Yahoo Loses Jerry Yang

First appeared in the Wall Street Journal

Jerry Yang rode Yahoo Inc.'s swift rise and subsequent decline over 17 years. Now the co-founder of the onetime dominant Internet company has decided to stop hanging on.

Mr. Yang, 43 years old, said Tuesday he was resigning from Yahoo's board, severing ties to the company he co-founded with David Filo in 1995 while both were Stanford University graduate students. Mr. Yang also said he would leave the boards of Yahoo Japan Corp. and Alibaba Group Holding Ltd., in which Yahoo owns significant stakes.

Mr. Yang has been under pressure for weeks, grappling with criticism over his multiple roles at the Sunnyvale, Calif., company—including co-founder, director, former chief executive and large shareholder. Some investors questioned whether Mr. Yang had conflicts of interest as Yahoo in recent months explored its strategic options, including whether to sell all or part of the company.

Mr. Yang is leaving after Yahoo this month hired a new chief executive, Scott Thompson, the former president of eBay Inc.'s PayPal unit. He fills a void created four months earlier when the board fired Carol Bartz. Yahoo is also closing in on a deal to shed its Yahoo Japan and Alibaba stakes without creating a hefty tax bill.

Activist investor Dan Loeb's Third Point LLC in recent months has threatened a proxy fight against Yahoo and called for the resignation of Mr. Yang and several other directors. In a reflection of investor sentiment toward Mr. Yang, Yahoo's stock gained 3% to $15.90 in after-hours trading after the co-founder announced his departure from the company's board.

Mr. Yang himself made the decision to exit Yahoo's board, said two people familiar with the situation. Mr. Yang didn't immediately inform all of his fellow directors that he would step down, these people added.

In making his decision, Mr. Yang also didn't discuss potential external pressures facing the board, said one of the people. "Mr. Yang just decided that now was the time," this person said. "Anything else is speculation."

But another person familiar with the situation said Mr. Yang may have wanted to avoid being a target if a proxy fight were to occur. "He's rich. He doesn't need all this [fuss],'' this person said. "He has a great reputation and he doesn't need it sullied.''

Mr. Yang's departure comes several weeks before shareholders can nominate rival directors to Yahoo's board, beginning Feb. 24, though the company could postpone the schedule. All nine Yahoo directors are up for re-election this year. Yahoo hasn't yet announced the date for this year's annual shareholder meeting.

Earlier this month, The Wall Street Journal reported the company was searching for several new board candidates to replace possible outgoing directors, including Chairman Roy Bostock, according to people familiar with the matter.

In a statement, Mr. Yang said "the time has come for me to pursue other interests outside of Yahoo." He didn't respond to requests for further comment.

A spokeswoman for Yahoo said she had no information about whether Mr. Yang would be replaced and who would take his posts on the boards of Alibaba and Yahoo Japan.

Mr. Yang's exit is the latest chapter for Yahoo and underlines the widening gap between old Internet companies and newer ones. Yahoo was part of an earlier crop of Web companies from the 1990s that helped spark the dot-com boom and came of age as users world-wide began going online.

But after riding that wave, new companies such as Google Inc. and Facebook Inc.—often with younger leaders like 27-year-old Mark Zuckerberg at Facebook—came to prominence with Web technologies such as search and social networking, leaving older firms like Yahoo struggling to catch up.

The resignation of Mr. Yang—who as of November still owned a 3.8% stake in Yahoo, compared with a 5.9% stake held by co-founder Mr. Filo—is a far cry from the glory days of Yahoo. The company began as a hobby for Messrs. Filo and Yang, who created "David's and Jerry's Guide to the World Wide Web," a list of their favorite websites.

In 1995, the duo dropped out of Stanford, took a $2 million investment and incorporated Yahoo. The founders chose the name Yahoo largely for its dictionary definition: "rude, unsophisticated, uncouth," according to an official company history.

When consumers started surfing the Web in the mid-1990s, Yahoo became their trusted guide, a kind of Yellow Pages for the new age. Yahoo went public in 1996 in an IPO that instantly made Messrs. Filo and Yang multi-millionaires. The company adopted an anti-corporate image, with executives who wore jeans and put their feet on their desks.

Mr. Yang, the more visible of the two co-founders, quickly became a poster child of the dot-com boom. At its peak in 1999, Yahoo was worth more than $120 billion—bigger than companies such as Cisco Systems Inc. and Hewlett-Packard Co. today.

But even then, the seeds of Yahoo's decline were being planted. The company failed to realize a crop of "algorithmic" Web-search engines such as Google were a potential threat to its business. More recently, Yahoo grappled with the rise of Facebook while failing to establish a big footprint in mobile devices and new methods of selling online ads.

"The near-term Wall Street reaction is that he [Mr. Yang] wasn't doing a good job, but the longer-term perspective is that he will go down as one of the top 10 Internet entrepreneurs," said Mark Mahaney, an analyst at Citigroup Inc. who has been covering the Internet industry since 1998.

During the dot-com bust last decade, Mr. Yang used his star power to help Yahoo draw in badly needed advertisers by meeting with them personally. "For big clients, Jerry was the man," said Greg Coleman, a former top Yahoo executive. "He was the iconic rock star…and he knew how to work that magic."

In the mid-2000s, Mr. Yang fostered a friendship with Jack Ma, CEO of Alibaba Group. In 2005, Yahoo opted to hand its Chinese operations over to Alibaba, while buying a 40% stake in the Chinese firm for $1 billion. That stake was recently estimated at $14 billion, making it one of Yahoo's most valuable assets.

On Tuesday, Mr. Ma said his relationship with Mr. Yang "has withstood some ups and downs over the past few years, and I have great respect for what he has built and I wish him well."

