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Shareholders are looking back at Microsoft's original $44.6 billion offer and crying. I thought they were crazy to turn down this deal and the subsequent offer in June. Today Yahoo! is worth $14.33 billion, $31 billion down from its value when Microsoft made its initial offer. As I predicted, their market capitalization is now less than Yahoo! Japan which sits at $16.9 billion. What the hell were they thinking? They clearly thought they could pull a rabbit out of their hat. What was the source of the confidence that caused them to turn down Microsoft's offers? The failed Google deal? Even if this had gone through it wouldn't have been enough to save the directionless company.

Its time for Jerry Yang to step down. He got religious about the Microsoft deal and forgot his primary responsibility as CEO, to create value for Yahoo!'s shareholders. Now they are mired in a mess that can only end in a fire sale. In stark contrast, Yahoo! Japan has consistently performed well over many years and enjoys excellent leadership. Although 2008 will obviously be a down year due to the collapse of capital markets, Yahoo! Japan has had 23.3% average annual revenue growth and 11 consecutive years of profitability. Maybe its time for the tail to wag the dog.


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Comment by Jared I. Kuroiwa on November 17, 2008 at 11:53pm
I guess Yahoo! will be moving in a new direction as Jerry Yang does step down.

http://kgmb9.com/main/content/view/11540/42/
Comment by Daniel Leuck on November 13, 2008 at 1:03pm
When the Yahoo - Microsoft deal came around as much as it was a blow to those who loved Yahoo and its culture it was a very smart and really the only financial play for the company.
Exactly. I can certainly understand an attachment to a fun, high energy corporate culture but in the end Icahn was right, it wasn't a responsible move.

I think Jerry (who is a really nice and approachable guy by the way) let his love for the Yahoo brand overcome the responsibility to the share holders.
I've heard Jerry is a great guy from a number of former employees. I wish him all the best, I just don't think he is the best CEO for Yahoo! at this point in time, largely because of his strong emotional attachment to the Yahoo! of yesteryear.

As a user and fan of Yahoo I wish them all the best. They have a lot of great technology and services to offer but Google has simply changed the game and Yahoo US does not seem to be able to keep up.
So do I. I hope whoever acquires Yahoo! continues to develop services such as Yahoo Music and interesting technologies such as Yahoo Pipes.
Comment by Brian Kirsch on November 13, 2008 at 11:28am
Dan,
I couldn't agree more. My wife worked at Yahoo for 7 years so we have both a strong
emotional tie and at times in the past a financial tie.

When the Yahoo - Microsoft deal came around as much as it was a blow to those who loved
Yahoo and its culture it was a very smart and really the only financial play for the company.

I think Jerry (who is a really nice and approachable guy by the way) let his love for the Yahoo
brand overcome the responsibility to the share holders.

After the merger failed as investors we sold all of our remaining shares in the company even though
at the time it was a bit frustrating. Had the deal gone through the stock would have been
worth a lot more.

But man with Yahoo currently at $10 to $12 dollars I am glad to have gotten
out when we did.

As a user and fan of Yahoo I wish them all the best. They have a lot of great technology and
services to offer but Google has simply changed the game and Yahoo US does not seem to be
able to keep up.

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