Yang Steps Down At Yahoo! (YHOO): No Candidates To Step In

From the day that Yahoo! (YHOO) walked away from a takeover bid by Microsoft (MSFT) to the day that the portal company could not report good earnings to the day that a lucrative partnership with Google (GOOG) fell apart, Jerry Yang was leaving as Yahoo!’s CEO.

The issue is not whether he was going, but who was coming. Even Microsoft is having trouble picking someone to run its troubled internet unit. Good people who can run beat-up portals must be hard to come by.

Of course, the next round of speculation about Yahoo!’s future has been set off before the search for a new CEO can begin. Carl Icahn, who sits on the Yahoo! board, and a number of large outside investors, would like the company to be sold to Microsoft even though the price may only be $14 or $15, nowhere near the $33 which was on the table less than a year ago.

There are no logical candidates to succeed Yang. If there were, those people would be mentioned as the prospects for running MSN or a merged Yahoo!/AOL. Over the last six years, Yahoo!, MSN, and AOL have eaten through close to dozen CEOs. At Yahoo!, it has been Koogle, Semel, and Yang. AOL has had two CEOs in less than two years. Steve Ballmer goes through internet bosses like Kleenex.

The internet industry does not appear to have any well-regarded turnaround specialists. The executives under Yang, especially COO Sue Decker, are viewed as part of the problem. The new CEO of AOL, Randy Falco, is a former network executive. Ad revenue at the Time Warner (TWX) portal is dropping.

The big portals are in a strange position. They are supposed to be taking marketing revenue away from traditional media. That is certainly not happening at a rapid rate. There are estimates that online display ad revenue may go down next year. Portals also face Google (GOOG) which has a marketing system that is viewed as the most efficient on the internet. Its revenue is as large as that of the all the large portals combined.

Perhaps the internet talent problem is not a dearth of qualified candidates. It may be that the best managers don’t think the core problems of the portals can be fixed. Who wants to be Sisyphus?

Douglas A. McIntyre