Mr. Yang was Yahoo CEO between mid-2007 and early 2009, during which time he grappled with an offer from Microsoft Corp. in 2008 to buy Yahoo for more than $45 billion. Mr. Yang and fellow directors turned down the offer, igniting a barrage of criticism.

In an on-stage interview at a conference in San Francisco that year, Mr. Yang deflected suggestions he had let his feelings for Yahoo cloud his decision making. "I know I will be labeled with that forever," he said.

After Ms. Bartz became Yahoo CEO in 2009, Mr. Yang receded from the spotlight. Following her firing last September, Yahoo began entertaining potential investments by private-equity firms to take a controlling or minority stake in the company.

Some Yahoo investors expressed concerns because one of the proposals discussed by Yahoo's bankers involved Mr. Yang aligning himself with a private-equity firm or other buyers and becoming part of a new Yahoo ownership group, people familiar with the matter have said. The activist hedge fund Third Point said Mr. Yang must "declare whether he is a buyer or a seller—he cannot be both."

Yahoo denied there was any conflict and people close to Yahoo said Mr. Yang was acting with the board's blessing and that he had retained his own lawyer to advise him on potential conflicts. Another person close to Yahoo said company directors hadn't expressed any concern about Mr. Yang's motivations.

Within Yahoo, Mr. Yang stepped up his presence after the firing of Ms. Bartz, people familiar with the matter have said. He has attended high-level company meetings and been involved in engineering and corporate development strategy, including Yahoo's $270 million acquisition of ad-technology firm Interclick Inc., announced in November, these people said.

CEO Letter to Yahoo

First appeared on Business Gear Live

So, Jerry Yang has left Yahoo!. Of course, we're interested in knowing how new Yahoo! CEO Scott Thompson would handle addressing the news to his crew, and we've got the full email below to show what he had to say. Spoiler: he has nothing but good things to say about Yang, and Yahoo! as a whole:

Dear Fellow Yahoos,

By now, I think everyone has heard that Jerry has decided that it is time for him to pursue other interests outside of Yahoo! and has resigned all of his positions with Yahoo!.

Obviously, I’ve only been here a short time, but Jerry has had a strong influence on me.  I know that when the Board appointed me as CEO, it was one major step in their plan to help restore Yahoo! to a path of robust growth and industry-leading innovation.  When I came on board, Jerry shared with me his confidence that the company had the foundation and resources necessary to achieve those objectives.  The more I dig in, the more I'm convinced that Jerry is right to have that confidence that Yahoo! can realize its still enormous potential, and I share it.

So it was very encouraging that even as he leaves the company, Jerry expressed his enthusiasm for our ability to create “an exciting and successful future” together – a powerful endorsement from one of the two people who know this company best.  Personally, I am grateful for the support and warm welcome Jerry provided me in my early days here.  His insights and perspective were invaluable, helping me to dig deeper – more quickly than I could have on my own – into some of the key elements of the company and how it operates.

Jerry will clearly be missed, but he has left an indelible imprint on this company he co-founded and built and an internet industry he helped pioneer.  The high standards he set for engineering excellence and a constant push for innovation will remain among the guideposts for our path forward.  Please join me in wishing him all the very best in this new phase of his life.  I assure you, we will make him proud.

Scott

Carl Icahn, Yahoo Board Split Amicably

From USA Today

Activist investor Carl Icahn has decided his work is done at Yahoo after muscling his way on to the slumping Internet company's board nearly 15 months ago.

In a resignation letter Friday, Icahn said he felt like it was time to leave Yahoo (YHOO) so he could spend more time on his investments in other companies.

"I don't believe that it is necessary at this time to have an activist on the board of Yahoo and currently my attention is focused on other matters," Icahn wrote.

Icahn, an outspoken billionaire, spent several months last year denigrating Yahoo co-founder Jerry Yang and the rest of the company's board after Yahoo turned down an opportunity to sell to Microsoft for $47.5 billion, or $33 a share.

That snub still looks like an expensive mistake, with Yahoo shares closing Friday at $17.22.

Icahn struck a truce with Yahoo to get on the board in August 2008 and he is apparently leaving on an amicable note.

In his letter, Icahn praised Yahoo's current chief executive, Carol Bartz, saying she is "doing a great job." Bartz replaced Yang as CEO nine months ago.

Icahn also applauded Yahoo's decision three months ago to hire Microsoft to provide its search results in the United States for the next decade. It's a partnership that Icahn tried to bring together while he was still seeking to get Yang fired. The proposed alliance between Yahoo and Microsoft still requires regulatory approval.

Yahoo, which is based in Sunnyvale, Calif., also had kind words for Icahn, saying it is "grateful for his active role in shaping the future" of the company.

A Yahoo spokeswoman said there are no immediate plans to fill Icahn's seat on the board. Another director, Maggie Wilderotter, plans to step aside at the end of the year.

After Wilderotter's departure, Yahoo will be left with 10 directors, including Yang. Two of other directors, John Chapple and Frank Biondi, joined the board as Icahn's allies.

Icahn remains one of Yahoo's largest shareholders with a 4.5% stake that is currently worth slightly more than $1 billion. He and his investment affiliates spent $1.8 billion accumulating a 5.5% stake last year, but whittled the holdings two months ago by selling 12.7 million shares.

His resignation letter gave no indication whether he plans to sell more of his Yahoo stock now that he has left the board.

Yahoo's fortunes have been sliding for the past three years as Google SEO widened its lead over Yahoo SEO search market and people began spending more time at other popular online hangouts such as Facebook.

Earlier this week, the company announced that its third-quarter earnings more than tripled as cost cutting helped to offset a 12% decline in revenue. The revenue erosion wasn't quite as bad as earlier this year, raising hopes that the company will fare better as the U.S. economy pulls out of its worst recession in 70 years.

