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.

Yahoo Shareholder Questions Vote on CEO

A large Yahoo Inc. shareholder has asked for an examination of Friday's shareholder vote, suggesting that more opposition to Chief Executive Jerry Yang should have been recorded.

Capital Research Global Investors has asked independent vote counter Broadridge Financial Solutions to look into the results of the closely watched election, the fund said Monday.

Capital Research, which owns at least 6% of Yahoo, and Capital World Investors, a separately managed but related fund which controls around 10% of the Sunnyvale, Calif., Internet company, had advised its funds to withhold votes for Mr. Yang to renew his position on the company's board, a person familiar with the matter said. A spokesman for Capital World declined to comment.

Yahoo said Friday that Mr. Yang received support from 85% of shares voted in the election, a higher share than seems likely if all votes had been cast as the Capital funds recommended. A spokeswoman for Broadridge declined comment.

A person familiar with the matter says it appears possible that Broadridge could have made a mistake -- but if so, the impact on the total vote would have been relatively minor. A separate person familiar with the discrepancy said an explanation isn't likely before Tuesday.

Yahoo said in a statement: "The independent inspector of elections certified the results of the election and Yahoo accurately announced those results. Yahoo didn't participate in the execution of the votes and was not a party to any errors which may have been made either by a voting institution or a proxy processing intermediary acting on behalf of banks, brokers and institutions."

Yahoo's Friday vote was closely watched as a barometer of shareholder opinion of Mr. Yang, who has faced intense criticism from investors who believed he botched negotiations to sell all or parts of the company to Microsoft Corp.

By: Jessica Vascellaro
Wall Street Journal; August 5, 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.

Founders' Hubris Fuels Corporate Drama

Lots of business dramas over the years have involved strong-willed company founders who couldn't let go in their 60s or 70s. Put much-younger founders into the mix, and tensions can be even greater.

There's no shortage of ambition among corporate top lieutenants. But if they collide with a founder who mightn't yet have reached age 40, that's a recipe for management upheaval. It's also likely to provoke intense anxiety among investors, customers and employees.

Anyone attending The Wall Street Journal's D: All Things Digital conference last week saw how challenging such human interplay can be. Three famous high-tech founders -- Microsoft Corp.'s Bill Gates, Yahoo Inc.'s Jerry Yang and Facebook's Mark Zuckerberg -- took the stage for separate appearances. Each was joined by his company's most powerful nonfounding executive.

While all the speakers did their best to make nice, it didn't take a Geiger counter to sense that offstage, each management team might have a few issues to work out.

Microsoft's executives were the most candid about the challenges. Mr. Gates said he had a hard time pulling back from day-to-day decisions after handing over the CEO's job to longtime colleague Steve Ballmer in 2000. The two met as Harvard undergraduates in the 1970s.

At the conference, Messrs. Gates and Ballmer talked about how it has taken a while for them to establish that Mr. Ballmer has risen to be the "senior partner" in their business relationship, while Mr. Gates has become the "junior partner." Both men are 52.

Yahoo's leadership history has taken the opposite path, with Mr. Yang stepping in as CEO in 2007 after the Internet company parted ways with Terry Semel, a boss brought in from outside.

Mr. Yang's conference appearance was colored by the recent breakdown of merger talks with Microsoft. That put him on the defensive for much of his time on stage, arguing that Yahoo wasn't "under siege" and hadn't suffered a loss of momentum.

"I think I'm the best person to run Yahoo," the 39-year-old CEO said. "It isn't just because I bleed purple," the main color of Yahoo's logo. "It's my time to take Yahoo to the next level."

But Mr. Yang's toughest moment came when he was asked to define Yahoo's business. "We want you to start your day with Yahoo," he said. "We want you to come to Yahoo multiple times a day."

That brought a quick interjection from Sue Decker, the company's 44-year-old president, who built her career on Wall Street before joining Yahoo in 2000. Aware that Yahoo has been criticized in the past for sprawling into too many areas, she said: "It's a little bit of a change. We still do hundreds of things. But we want to focus Yahoo on four things" -- its home page, search, email and mobile communications.

After the Yahoo presentation, conference attendees were buzzing about what struck them as a hazily defined strategy. With Mr. Yang and Ms. Decker emphasizing different elements and shareholders unhappy about Yahoo's falling stock price since the Microsoft deal fell apart, the status quo doesn't seem stable.

Facebook's Mr. Zuckerberg and his recently recruited chief operating officer, Sheryl Sandberg, 39, went on stage with different challenges.

The 24-year-old Mr. Zuckerberg, dressed in jeans and a hooded olive sweatshirt, was grilled on why he is remaining CEO of his fast-growing social-networking Web site. When a growing company needs more-experienced management, the norm in Silicon Valley is for young founders to let someone else become chief executive.

Mr. Zuckerberg offered a job description that suits him well. "CEOs do two things basically," he said. "They set the vision, and they build the team."

