Yahoo Founder, CEO Yang Steps Down
Tuesday, November 18, 2008
Yahoo chief executive Jerry Yang will step down, the company announced last night, as the once-highflying Internet portal struggles to steady itself in the turbulent environment for Web media.
Yang, 40, co-founded the company in 1994 and returned last year to lead it again as chief executive. He has said that he is so devoted to the firm that he "bleeds purple," the company's logo color. But this spring, he angered investors by fending off a $43 billion buyout offer from Microsoft and then watched as Yahoo's stock crashed to a third of what it was worth in October 2007.
Company officials said that Yang will continue to advise the company as "chief Yahoo," an honorary role, and will hold a place on the company's board. He will remain chief executive while the search for a replacement is conducted. Candidates from inside and outside Yahoo will be considered, they said.
Yang informed workers yesterday of his departure in his customary lower-case prose:
"all of you know that I have always, and will always bleed purple," he wrote. "i will always do what I think is right for this great company. while this step will be an adjustment for all of us, i know it's the right one."
The move comes as employees at the company, known for its freewheeling and informal approach, are bracing for layoffs. About 10 percent of the Yahoo's workforce of 15,000 will be let go, company officials announced recently. The Internet portal let go 1,000 workers in late January.
In a statement, company Chairman Roy J. Bostock said, "Jerry and the Board have had an ongoing dialogue about succession timing, and we all agree that now is the right time to make the transition to a new CEO who can take the company to the next level. We are deeply grateful to Jerry for his many contributions as CEO over the past 18 months."
"Jerry and the board have been talking about this for some time," Yahoo spokesman Brad Williams said. "It was a mutual decision."
Yang and David Filo, graduate students at Stanford University, founded the company in the early days of the Internet. The list of links that became Yahoo started as a way for the friends to keep track of their personal interests on the Web, and they called it "Jerry and David's Guide to the World Wide Web."
It soon became popular with friends, then among a growing crowd of Internet enthusiasts. The duo incorporated in 1995 and soon brought aboard veteran executives to run the company. Investor enthusiasm for the company peaked in early 2000, along with the dot-com bubble, as Yahoo shares traded above $400.
Since then, the company has faltered. Internet users who once relied on Yahoo as a guide to the Internet now use search engines like Google. Yahoo remains an Internet powerhouse, with 141 million unique visitors in the United States in August, second only to Google. It also has created a search engine, but it ranks far behind Google's.
The key question for the company is how to continue to grow and make money from those visitors. While Google has enriched itself with search advertising -- the little ads that appear alongside search results -- Yahoo has relied more on Web display advertising, which hasn't fared as well, especially as the economy has weakened.
In June 2007, Yang replaced Terry S. Semel, a veteran media executive who came aboard in 2001, as chief executive. In the months before his ouster, Semel had struggled to streamline the company's operations and boost revenue and profitability. Yang then promised to turn the company around.
The beginning of the end of Yang's tenure may have arrived earlier this year, when rival Microsoft offered to buy the company for $33 a share. Yang and Bostock insisted that Yahoo was worth more than what Microsoft was offering, but some critics suggested that Yang was too devoted to the company he founded to allow it to be swallowed up. Today, Yahoo's market value has dwindled to about $14.8 billion.
In the aftermath of the Microsoft deal, Yang has sought to reorganize the company and cut costs.
He brought in Bain & Co. to find ways to trim expenses. The company entered into partnership talks with Time Warner's AOL unit. And in another bid, it sought an advertising partnership with Google. But federal antitrust regulators voiced opposition and earlier this month, that deal, which would have brought Yahoo an additional $800 million annually, was scuttled.
"From founding this company to guiding its growth into a trusted global brand that is [indispensable] to millions of people, I have always sought to do what is best for our franchise," Yang said in a statement. "When the Board asked me to become CEO and lead the transformation of the Company, I did so because it was important to re-envision the business for a different era to drive more effective growth. Having set Yahoo! on a new, more open path, the time is right for me to transition the CEO role and our global talent to a new leader."