Search Is on for New Yahoo CEO After Yang Steps Down

Yahoo Inc said Jerry Yang will step down as chief executive as soon as the board finds a replacement, sending its shares up 4 percent on hopes his departure will clear the way for a deal with Microsoft.

Yang — who will return to his former role as Chief Yahoo, focusing on strategy and technology — tried to carve an independent strategy for Yahoo and was blamed when Microsoft Corp walked away from an offer to buy the company earlier this year.

Rival Google Inc abandoned a search advertising partnership amid regulatory concerns, and Yang faced a growing chorus of criticism from investors and analysts as Yahoo’s shares nosedived.

Yahoo’s months-long talks with Time Warner Inc about combining with its AOL unit — as yet another way to boost Yahoo’s earnings — have also failed to produce a deal.

"Competing with Google is Tough Stuff"

“The company is in desperate need of change and this is clearly one way to do it,” said Ross Sandler, an analyst at RBC Capital Markets, adding that Microsoft could enter the picture again. “Jerry was the roadblock for the last deal getting done.”

Yang has consistently said that he would sell the company for the right price.

Microsoft declined to comment.

Yahoo shares rose to $11.10 in after-hours trading from their Nasdaq close of $10.63.

The shares are down nearly 65 percent from their 52-week high of $30.25, reached in February, two weeks after Microsoft made its $31-a-share offer public.

Microsoft withdrew its $47.5 billion buyout offer in May after Yahoo rejected the sweetened bid.

Yang, a co-founder of Yahoo, took on the CEO role in June 2007, hoping to strengthen its position as an online consumer brand.

“From founding this company to guiding its growth into a trusted global brand that is indispensable to millions of people, I have always sought to do what is best for our franchise,” Yang said in a statement.

Last month, Yahoo announced it planned to cut at least a tenth of its workforce, or about 1,500 jobs, as corporate brand advertisers scaled back spending on Web marketing promotions amid a global economic downturn.

In an e-mail sent to employees, a copy of which was seen by Reuters, Yang said his decision to step down was taken jointly with Yahoo’s board.

“All of you know that I have always, and will always bleed purple,” Yang wrote, referring to Yahoo’s corporate color.

Yang has been talking with the board, which includes activist investor Carl Icahn, about stepping down since before Google pulled out of the search deal in early November, said a person familiar with the talks.

Icahn did not return a call seeking comment.

Yahoo Chairman Roy Bostock is leading the effort to find a replacement, said Yang, who will continue to serve as a director.

“Jerry was miscast in this CEO role as far as running Yahoo at this point,” said Martin Pyykkonen, an analyst at Wunderlich Securities. “He’s much better off running strategy or technology behind the scenes.”

Pyykkonen said it was a step in the right direction for Yahoo, but warned that a lot depended on the board’s choice to replace Yang.

“Because he’s stepping down doesn’t mean the company is going to magically be wonderful again,” he said.

Yahoo has hired the executive search firm of Heidrick & Struggles to look for both internal and external candidates.

The process could take anywhere between four weeks and 12 weeks, the source said.

Analysts listed several executives as potential candidates for the job, including former AOL chief Jon Miller, News Corp President and Chief Operating Officer Peter Chernin, former eBay Inc Chief Executive Meg Whitman, former Yahoo COO Dan Rosensweig and Yahoo President Sue Decker.

The source familiar with Yang’s talks with the board said Decker, No. 2 at Yahoo, was among the candidates being considered.

coYahoo Plans Job Cuts as Profit Plunges

Yahoo Inc. announced plans to lay off at least 10% of its work force, as the struggling Internet company posted a 64% drop in profit and eked out a slight revenue increase in its third quarter.

The new layoffs, Yahoo's second major round of cuts this year, amount to at least 1,500 of Yahoo's roughly 15,000 full-time employees.

The Sunnyvale, Calif., company's stock -- which has nearly halved so far this year -- rose 5.2% in after-hours trading to $12.70, from its 4 p.m. Nasdaq close of $12.07. Investors appeared placated by Yahoo's plans to cope with a weak economy with cost cuts and by signs that an ad-spending slowdown hasn't derailed Yahoo's business. "Management is at least trying," said Youssef Squali, an analyst with Jefferies & Co.

But the results were tempered by notes of caution. Yahoo lowered its annual revenue guidance to a range of $7.18 billion, from its previous forecast of $7.35 billion. The company also narrowed its operating-income guidance.

"An increasingly challenging economic climate and softening advertising demand" were to blame, said Yahoo's chief financial officer, Blake Jorgensen, adding that the company was "disappointed" with results.

Yahoo posted net income of $54.3 million, or four cents a share, for the quarter ended Sept. 30, down from $151.3 million, or 11 cents a share, in the same quarter last year. Revenue increased 1.1% to $1.79 billion.

On a call with analysts, Yahoo executives said results were dragged down by a continued weakness in display ads -- the graphical or "banner" ads that appear on Web pages -- from large brand advertisers, one of the company's most important revenue streams.

When will Yahoo realize hat banner ads have lost much of their impact. Top third banner ads often "leave the screen" when users interact with the page. Yahoo has been trying to counter this flaw with new intrusive forms of banners hat pop out or slide into the screen interfering with the content of the page. Advertisers are less likely to sponsor obtrusive forms of banner advertising that could result in poor brand impressions and actually sour users on the brands involved prior to purchase.

Mobile SEO and new advertising programs for mobile phones have recently been rolled out by Yahoo. Mobile Phone advertising programs could be a significant growth area for Yahoo in the coming months.

World-wide revenue for banner ads rose only 3%, down from double-digit growth in the second quarter. Yahoo President Susan Decker acknowledged that demand from premium-brand advertisers was "mostly weaker than anticipated" in the U.S., while international growth slowed more than expected.

Search revenue from Yahoo-owned and operated sites grew 17%, which was relatively steady with last quarter. Yahoo announced no new plans or startegies to help grow their search advertising revenues.

