Leaders Deflect Criticism, Set Out To Recast Company
By Peter Whoriskey
Washington Post Staff Writer
Saturday, August 2, 2008
SAN JOSE -- Having endured takeover attempts by Microsoft and then billionaire investor Carl Icahn, executives and board members at Internet giant Yahoo sought to assure rattled shareholders at the annual meeting here yesterday that the company has a plan for regaining its momentum after a multiyear stall.
Shareholders, for their part, largely expressed faith in the current board. In voting, each board member received more than 75 percent of shareholder ballots.
As a result, the meeting came as a relatively peaceful coda to six months of tumult and bickering over the future of Yahoo, one of the world's most popular Web destinations.
Icahn, who made headlines by calling for the removal of chief executive Jerry Yang, did not attend, though he had earned a board seat in the negotiations.
"This is a company that we are determined and very excited to transform," Yang told the crowd, which filled fewer than half the seats in an auditorium at the Fairmont Hotel.
Chairman Roy Bostock and Yang, who have been vilified for passing up a $33-a-share offer from Microsoft (the current share price stands at around $20), repeatedly said they always negotiated with shareholders' interests in mind.
Bostock dismissed claims that the board had resisted Microsoft's offer and that it was never really interested in ceding control.
"The board controlled the process of dealing with Microsoft right from the start," Bostock said. "We called the shots, and we were deeply involved."
He repeated Yahoo's assertion that it was Microsoft who backed away.
"At no point did . . . we ever resist Microsoft's proposal," he said. "In fact, we proactively engaged with them."
Bostock received one of the lowest approval percentages from shareholders, with 79 percent; Yang received 85 percent. Since the slate was unopposed, shareholders expressed disapproval by withholding votes.
While the takeover frays appear to be over, Yahoo remains a company that has in recent years performed below investor expectations despite a massive global presence.
It is a mark of the rapidly changing nature of the Internet industry that a dominant company just eight years ago now seems anchored in another era.
Yahoo rose to prominence as a destination on the Web. Users would come to Yahoo sites -- and then stay. There were games, advice columns, financial information, news, all available under the Yahoo banner.
But as users have become more accustomed to browsing all over the Web and using search engines such as Google, Yahoo has lost its dominance. Social networking sites have made inroads on it, too.
During the shareholder meeting, Yang and President Sue Decker laid out a two-pronged strategy to recast the Web property.
First, for consumers, the company is seeking to make Yahoo sites more open to the rest of the Web and more social.
For example, the Yahoo home page is trying to present users with links to the "best of the Web," Decker said, rather than simply encouraging them to stay on Yahoo sites as before.
The company is also trying to capitalize on the enthusiasm for social networking. Company officials said there are 20 billion latent social connections among Yahoo users now, from e-mail lists and other sources. The company will seek to allow users to better know what their friends are doing on the Web.
The second part of the strategy revolves around display advertising, which accounts for the vast majority of Yahoo's revenue, and which is expected to continue to grow rapidly.
Advertisers have long complained about the fragmented nature of the Web audience: to reach it, an advertiser often has to deal with many Web sites instead of centralized providers.
"Display advertising is unbelievably complicated," Decker said.
A new Yahoo advertising system, still being tested, would allow advertisers to buy simply from Yahoo and from partner sites across the Web.
Despite such plans, many analysts remain wary. The company's stock has lost more than half its value since trading at $43 in January 2006.
"At the root of it, it seems as if Yahoo's troubles are tied to shifting consumer behavior," said Derek Brown, an analyst at Cantor Fitzgerald. "I don't have a magic bullet, nor, do I think, do they."
View all comments that have been posted about this article.