Who Has Stolen the Old Jerry Yang? (But No Need to Return Him!)
Could the new and improved Yahoo CEO Jerry Yang actually manage to beat back the proxy fight being waged against him by activist investor Carl Icahn?
It increasingly looks that way, with only 12 days to go until Yahoo’s annual meeting on Aug. 1.
But exactly which Yang will be running Yahoo (YHOO), if he does win, is probably the most important question shareholders need to ask.
Will it be the seemingly energetic Yang of the past two weeks, invigorated by the battle with Icahn and his new best friend and Yahoo foe, Microsoft (MSFT)?
Or will it be the other Yang?
Because for months and months now, since Microsoft waged its takeover bid on the Internet company he founded, the woe-is-me vibe emanating from Yang has been working the last nerve of anyone paying attention to the proceedings.
Given that this vibe was combined with a kind of cave dweller PR strategy of not speaking publicly–other than releasing an indignant, noncapitalized letter every now and then about the situation–some questioned Yang’s ability to gin up the kind of passion needed to bring Yahoo back from its current straits.
Even before the Microsoft parry in February, the ho-hum mood had trickled down to the troops, causing lower morale, too many departures and a general feeling–deserved or not–that Yahoo has been circling the drain for much too long under its current lackluster leadership.
And, let us not forget the drippy stock performance either.
And while BoomTown, especially, has to give both Yang and also Yahoo President Sue Decker much credit for appearing onstage at our sixth D: All Things Digital conference in May, most who saw the appearance (we posted the whole thing last week, starting here) were not blown away by the performance, considering it too enervated.
What then, do we make of the current round of pugnacious, dare-we-say, passionate, and, as it seems, pretty effective moves Yang has made this week to ward off the attacks of Icahn and Microsoft?
I should have gotten clued-in to the shift when Yang actually made contact with me on July 9, after being out-of-touch for many, many moons, presumably due to pique over my 100-day Sacred Cow Countdown (he started it!).
As it happened, I was in Seattle visiting a lot of Pacific Northwest companies, including Microsoft, when he called.
After our discussion, I published these choice quotes from Yang in a post on July 10, titled “Jerry Yang’s Pledge: Not on My Watch”:
“I think handing over the company to Carl Icahn for the express purpose of hoping he can negotiate a complex deal with Microsoft is a big mistake for shareholders. This is particularly true since Icahn has no plan B and therefore will have no leverage and will be dealing with Microsoft from a position of weakness.
“Furthermore, Microsoft’s interest in Yahoo has been inconsistent at best and they refuse to even put a firm proposal on the table. Their motivations are suspect and there is simply no good reason to think they will actually show up at the end of the day. And then what will shareholders be left with? A weakened, Icahn-controlled Yahoo.”
Then Yang went into overdrive over that next weekend as Yahoo managed to make a new Microsoft search proposal–which was really very, very generous–look radioactive by loudly declaring that Icahn’s taking over of Yahoo was crazy-glued to the plan.
It was not, but no amount of Microsoft spinning could undo the damage of what looked like a goofy power play by Icahn and Microsoft.
That was followed at the end of last week by the news that Yahoo had convinced one big investor, Bill Miller of Legg Mason Capital Management (who has always been a supporter of Yang and especially, Decker), to back the current board.
Legg Mason owns about 4.4 percent of Yahoo.
While not saying it was final, Miller noted that it was his intention to stick with Yahoo’s leadership, adding that he also wanted Yahoo and Icahn to settle their differences before the annual meeting.
Of course, Miller still tried to get Microsoft back to the table, noting, “If Microsoft wants to acquire Yahoo, it can make the terms and conditions of its offer public.”
One can hope, Bill! (Actually, as I have written many times, Microsoft should make that move if it really intends to compete against Google.)
But, best of all, was Yahoo sticking a big fat banner on its much-trafficked home page Friday, alerting its users–most of whom were really just minding their own business and trying to get their daily horoscopes.
Nonetheless, in a box that flashed various outrages about the proxy fight, Yahoo linked to a presentation that pretty much called Icahn a Luddite. It included a quote attributed to him from The Wall Street Journal: “It’s hard to understand these technology companies.”
You can say that again, Carl!
And Yang did say it again in video message to Yahoo employees, noting, “We’re taking full advantage of the power of our network to remind our stockholders why voting for Carl Icahn’s board of directors is a bad choice.”
Ah, there is nothing like a technically clueless billionaire as an enemy to get Yang’s blood boiling!
Apparently, that has helped employee morale too. This weekend, I have heard from several execs contemplating leaving, tired of waiting for the 12th shoe to drop, who noted that more passion from Yang was helping.
“People feel like he is showing some strength, which you never see,” said one. “It sounds corny, but we want someone we believe in.”
Well, we’ll see if institutional investors believe, after they get a recommendation midweek from the large proxy-advisory service ISS Governance Services, which Yang and other Yahoo execs and board members visited last week to make their case.
That will come one day after Yahoo releases its second-quarter earnings on Tuesday, which I am sure will be decent, as they just have to be, considering the hubbub around Yahoo.
(And you can be sure Yahoo CFO Blake Jorgensen is working overtime this weekend, adding in all he can to make the picture as pretty as possible.)
It’ll be a big week for Yahoo, as usual, made bigger if Icahn does not mount an effective offense, such as releasing a cogent plan of his own and showing he has some managers in the wings who can run Yahoo if he were to get the reins.
Which Yang is not showing any signs of giving up anytime soon.
I fully expect Yang to get even more hopped up this week with more speeches to employees, more visits to shareholders and perhaps even more calls to the press. (BoomTown is waiting by the phone!)
Of course, this is all just show. And while it’s a good one, as I said, the most important thing everyone has to keep in mind is what this all means after Aug. 1.
So I have some questions for Yang:
Does he have the energy and vision and, most important, management chops, to really move the needle at Yahoo and make the kinds of changes it needs?
And what are those changes? More of the same direction (more social, more open) or perhaps a much more radical focus on core businesses like content and communications?
And what about search, a losing game as Yahoo inevitably will be crushed between Google (GOOG) and Microsoft? And what about fending off that pair’s new focus on display advertising, where Yahoo does excel?
Will Yang, if he does not think he has what it takes, be willing to step aside? And does that mean Decker will become CEO, or will he bring in new outside execs who have not been part of the problems of the past?
I could go on and on, of course, but it pretty much boils down to one key question:
Is the Yang who acts like he can win really here to stay?