Yet Yahoo executives stressed that their plan to reverse years of disappointing growth is working despite a tough environment. "I am encouraged that most advertisers who are still spending in this environment are spending with Yahoo," said Chief Executive Jerry Yang.

Mr. Yang said the layoffs and other cost-cutting plans would reduce the company's annualized costs by more than $400 million before the end of 2008.

In an interview, he added that the cost cutting would likely coincide with broader organizational changes that "remove a number of layers" in the company.

Mr. Yang declined to comment on the progress of the Department of Justice's review of Yahoo's search agreement with Google Inc. beyond stating that Yahoo continued to have "very detailed conversations with regulators."

So far, those talks have failed to result in an agreement that would allow the controversial search-ad deal to proceed. The Justice Department continues to build a possible lawsuit to stop the deal, which Yahoo hopes will help generate hundreds of millions of dollars in revenue. In the event of a suit, one or both of the companies could walk away.

Yahoo's 5-Year Low Draws Rebound Bets

Shares of Yahoo Inc. slid to a five-year low Thursday, and options traders appeared eager to bet on a rebound.

Trading in Yahoo options leapt to four times the normal level as investors picked up 168,000 calls that allow them to buy the company's stock and 19,000 puts that allow them to sell it, according to Track Data.

Traders convened around October calls for most of the session, showing particular interest in October $25 calls and October $30 calls. The former are priced at about 15 cents and make money if Yahoo shares pull above $25.15 before Oct. 17. Yahoo closed at $17.75 a share, falling 5.4% in 4 p.m. Nasdaq Stock Market composite trading.

Looking further ahead, one trader pursued a "call spread" in January contracts -- buying January $22.50 calls and selling twice as many January $27.50 calls. Priced at about 50 cents, the positions make money if Yahoo climbs above $23.

In many cases, options traders appeared to be getting in position for a noteworthy event that could boost Yahoo's share price, experts said.

With the stock trading well below the $33 price that Microsoft Corp. offered for Yahoo, the company's board -- now staffed with activist investor Carl Icahn and two of his allies -- might feel compelled to oust Chief Executive Jerry Yang, they said.

Other experts said that Microsoft CEO Steve Ballmer could make another attempt to acquire Yahoo before year's end, which would also prompt an upward move in the company's stock.

"Ballmer might come back when the price gets low enough because he knows he needs the platform," said Paul Foster, a strategist with TheFlyOnTheWall.com.

Several Plays Made in Intel Options

Traders pounced on Intel Corp. amid a broad-based selloff in semiconductor stocks. Intel shares have fallen 10% since last Friday's close, and closed the Thursday session at $20.52, down 4.7%, in 4 p.m. Nasdaq Stock Market trading.

Trading in Intel jumped to three times the normal level Thursday, as investors picked up 168,000 calls as well as 50,000 puts.

While the calls outnumbered puts more than 3 to 1, which suggests bullish activity, most traders appeared to be selling the calls.

They unloaded large numbers of September $21 calls, in particular.

Analysts said the activity suggests that traders think the stock will start to stabilize or that the shares are unlikely to climb above $21 apiece before Sept. 19.

By: Tennille Tracy
Wall Street Journal; September 5, 2008

Yahoo Vote-Counting Error Overstated Support for Yang

Yahoo Inc. said a greater number of shareholder votes were cast opposing the re-election of Jerry Yang and other directors than reported, after a company responsible for processing multiple shareholder votes said it made a mistake in handling those of one large investor.

Acknowledging the tabulation error, Yahoo said 66% of votes were cast in support of Mr. Yang, who also is Yahoo's chief executive, down from the 85% it had announced. Yahoo Chairman Roy Bostock received a 60% favorable vote, down from 80%. Yahoo director Ron Burkle's share of supportive votes fell to 62% of votes cast from 81%.

The disclosure didn't affect the outcome of Friday's shareholder election, in which all directors were re-elected. It weakens the endorsement Mr. Yang and other directors involved in negotiations with Microsoft Corp. received during Yahoo's shareholder vote last Friday and could serve as possible ammunition for critics who continue to seek strategic changes at the Sunnyvale, Calif., Internet company.

Broadridge Financial Solutions, which was responsible for sending Capital Research Global Investors' voting preference to be tallied, was behind the glitch. Capital Research, which owns at least 6% of Yahoo, has been a steady critic of the Yahoo board's decision to reject a number of offers from Microsoft.

Chuck Callan, senior vice president of regulatory affairs at Broadridge, said a printout the Lake Success, N.Y., company sent to the voting tabulator mistakenly cut off the first digit of the number of shares the investor wanted to withhold for certain directors. The incident was isolated and triggered by a unique combination of factors, including the fact that at least 100 million shares were being withheld. Broadridge -- which processes votes for 14,000 meetings a year -- determined that no other meetings within the past 18 months were affected, and it has fixed the problem.

Broadridge investigated Monday at the request of Capital Research Global Investors, which suspected that the number of withheld votes ought to have been higher. A few investors Tuesday drew attention to another issue -- the fact that significantly fewer votes were cast this year than in previous years. Some have suggested that investor confusion around Carl Icahn's proxy contest, which he ended with a settlement that allows him and two others out of a group he recommends to join the board, could have resulted in more ballots being invalidated than in previous years.

Shareholder voting glitches aren't uncommon given the number of companies involved in the process, says Claudia Allen, chairwoman of the corporate-governance-practice group at Neal Gerber & Eisenberg LLP, a law firm in Chicago. "Most of the time these things happen you don't hear about them," she said, describing this as a case of a shareholder "sending a message."


By: Jessica Vascellaro
Wall Street Journal; August 6, 2008

Yahoo Announces New Board - Formal Announcement

Jerry Yang Last Days ?

