status or power within the organization: “I am responsible for the business and Ari (CTO Ari Balogh) is responsible for the technology and engineering.”

Wall Street, however, thinks Sue may be too modest in her self-assessment. We spoke to several analysts who stressed her rise to prominence and the long-held assumption (at least since last June, when Yang took over from Terry Semel) that Decker was still being groomed for CEO-dom.
Here’s what some of them said:

Jeffrey Lindsay of Sanford C. Bernstein:
“It begs the question, what is Jerry Yang doing? … It looks like there has been a significant shift in power towards Ms. Decker. Clearly if there are three new groups reporting to her that would suggest to us that she’s taking a larger role in operations.”
“It’s hard to see what significant difference it’s going to make. Certainly previous reorganizations haven’t achieved a great deal. Reorganizations at most large Internet companies don’t seem to achieve very much, so we’re not terribly optimistic.”
Colin Gillis of Canaccord Adams:
“Either way that’s not the change that certain investors were seeking …We certainly see Sue taking an increasingly active role in the company and Jerry probably likes his Chief Yahoo title after what’s been a very grueling year.”
“Our take is that this reorganization is driven by Sue. Sue’s got to have a little bit of time here. If this reorganization can get pulled off without disrupting the business momentum (i.e. Yahoo doesn’t miss expectations or lower forecasts) … then points to her for that and that would be a success.”

Yahoo to Microsoft: No, No, No

yangthinking.jpgDetails of the backroom dealings between Microsoft and Yahoo from an investor lawsuit were unsealed by Delaware Chancery Court Judge William Chandler on Monday.

The document adds some color to what we already know, including a history of rebuffing offers dating back to 2007, criticism over the size of Yahoo’s severance plan by its own consultants and Yahoo’s recently hired CTO.

Notes by a Yahoo participant from a phone call between CEO Jerry Yang and Microsoft CEO Steve Ballmer Ballmer also appear to indicate that Yang quickly rejected Microsoft’s January 2008 overtures, as his predecessor Terry Semel did a year before (at the far higher price of $40).