Yang Gets "Adult Supervision" at Microsoft Meetings

Several major investors in Yahoo–who have been, how shall BoomTown put this delicately, freaked out by the sudden departure of Microsoft from the deal two weeks ago–have blamed the passive-aggressive style of Yahoo, and especially Yahoo CEO and Co-Founder Jerry Yang, on the collapse of those talks as a big problem.

They were also plenty irked that Yahoo then said big investors were with them on turning down the $33 price in its takeover bid.

But this time, according to several investors, Yahoo is making sure things go a little better, especially given the increasing anger on the part of its shareholders and the recent proxy attack from billionaire investor Carl Icahn.

Thus, Yahoo’s Chairman Roy Bostock himself has assured major investors that there are now others in the room–such as Yahoo’s independent directors, who are being called “adult supervision”–to make sure Yahoo’s (YHOO) latest revived talks with Microsoft (MSFT) go more smoothly.

“I would have been happy with a $33 price then and I would be happy with one now,” said one big investor to me this week. “But since that’s not happening now, I would like then to not screw up these new talks.”

The discussions in question, of course, first reported by BoomTown, are over the sale of Yahoo’s search-ad business and also search function to Microsoft–including a long-term and exclusive search-ad monetization deal.

It would be a complex transaction that also includes the sale of Yahoo’s Asian assets.

At this point, Yahoo is debating whether to also include search itself in the deal, which some at the company do not want to do, even though the company’s share is declining as Google’s rises.

Microsoft wants to own both Yahoo’s search and also search monetization. Yahoo is also seriously talking to Google (GOOG) about a search monetization outsourcing deal.

Thus, there is a lot of delicate negotiating to do and some are concerned that Yang cannot pull it off.

Many point to the meeting where the first talks all fell apart–Saturday, May 3.

There, Yang brought his Co-Founder David Filo with him to a meeting in Seattle with Microsoft CEO Steve Ballmer to try to come together on price.

It ended in disaster, of course, with Yang and Filo sticking to the $37-a-share price and Ballmer offering $33.

While Yahoo’s Yang and Filo left the meeting thinking it went well and more price-kibitzing would go on, Ballmer used it as an excuse to end the circus.

Frankly, I thought bringing Filo–a notoriously silent person, who was also key to stopping Yahoo’s merger with eBay in the Web 1.0 era, who is well known internally as someone who wants to keep Yahoo independent and who is, of course, a Google-deal fan–was a typical passive-aggressive way of flipping Ballmer off.

Now, according to investors briefed by Bostock, things will go a lot better with others involved in the talks with Microsoft.

“They are telling us it is ‘adult supervision,'” said the investor, “and that Jerry has more of a realistic attitude now too that some kind of transaction has to happen and Yahoo has few options.”

Apparently, Yang has gotten that religion himself and has been more realistic in meetings with top execs than he has ever been before.

Several execs at the company said the entry of corporate raider Carl Icahn into the mix (which investors compare to an effective red-hot Satan poker to get Yahoo moving) has gotten Yang to realize that Yahoo’s fate lies in some kind of dramatic transaction and soon.

“I think he realized it’s inevitable,” said one.

“Jerry is beloved at the company and he knows now that that’s at risk if he lets this spin out of control any more, so I think he’s wised up to the situation.”

Of course, there’s another way of saying that: Yang now has to take what’s going to happen to Yahoo like a man.