Yahoo! Inc., a leading global Internet company, announced today that it has reached an agreement with Carl Icahn to settle their pending proxy contest related to the Company's 2008 annual meeting of stockholders.

Under the terms of the settlement agreement, eight members of Yahoo!'s current Board of Directors will stand for re-election at the 2008 annual meeting: Roy Bostock, Ronald Burkle, Eric Hippeau, Vyomesh Joshi, Arthur Kern, Mary Agnes Wilderotter, Gary Wilson and Jerry Yang. In view of the settlement agreement with Mr. Icahn, and the termination of the proxy contest, Robert Kotick has decided not to stand for re-election to the Board at the 2008 annual meeting.

Following the 2008 annual meeting, the Yahoo! Board will be expanded to 11 members. Carl Icahn will be appointed to the Board and the remaining two seats will be filled by the Board upon the recommendation of the Board's Nominating and Governance Committee from a list of nine candidates recommended by Mr. Icahn, which includes the eight remaining members of the Icahn slate of nominees and Jonathan Miller, currently a partner in Velocity Interactive Group and former Chairman and CEO of AOL.

As part of the settlement agreement, Mr. Icahn, who owns an aggregate of 68,786,320 shares, or 4.98% of Yahoo! common stock, has agreed to withdraw his nominees for consideration at the annual meeting and to vote his Yahoo! shares in support of the Board's nominees.

"We are gratified to have reached this agreement, which serves the best interests of all Yahoo! stockholders," said Yahoo! Chairman Roy Bostock. "We look forward to working productively with Carl and the new members of the Board on continuing to improve the Company's performance and enhancing stockholder value. Yahoo! is a world-class company with an extremely bright future, and collaborating together, I believe we can help the Company achieve its ambitious goals."

"This agreement will not only allow Yahoo! to put the distraction of the proxy contest behind us, it will allow the Company to continue pursuing its strategy of being the starting point for Internet users and a must buy for advertisers," said Yahoo! Co-founder and Chief Executive Officer Jerry Yang. "No other company in the Internet space has our unique combination of global brand, talented employees, innovative technologies and exceptional assets, attributes that will help us take advantage of the large and growing opportunity ahead of us. I look forward to working together with our new colleagues on the Board to make that happen."

Mr. Icahn said, "I am very pleased that this settlement will allow me to work in partnership with Yahoo!'s Board and management team to help the Company achieve its full potential. While I continue to believe that the sale of the whole Company or the sale of its Search business in the right transaction must be given full consideration, I share the view that Yahoo!'s valuable collection of assets positions it well to continue expanding its online leadership and enhancing returns to stockholders. I believe this is a good outcome and that we will have a strong working relationship going forward. Additionally, I am happy that the board has agreed in the settlement agreement that any meaningful transaction, including the strategy in dealing with that transaction, will be fully discussed with the entire board before any final decision is made."

In response to Mr. Kotick's decision to step down from the Board, Mr. Bostock said, "I would like to personally thank Bobby for his dedicated service to Yahoo! these past 5 years. Bobby has been a valuable resource to our Board and the Company and we are grateful for his contributions. He wanted to help see the Company through this recent chapter, but made it clear to me that once the proxy contest was resolved, he was eager to focus his efforts on his work as CEO of the newly merged Activision Blizzard and his other business and civic pursuits."

The Company intends to file the full text of the settlement agreement later today with the Securities and Exchange Commission, and will also file and mail to its stockholders, supplemental proxy material.

Forward-Looking Statements

This press release (including without limitation the statements and information in the quotations in this press release) contains forward-looking statements that involve risks and uncertainties concerning Yahoo!'s strategic and operational plans. Actual results may differ materially from those described in this release due to a number of risks and uncertainties. The potential risks and uncertainties include, among others, the expected benefits of the commercial agreement with Google may not be realized, including as a result of actions taken by United States or foreign regulatory authorities and the response or acceptance of the agreement by publishers, advertisers, users and employees; the implementation and results of Yahoo!'s ongoing strategic initiatives; the impact of organizational changes; Yahoo!'s ability to compete with new or existing competitors; reduction in spending by, or loss of, marketing services customers; the demand by customers for Yahoo!'s premium services; acceptance by users of new products and services; risks related to joint ventures and the integration of acquisitions; risks related to Yahoo!'s international operations; failure to manage growth and diversification; adverse results in litigation, including intellectual property infringement claims; Yahoo!'s ability to protect its intellectual property and the value of its brands; dependence on key personnel; dependence on third parties for technology, services, content and distribution; general economic conditions and changes in economic conditions; potential continuing uncertainty arising in connection with Microsoft's various proposals to acquire all or part of Yahoo!; the possibility that Microsoft or another person may in the future make other proposals, or take other actions which may create uncertainty for our employees, publishers, advertisers and other business partners; and the possibility of significant costs of defense, indemnification and liability resulting from stockholder litigation relating to such proposals. More information about potential factors that could affect Yahoo!'s business and financial results is included under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Yahoo!'s Annual Report on Form 10-K for the fiscal year ended December 31, 2007, as amended, and the Quarterly Report on Form 10-Q for the quarter ended March 31, 2008, which are on file with the Securities and Exchange Commission ("SEC") and available at the SEC's website at www.sec.gov. All information in this release is as of July 21, 2008, unless otherwise noted, and Yahoo! does not intend, and undertakes no duty, to update or otherwise revise the information contained in this letter.

Yang Mulls Partnership Deal

Yahoo Look to Bezo at Amazon and Diller at IAC and Ask.com for New Deal

Yahoo Inc. Chief Executive Jerry Yang Wednesday admitted to mixed feelings about the withdrawal of Microsoft Corp.'s merger bid and reiterated Yahoo continues to consider Microsoft proposals for various partnerships.

