Yahoo’s Yang; Dollar Short, Day Late

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[The Market Watch]

Jerry Yang, founder and current Chairman of Yahoo!, has announced his resignation as Chairman. Unfortunately for the shareholders of Yahoo!, Jerry’s resignation comes too late.

Money does not matter to Jerry Yang.

Fortune lists Yang with a net worth exceeding $2 billion. In 2007 Yang turned down an offer of $38 per share from Microsoft. In February 2008 Yang rejected an offer of $31 per share from Microsoft- a 68% premium to Yahoo’s share price. Yahoo! is now selling below $12 a share as I write.

Not even Carl Icahn, now labeled an activist investor but in reality a corporate raider, could convince Jerry Yang to sell Yahoo to Microsoft. The result was inevitable. Yahoo’s stock price continued to decline as Yahoo’s market share of the internet search engine collapsed. Even a proposed deal with Google collapsed.

Before Yang’s departure was announced Yahoo was trading at $10.63. Yahoo immediately shot up to $12 after the announcement.

Anybody notice something wrong here? Jerry Yang was actually involved in the law of diminishing returns. The longer Yang stayed as Chairman of Yahoo gazing out the window of Yahoo’s headquarters, the lower the price of Yahoo. Instead of Yang’s de-accession as Chairman, what was needed in early 2007 was Yang’s defenestration, i.e., out the window with Yang.

Perhaps Steve Ballmer, CEO of Microsoft, can purchase Yahoo for $15 a share. That would represent a savings of approximately $16 per share or approximately $22 billion.

Is Ballmer already on the telephone?


Manfredonia is The Black Star News's Finance and Economics Columnist

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