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Article

Title: Deconstructing Jerry

Author: Staff Article Type: Company
Source: The Economist, v386 n8571 p76(2) Publication Date: Mar 15, 2008
  ISSN: 0013-0613
  Illustrations: Graphs, Photographs
URL of Publication: http://www.economist.com

Although Yahoo! got off to a hot start, times have changed for the now-struggling company. Co-founder Jerry Yang is keeping things polite as he contemplates a possible sale to Microsoft. The last couple years have been difficult for Yang and Yahoo!, as his companys morale was deteriorating and people were defecting. In February 2008, however, Microsoft offered to take Yahoo! out of its misery by paying $44.6 billion in cash and shares for Yahoo!. Another option was to strike a deal with News Corp., the media giant that owns MySpace, the biggest online social network, but News Corp. boss Rupert Murdoch recently said he has no interest in getting into a fight with the wealthier Microsoft over Yahoo!. Yet another option is to get assistance from media giant Time Warner, which could fold its web portal, AOL, into Yahoo! in exchange for a large stake in the firm. Google, which owns a 5 percent stake in AOL, actually may be able to provide assistance, and Yahoo! considers Google to be more friend than enemy during the talks. After all, the founders of both Yahoo! and Google have their alma mater of Stanford in common and they both consider Microsoft as the real foe. However, the clear problem for Yang is that none of the alternatives would yield more money to his shareholders than Microsofts offer. Yang recently made a hostility-averting gesture to Microsoft by postponing Yahoo!s March 14, 2008 deadline for shareholder to nominate directors, which would have forced Microsoft to present its own opposing directors. There are worse outcomes for Yang than selling but he likely has no choice because of his duty to his shareholders. Yang needs to consider all alternatives for Yahoo! and put up a slight struggle first for the sake of his personal pride.

Special Features: Graphs, Photographs

Companies:
AOL LLC Google Inc
Microsoft Corp MySpace Inc
News Corp Time Warner Inc
Yahoo! Inc

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