Mr. Yang, appearing at The All Things Digital conference here, attributed the failed negotiations to more than the disputed price. While price was "the most public issue," he said "regulatory issues and a number of other things" were also concerns. He stressed that it was Microsoft, not Yahoo, that walked away from the negotiating table.

In his first extensive public discussion of the merger, Mr. Yang said the Sunnyvale, Calif., company has changed for the better as a result of the furor over the bid. "In many ways it has pulled us together as a company," he said. Yahoo continues to talk to Google about a possible partnership, he said, without offering any details.

His remarks came on the second day of a conference that heard technology executives hail their companies' staying power despite economic weakness. Michael S. Dell, chairman and founder of Dell Inc., Howard Stringer, chief executive of Sony Corp., and Amazon. com Inc.Chairman Jeffrey P. Bezos took turns promoting their companies' new directions and technologies.

Mr. Dell said the computer maker is reaping the benefits of a recent reorganization and is growing faster in the U.S. than its rivals. Although displaced in world-wide, PC-unit sales by Hewlett-Packard Co., Mr. Dell insisted the Austin, Texas, PC maker still leads by revenue and its outlook remains strong due to a focus on diversifying its businesses.

But, he admitted, "in the U.S., there's definitely caution. You can't have a country where the overall growth is 3.5%, and say, 'that's fantastic,'" he said.

He said consumer preferences are changing. "If you go back five or 10 years ago, we used to go to forums like this and we would talk about megahertz and gigahertz," Mr. Dell said. "But now in the consumer world ... fashion definitely plays a role that it didn't play [previously]."

Sony's Mr. Stringer showed off a television that uses an ultrathin screen technology that uses organic light-emitting diodes, or OLEDs, to illuminate the screen. Sony will start selling a 27-inch OLED set with a screen the thickness of a credit-card within the next 12 months, he said. Mr. Stringer didn't disclose pricing but suggested it would have limited early appeal.

"It is fairly expensive. The only people who can buy one are in this room," he joked. Sony cur-
rently sells an ll-inch OLED screen for about $2,500. He also said Sony's Blu-ray high-definition video format will "more than hold up" against competition from new online video devices. Blu-ray faces new challengers including Amazon.com, which sells movie downloads, and announced plans here to offer streaming services, and Netflix Inc., which recently announced it would allow customers to watch streaming video on their televisions rather than their PCs.

Amazon.com's Mr. Bezos, also said Amazon has improved supplies of its Kindle electrc book reader. "It is selling and we are very happy about it," he added. He declined to provide sales figures. Mr. Bezos offered no other details of the proposed streaming video download device. Amazon already sells video downloads on its Web site, and is increasingly challenging Apple Inc. in the digital realm.

Mr. Bezos said the company plans to keep working on improving its Kindle reader, though said consumers shouldn't intrepret its recent price cut (to $359 from $399) as an indication that a second version is imminent. "There will be a second version and a third version and a 10th version," he said. But he added: "The second version is not that near."

IAC/InterActiveCorp chairman Barry Diller says he is ready to create some trouble again. He told conference attendees that a planned August spinoff of some ofIAC's largest businesses will allow him to "create trouble" instead of "fix trouble." Mr. Diller, who spent the past few months distracted by a lawsuit with majority shareholder John Malone, chairman of Liberty Media Corp., was short on specifics.

Mr. Diller, former chairman of Paramount Pictures and Fox, also had colorful words for his former colleagues in Hollywood and rivals in the online world. "The [film] community is so inbred that it's no wonder the children have any teeth," he said. He called Google Inc. "irrelevant" to IAC but predicted that its growth wouldn't continue indefinitely, leaving new openings for smaller players like his Ask.com.

He also joked that he had been rooting for Microsoft to acquire Yahoo on the grounds that it would have bumped up Ask.com in search-engine rankings "It would have been good for me," he joked.

Activision Inc. Chairman anc CEO Robert Kotick presided over the first public demonstration of "Guitar Hero World Tour," a new multi-instrumental version of Activision's best-selling music videogame.

By: Jessica Vascellaro, Jason Anders, Marcelo Prince, & Nick Wingfield
Wall Street Journal; June 2008

Icahn Says Jerry Yang Must Be Pushed Out

Billionaire investor Carl Icahn plans to seek the ouster of Yahoo CEO Jerry Yang, should his dissident slate of directors gain control of Yahoo's board, according to a report in The Wall Street Journal.

Icahn previously has centered his comments on removing Yahoo's board of directors, of which Yang is one of nine members who are up for re-election to a one-year term, when the next annual shareholders meeting is held.

Yahoo announced later in the day that it planned to hold its annual shareholders meeting on August 1 in San Jose, Calif. The meeting was originally scheduled for July 3, but the company announced a delay when one of its board members resigned in May.

Icahn apparently is irate over newly released details from a shareholders lawsuit unsealed Monday, according to the Journal. In the amended lawsuit by two Detroit retirement funds, Yang is portrayed as the architect of a controversial employee severance program, which would be triggered if Yahoo undergoes a change in control.

The change in control applies to not only a buyout, like the one Microsoft had on the table before it withdrew its $33 a share bid for Yahoo on May 3, but also a change in control of a majority of Yahoo's board, as noted in a CNET News.com blog.

"It's no longer a mystery to me why Microsoft's offer isn't around," Icahn said in his Journal interview. "How can Yahoo keep saying they're willing to negotiate and sell the company on the one hand, while at the same time they're completely sabotaging the process without telling anyone."

Icahn noted he believes the unsealed shareholders lawsuit will aid his efforts to win a proxy fight to unseat Yahoo's board, especially given his belief that investors will fear Microsoft will not come back with a buyout bid until Yang and the current board are gone.

The Journal also reported Yahoo's board is expected to meet Tuesday.