But Facebook's vision was set years ago. The company's biggest challenges today include finding ways to sell ads or raise revenue in ways that won't alienate users; managing fast-paced expansion in an orderly way, and dealing briskly with privacy concerns about users' data. As the company's "grown-up," with previous managerial experience at Google Inc. and the Treasury Department, Ms. Sandberg is the logical person to take command of such areas.

Ms. Sandberg and Mr. Zuckerberg have been working together for only a few months. Their onstage remarks at D were separate soliloquys. It's anyone's guess whether they can establish true working harmony and divide up duties effectively.

"Once you've founded a company, you tend to think extremely highly of your abilities," says David Lewin, a professor at the UCLA Anderson School of Management. "And in some ways you should." But founders' hubris can often get them in trouble, he cautions.

A more philosophical view comes from Adam Galinsky, a professor at Northwestern University's Kellogg School of Management who studies ethics and decision making. Founders' challenges in letting go have been studied for decades, he observes, without ever being solved in a lasting way.

"These are timeless issues," Prof. Galinsky says. "Many people have to learn the lessons themselves. Their own experience counts for much more than anything anyone else will tell them." Often it's only on a second or third start-up that founders are more mindful of how -- and when -- they pass the leadership baton, he says.

By: George Anders
Wall Street Journal; June 4, 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.

Jerry Yang's Scorched Earth

Congratulations to Steve Ballmer. Not many CEOs would have the nerve – humility, cold-bloodedness, whatever – to float a gotta-have takeover offer, then back away over the difference between $33 and $37 a share.

Not many CEOs would have been willing nakedly to advertise strategic vulnerability and faulty execution vis-a-vis a rival like Google, then fail to consummate the deal marketed to investors as the remedy for that vulnerability and faulty execution.

Even more so because of Mr. Ballmer's Murdochian approach: He came at Yahoo with a rich 62% premium designed to foreclose a rival suitor and confront the Yahoo board with a choice of accepting Microsoft's terms or serving up a big ugly stock price drop to Yahoo's suffering shareholders. By laying such a dramatic premium on the table, he also sent a message to his own Microsoft shareholders that said: "This is the only way I see forward."

But Mr. Ballmer didn't count on Jerry Yang, whose idea of what his company was worth became inflated by the perception that Microsoft needed it so much. When Mr. Yang said Microsoft's offer "undervalued" Yahoo, he meant it underestimated Yahoo's value to Microsoft, not to anybody else.

In a fashion, he outsmarted not only Mr. Ballmer but his own Yahoo shareholders and board. Having discovered how much Yahoo was worth to Redmond (and no one else), he set about destroying that unique value by ceding Yahoo's position in search to Google through an outsourcing deal.

All this so Jerry Yang can fulfill his dream of having an independent Yahoo whose halls he can continue to walk as the revered "founder."

Luckily for him, the media are too busy obsessing about the severance dished out to various Wall Street executives to make him the new poster boy for high-handed, unaccountable CEOs.

For his part, Mr. Ballmer's retreat was a rarer sort of act. Yahoo's value to Microsoft, after all, was as a weapon to impede Google's assault on Microsoft's core business, for which Microsoft could afford to pay almost any price.

A Yahoo acquisition would have allowed Microsoft to buy a position in Web eyeballs with which to attack Google's margins if not Google's market share. In turn, Google would have to think twice about throwing money regardless of potential return (as Microsoft itself was known to do) at undermining a rival's business model.

It was a plausible strategy. Then again, Microsoft might have ended up spending years and billions to build a Maginot Line.

Post-Yahoo, Mr. Ballmer says his company's counter-Google strategy remains intact; it will just be slower-going without Yahoo. But Microsoft here is perhaps showing too little imagination – or throwing up a smokescreen.

The alternative? The bravest would be to spin off Windows. Vista, its latest output, was not a triumph, even if Microsoft claims to be content with sales of the new operating system sold so far. InfoWorld, a magazine of corporate technology managers, has collected thousands of online signatures begging Microsoft to delay retiring its previous Windows version, XP, without which they'll be forced to upgrade and buy expensive new computers they don't want.

A liberated Windows unit could concentrate on developing the more streamlined and diverse operating system products the market wants (some of which could be supported by advertising), and it would still be a fabulous business for Microsoft shareholders. Meanwhile, the other Microsoft could devote itself wholeheartedly to building application businesses for the Web age, even an Office-based network for delivering ads and other services in competition with Google. With its $26 billion cash pile, Microsoft could set itself up as the host for an array of cutting-edge Web services being created by new start-ups, rather than trying to outgoogle Google in the search market.

Moral victories don't count for much with the stock market, but let's give Mr. Ballmer his moral victory. Big Yahoo investors like Capital Research's Gordon Crawford are slinging spitballs at Mr. Yang. Mr. Yang, in legal jeopardy, is spinning a tale about how Microsoft was the one that botched a deal. Yahoo's future as an "independent" company would seem to mean vassalhood to Google.

