Yahoo! 2007 Shareholder Meeting: Can Semel Survive? (YHOO, GOOG, MSFT, AQNT)

Today is the highly-awaited Yahoo! (YHOO-NASDAQ) shareholder meeting, and the media focus isn’t on Google (GOOG-NASDAQ) and Microsoft (MSFT-NASDAQ) and the bulk of the online advertising deals that have been made.  The media focus is on Terry Semel being given a one-way ticket for a vacation at the Resort de Guillotine.  We have noted since December that Terry Semel was no longer the right man for the job.  We noted that its Chief Technology Officer leaving was the wrong executive leaving.

Let’s de-personalize this for a moment and reflect on why some CEO’s are great at some times and atrocious at others.  Let’s even forget about stock bonus awards that were already made.  Semel came along in a time of need, back when the company needed a real world CEO that actually sold and packaged things when merely having search and ads wasn’t a solid enough business model.  That was true at the time and they did get a CEO that gave them stability when they needed it.  The problem is that most people are not able to recognize whne their best performance and effort has been maximized, and that’s the case here and now with Yahoo!.

Semel may be a great guy, but his usefulness has come and gone.  So much is riding on Panama at Yahoo!, and frankly the reviews and reception from Wall Street are mixed.  Many are even questioning how much of a real threat it is to Google’s search, particularly since Google acquired DoubleClick and even since Microsoft acquired aQuantive (AQNT-NASDAQ).

Since December when we went out with a "Semel needs to leave" and our 10 CEO’s that could use at least some change, there has been a steady push from other media and even shareholder groups calling for the same end.  It isn’t that Semel is incompetent or that Semel is a bad guy.  He was the stabilizer in a time of instability, but now Yahoo! needs a homerun hitter.  The song ‘Panama’ was probably the last big hit that anyone can recall for David Lee Roth, and now it seems like a reference for nothing good ahead.  If Semel doesn’t want his own Panama apex and long decline, perhaps he should capitulate and take the obvious hints.  There are plenty of new large movie studios and his career will be far from over if he doesn’t ride this into the ground.

The last rally before the most recent sell-off was based on hopes that a buyout could be in the works, but a digital company with a $36 Billion market cap that has limited growth and has been under attack from a more nimble Google might not be the best buyout target.  There are many other avenues the company can go on, and it’s too bad that the driver of the cab won’t admit he’s lost.

Shares of Yahoo! are trading down more than 0.5% pre-market, although the volume is too light for a real read.  If you wish to listen to the webcast today, it starts at 1:00 PM EST and can be accessed here.

Jon C. Ogg
June 12, 2007

Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.