Comments left about this story include:
Who does Carl Icahn have tapped to replace Jerry Yang? Hopefully someone with a proven history of web and internet advertising success. Susan Decker might have to be moved out. The Yahoo sales efforts and advertising programs are overpriced and weak at best. Yahoo is not delivering advertisers enough return on investment. When will Yahoo shift focus and actually help advertisers drive conversions and ROI? If Yahoo would focus on advertiser ROI and moving the sale needle for their clients, they could turn the tide and truly compete with Google. I also was expecting Jerry Yang to focus more on quality user experiences. Yahoo is no longer delivering high-quality search results and content for users. C'mon Jerry, restructure the senior management team, trim the top level, take charge, clear the company of unskilled executives that lack "internet marketing" experience and take Yahoo back to its core. Improve Yahoo from the inside out and everything will fall into place.

Key Employees About to Jump Ship at Yahoo

Yang's Memo to Yahoo Employees ... Sit Tight I'll Get You Paid

As the proxy fight heats up, Yahoo CEO Jerry Yang issued a letter to employees to address the mechanics of a proxy contest and what to expect.

Yang's letter comes as Yahoo and billionaire investor Carl Icahn have exchanged several rounds of proxy fight letters over the past few days. The fevered pitch between the two parties is expected to further accelerate in the coming weeks leading up Yahoo's August 1 annual shareholders' meeting.

Icahn is seeking to unseat Yahoo's board of directors with his own dissident slate, while Yahoo is working to persuade investors to re-elect the current board. Here is Yang on what constitutes a proxy fight and what employees should expect:

To: Yahoo global staff
From: jerry
Subject: proxy contest update

yahoos,

over the last few weeks, i'm sure you've read a lot about a potential proxy contest leading up to our august 1, 2008 annual meeting of stockholders. the proxy contest has now begun.

so what is a proxy contest?

a proxy contest happens when one or more stockholders proposes nominees for the board of directors other than the nominees proposed by the company. and as you know, carl icahn has also announced his intention to nominate an alternate slate of directors for election to our board.

in a proxy contest, it is typical for a variety of positive and negative statements to be made about a company's board and management. we expect these kinds of statements about yahoo! to intensify in the weeks ahead. we intend to respond to statements that we believe are unfair or misleading, and we did so with the press releases we issued this week.

what should you expect in the coming weeks?

we have already filed our proxy statement with the SEC, which includes the board's nominees for election as directors and the other matters to be voted on at the annual meeting. next, we'll mail our proxy statement to all stockholders as soon as it's cleared by the SEC . in our proxy statement, our board unanimously recommends that all stockholders vote for all of yahoo!'s board of director nominees.

we believe the yahoo! board has the independence, knowledge and commitment to navigate the company through the rapidly changing internet environment and to deliver value for yahoo! and its stockholders. as we've said repeatedly, the entire yahoo! board is fully committed to doing what is in our stockholders' best interests. as yahoos, it's more important than ever that we put aside the rhetoric and continue to focus on strategic objectives and our efforts to maximize stockholder value. i want to thank all of you for your continued hard work and dedication through this distracting time. you are our most valued asset.

please remember that there are certain requirements that apply to communications during a proxy contest, but we'll do our best to keep you as informed as possible.

Hiding A Hatred of Microsoft?

And the Truth Comes Out...


Sadly for Jerry Yang, psychic phenomena don’t carry a whole lot of weight in today’s corporate-governance regime.

Mr.Yang will have to keep that in mind as he and Yahoo defend the drafting of a press release in October to reject a Microsoft bid. For those not handy with calendars, that was three months before Microsoft actually got around to bidding. Now, Yahoo did have expressions of interest from Microsoft earlier that year, and indeed as long ago as March 2000 Microsoft was seen as “the most likely contender” to take over Yahoo after the then-terrifying AOL-Time Warner merger. But in October, there was no bid to reject. Yahoo just knew it didn’t want Microsoft.

Outraged activist Carl Icahn called Yang out Tuesday for having a “deep hostility” toward Microsoft. Yang denies this, but the denials ring hollow. (And not just because one of Yang’s nicknames within his company is “Grumpy.”)

But why hide a hatred of Microsoft? If anything, it would at least provide some kind of explanation for the otherwise knee-jerk rejection of a bid that didn’t yet exist. Besides, most of Silicon Valley’s old-line companies hate Microsoft–a legacy of Microsoft’s systematic destruction of Valley golden child Netscape (the subject of the U.S.’s antitrust crusade against Microsoft in the 1990s). Netscape was Yahoo’s buddy. Another Yahoo buddy, Google, doesn’t hide its disdain for Microsoft. Larry Page said a couple of weeks ago that Microsoft “has a history of doing bad stuff.”

Now no one is going to make an argument that Microsoft is pure of heart. After all, the company recently accepted faulty chips from Intel to help Intel make their earnings. But there is a big pot-and-kettle issue here with both Google and Yahoo. Critics see Google as having its own plans for world domination and, despite the quippy “Don’t Be Evil” motto, bemoan the Web search and ad giant’s amassing the personal information of its users on what may be the largest scale outside the government. As for Yahoo, there was that whole incident about helping China convict a dissident journalist, presumably to protect Yahoo’s business standing in that country.

But the larger point is this: It isn’t 1999 any more. The tech world is supposed to have matured, and the petty childhood rivalries forged in the heady spells of the tech boom don’t hold up in a world where time has revealed the strains of expansion on these companies and future growth no longer is assured. The past is past. The future is now.

By: Heidi Moore
Wall Street Journal; June 4, 2008

Yahoo Manages Short Term Surprise

In founder Jerry Yang's first quarter as CEO, Yahoo! managed to surprise investors on the upside, by sending its stock up 9%. Although net income at Yahoo was down 5%, sales rose 12% driving quarterly net income to $1.8 billion before expenses. These earnings are much better than projected yet Yahoo the former undisputed kings of keyword search still face many challenges. Jerry Yang made sure to drive home that his mindset and focus is on the entire $45 billion online advertising market, not just keyword search a "lucrative subset of it".