But "I told you so" doesn't brace up the Windows/Office fortress or throw a banana peel under an advancing Google. More interesting than Yahoo's fade to irrelevance (see you in Delaware Chancery Court!) will be Mr. Ballmer's Plan B.


By: Holman Jenkins, Jr.
Wall Street Journal; May 7, 2008

Is Jerry Yang Capable of Running Yahoo?

Yahoo shareholders frustrated seeking change at the top

Here's a couple of insights from the Deal Journal, part of Wall Street Journal:



Yahoo Investors Could Get Antsy

KeepingtheCrowdHappy: Generous Share Buyback, A Nice Dividend, Perhaps

Since Yahoo isn't going to accept Microsoft's $33-ashare offer, it will have to do something for shareholders quickly as they continue to suffer from the stock's 15% slide Monday.

About 279.07 million Yahoo shares traded hands Monday, compared with average daily volume of26.83 million. As Jones Day partner Robert Profusek pointed out, buyers in such numbers can't all be looking to be long-term shareholders in Yahoo, putting their faith in the company's three-year plan.

A big share buyback or a special dividend are just two options to assuage those holders; who apparently see shortterm gain in Yahoo's stock, according to Mr. Profusek. Legg Mason's Bill Miller, for one, has said he wants Yahoo to take the pain offunding a buyback, even at a lower price than the Microsoft offer.

Despite Yahoo Chief Executive Jerry Yang's apparent insistence on $37 a share for his company, it seems a little difficult to believe institutional Yahoo shareholders would have held out for that much money. Mr., Millerwho supported Yahoo's resistance against Microsoft before-groused in an interview Monday that he would have supported a deal at $35.

Yahoo can head off incensed shareholders at the pass if stockholders try to stage a coup. If Yahoo decides this week to announce the date of its annual meeting, shareholders may not have enough time to nominate new directors. According to Yahoo's bylaws, shareholders can propose a "short slate" of directors. But those bylaws require advance notice of any new candidates by 10 days after the public announcement of the annual meeting.

And a proxy fight would be difficult without wide and vocal support from Yahoo's heretofore silent shareholders. A lot of Yahoo's stock is concentrated in Microsoft-hating hands for a proxy fight to really be worth it for the Redmond, Wash., software giant: Insiders hold 18% of Yahoo's stock, according to Thomson Reuters data.

We hear shareholders are trying to encourage Microsoft to enter the fray again. But now, as always, there is a limit to how much Microsoft can do without Yahoo's help.

By: Heidi Moore


Jerry Yang, Meet the Shift Key

In an email message sent to employees on Saturday after Microsoft rescinded its $33-per-share offer for Yahoo, its chief executive Jerry Yang urged “yahoos” (as he referred to his employees) to remain focused on their work, expressed relief that the “distraction” of the bid had been removed and applauded the company’s “uniquely yahoo!” culture. One thing he didn’t do: capitalize a single letter.
Shift Key

In February, Mr. Yang sent a letter to Secretary of State Condoleezza Rice that would make any grammarian proud. But Mr. Yang is much better known for his cap-free, easy-breezy, Silicon Valley-style emails. Certainly, the tone of Saturday’s email indicated a Yahoo posture of “No deal? No big deal” (or rather, no deal no big deal). Yet Mr. Yang presumably understood that the email would leak and attract readership beyond rank-and-file employees. Early this morning, shareholders weren’t feeling as blasé about the whole matter; shares were trading at $23.03 — down nearly 20% from Friday’s closing price of $28.67.

Vogue’s editor in chief, Anna Wintour, once wrote, “When a woman has to do something important or she wants to be heard, she puts on a suit.” (Clearly Gerald Levin — the former chairman of Time Warner, who showed up to the announcement of the AOL-Time Warner merger sans tie — was not a regular reader of the fashion bible.) Similarly, some argue that when a CEO has an important message to convey to shareholders, he employs proper grammar. Or at least he should. “For an important communication that will reach shareholders, a well-crafted and appropriately capitalized and punctuated message is important,” according to JoAnne Yates, deputy dean of MIT’s Sloan School of Management — and a professor of management who has studied communication and technology in business. In an email that was perfectly capitalized and punctuated, Ms. Yates continued, “Although young employees may find the casual style attractive, more mature stockholders could interpret it as not taking the offer and their concerns seriously enough. Thus, it could increase shareholder unhappiness over his refusal of the offer.”

Emily Post, the etiquette doyenne, wrote that old-school correspondents tried to “express themselves the very best they knew how [but] to-day people don’t care a bit whether they write well or ill. Mental effort is one thing that the younger generation of the ’smart world’ seems to consider it unreasonable to ask.” However, she wrote that in the 1920s, and her opinions can be, like, totally analog. Still, as he faces shareholders, Mr. Yang might consider making the extra effort. We would suggest that Mr. Yang rustle up a “yahoo” to show him how to make a little “y” big. But we’re certain he knows the location of the “shift” key — it must be struck in order to render an exclamation point, which, in Saturday’s email, Mr. Yang did five times.

By: Katherine Rosman
Wall Street Journal; May 5, 2008