Jerry Yang is stressing that Yahoo intends to be more active with "one-off services" around the world that will be cut off, much as Yahoo did in folding Yahoo Photos into Flickr, shutting down the revenue losing, resource draining, and clearly unpopular Yahoo Podcasts, as well as deemphasizing subscription-based music services and online tickets services in favor of ad-supported music programs.

Yahoo president Sue Decker says that Yahoo Panama, the much-delayed search ad system, is beginning to work. Revenue per search category was up 20%. And display ad revenue was also up 20% a rare acceleration after more than a 15 months of downward trends. No mention was made concerning declining PPC conversion levels or any new, sustainable click fraud prevention measures.

Yahoo executives stress that YHOO is more focused than ever on becoming the first stop for most people online, and will try to facilitate connections between people only as it supports the Yahoo starting-point strategy.

Given that social networks such as Facebook are increasingly the starting point for many people online, as well as Yahoo's previous emphasis on connecting users with other people and their passions, it is not clear what Yahoo's next steps are in the emerging social networking arena.

Terry Semel Leaves Yahoo.

Microsoft Takeover Looms Large as The Panama Project Continues to Implode.

Jerry Yang Returns as Yahoo CEO - Susan Decker Named President.

Yahoo! announced that Terry Semel will resign as CEO and pass the torch back to co-founder Jerry Yang.

Yang an original co-founder of Yahoo will remain on Yahoo's Board. Susan Decker, Yahoo's former head of Advertising has been named President. The changes culminate a dramatic sequence of events at Yahoo as the Panama Project continues to sink the ship taking many senior level managers and executives with it.

The Chief Technology Officer at Yahoo had resigned a couple weeks earlier and Semel just completed annual shareholder meetings that left the majority screaming for his resination.
Yahoo has faced mounting internal and external criticism in recent months as the Panama search project continued to flounder.

Panama has failed to increase revenues and is not helping Yahoo boost its shrinking share of the keyword search pie. Yahoo has reported poor results to date in 2007 with no end to the downward profit trend in sight.

Yang, 38, founded the company in 1994 with David Filo and serves on the board of directors, in addition to holding the title of "Chief Yahoo" overseeing the company's strategy and technological vision.

In a conference call with analysts held Monday afternoon, the company said it is seeing slower growth in display advertising --which include banner ads, website design and videos -- but better-than-expected performance from its recently re-tooled search advertising business.

Proposals opposed by the board that aimed to tie executive pay to competitive performance and challenge the company's human rights policies in China were defeated.

CNBC is reporting that Yahoo may need to explore strategic alternatives. Micorsoft has been knocking on the door for several months looking to join forces and give Google a tougher fight in keyword search.

"Yahoo is in a tough position of weakness so I think there are some people circling around it," Jim Friedland, an Internet analyst with Cowen and Co. "Given the weakness Yahoo has been experiencing, I think now is the time those talks become more real."

However, the analyst noted that forging a strategic deal with the likes of News Corp., Time Warner or Microsoft may not be in Yahoo's best interests.

Addressing such speculation, Jerry Yang said Monday the company's board believes Yahoo should remain independent.

For a full update visit - The Jerry Yang Blog


Some highlights from Jerry include:

Yahoo! has an incredibly bright future and I make this move with deep conviction and enthusiasm. I’ve partnered closely with our executive teams for 12 years to steer our strategy and direction and today I’m ready for this challenge.

Terry has given Yahoo! six of its best years. He delivered great value to our users, advertisers and shareholders. Terry refocused the company on key strategic priorities, and in so doing, helped Yahoo! increase our revenues nearly nine-fold from $717 million in 2001 to $6.4 billion in 2006; boost our operating income from a loss in 2001 to nearly $1 billion last year; and create more than $30 billion in shareholder value during his tenure. He helped grow our audience from 170 million to more than 500 million users globally, and he oversaw the expansion of our base of talented employees from 3,500 to nearly 12,000.

I will always be grateful for the incredible achievements under his leadership — and for his mentorship and friendship. We’ll continue to benefit from his support and guidance as he transitions to his role as our Chairman.

I also couldn’t ask for a better partner in Sue Decker as our new president. In addition to knowing this company inside and out, Sue has incredible talents, leadership abilities, a fierce focus on winning, and intense dedication to this company and its people. I look forward to teaming more closely with her as we pursue our joint vision.

What is the vision of Yahoo?

A Yahoo! that executes with speed, clarity and discipline.

A Yahoo! that increases its focus on differentiating its products and investing in creativity and innovation.

A Yahoo! that better monetizes its audience.

A Yahoo! whose great talent is galvanized to address its challenges.

And a Yahoo! that is better focused on what’s important to its users, customers, and employees.

The past year has obviously not been an easy one for us. But we’ve taken important steps to address the challenges we face, and we’re starting to realize some of the benefits – especially with the successful launch of Panama, which continues to receive positive feedback from advertisers and is exceeding our expectations.

By the way, that’s directly attributable to the operational excellent mentality Terry has instilled and is a clear sign one of his most critical initiatives is succeeding.

We have incredible assets. This company has massive potential, drive, determination and skills, and we won’t be satisfied until the external perception of Yahoo! accurately reflects that reality.

I have absolute conviction about Yahoo!’s potential for long-term success as an Internet leader.
Yahoo! is a company that started with a vision and a dream and, make no mistake, that dream is very much alive.

I’m committed to doing whatever it takes to transform Yahoo! into an even greater success in the future.

The time for me is right.

The time is now.

The Internet is still young, the opportunities ahead are tremendous, and I’m ready to rally our nearly 12,000 Yahoos around the world to help seize the opportunities.

Go Yahoo!

Jerry Yang
CEO and Chief Yahoo