[NYTr] "Struggling" Yahoo replaces its CEO It's all about greed Date: Tue, 19 Jun 2007 09:43:43 -0500 (CDT) Via NY Transfer News Collective * All the News that Doesn't Fit The Washington Post - Jun 19, 2007 http://www.washingtonpost.com/wp-dyn/content/article/2007/06/18/AR2007061801027.html?hpid=sec-tech [In recent months Yahoo has increased its advertising to the point where they are now requiring paying customers to see it (this did not used to be true). Paid subscribers are incensed. But the investor class is pissed that earnings are down. Google meanwhile serves up ads in a much more subtle and manipulative fashion. If you've noticed more irrelevant links at the top of your search results -- strangely fewer journal articles, non-profit pages, and more substantial scientific articles, guess why? It's not only the commercial paid ad links on the right that Google is pushing. For years their secret-recipe magic algorithm has systematically overweighted commercial sites. See Google Watch for more info: http://www.google-watch.org One unkind analyst quoted by the Washington Post unkindly calls Yahoo the last of the "old media" companies. Ouch. It is true that Google has a much more sophisticated model -- but they're still selling their "product" (US, the users) to their REAL customers, the paying advertisers. They're just not using annoying jumping jellybeans and dancing palm trees to do it. -NY Transfer] The Washington Post - Jun 19, 2007 http://www.washingtonpost.com/wp-dyn/content/article/2007/06/18/AR2007061801027.html?hpid=sec-tech Yahoo's Chief Steps Down Co-Founder Takes Helm in Shake-Up By Alan Sipress Washington Post Staff Writer Yahoo's chief executive Terry S. Semel resigned yesterday as part of a management shuffle designed to reverse flagging fortunes as the company continues to lose ground to rival Google. Semel, 64, who led Yahoo for six years and helped revive the company after the Internet bubble burst, will retain the title of non-executive chairman and remain in an advisory role while Jerry Yang, Yahoo's co-founder, takes over as chief executive. As part of the shake-up, Susan Decker, an executive vice president who headed Yahoo's advertiser and publisher group, becomes president. Yahoo CEO Terry Semel delivers a speech in this file photo, Friday, Jan. 6, 2006 at the International Consumer Electronics Show, CES, in Las Vegas. Semel ended his six-year stint as chief executive officer Monday, June 18, 2007, and will hand over the reins to co-founder Jerry Yang in the Internet icon's latest attempt to regain investor confidence. Semel, 64, will remain chairmain in a non-executive role. (AP Photo/Damian Dovarganes) Yahoo CEO Terry Semel delivers a speech in this file photo, Friday, Jan. 6, 2006 at the International Consumer Electronics Show, CES, in Las Vegas. Semel ended his six-year stint as chief executive officer Monday, June 18, 2007, and will hand over the reins to co-founder Jerry Yang in the Internet icon's latest attempt to regain investor confidence. Semel, 64, will remain chairmain in a non-executive role. In December, Semel launched a corporate reorganization that senior executives said yesterday had helped Yahoo refocus its efforts, cut bureaucracy and streamline its operations. But the results of those efforts have yet to translate into significant improvements in revenue or profitability, prompting unhappiness in shareholders and employees. At an annual shareholders' meeting last week, some investors complained the company's top executives were overpaid and called for executive pay to be tied more closely to performance. That proposal failed to gain a majority. "We all know they've been struggling to find themselves in terms of strategic direction," said Charlene Li, an analyst with Forrester Research. Yahoo took several steps in recent months to reposition itself in the market, she said. "The final step was to say who is going to lead the turnaround. It's clear it wasn't going to be Terry." In April, Yahoo reported that its first-quarter profit declined 11 percent compared with the corresponding quarter a year earlier, disappointing analysts who had hoped to see better results from the company's new advertising program, Panama. Yahoo has also seen its share of the crucial Internet search market decline as Google pulls farther ahead of its competitors. Semel said during a conference call with analysts and reporters yesterday that he had been talking to the Yahoo board about resigning for "quite some time" and decided those talks had gone on long enough. "I saw myself more as a coach than a player moving forward," he said. Yang, 38, described this as an "emotional time for us at Yahoo." "Yahoo is in the midst of a multi-year transition," Yang said. "It's imperative to execute with clarity, speed and discipline." While he admitted the company must be more responsive to the dramatic changes reshaping the Internet economy, he and other senior executives expressed confidence in its global reach and workforce. Yahoo executives tried to assure analysts that the management changes did not result from a sudden deterioration of the company's finances. They said Panama, which is the company's program for selling online advertising linked to search engine results, was already outperforming Yahoo's expectations. But the executives said revenue from online advertising was not faring as well because of a slowdown in earnings from graphical advertising. As president, Decker, 44, will continue to oversee Yahoo's advertising efforts. In the past year, she directed the company's alliance with newspaper publishers, building a network to share online advertising and some content. That collaboration includes at least 264 U.S. newspapers. Before joining Yahoo, Semel spent two decades at Warner Brothers, and some critics questioned whether he fully grasped the dynamics of the Internet economy. Jeff Jarvis, a professor at City University of New York, said Yahoo under Semel had mistakenly assumed that the Internet was a medium like television rather than a tool, as Google had discovered. "I argue that Yahoo is the last old-media company," Jarvis said. "They operate by the old-media model: We control the content, and we spend a lot of money advertising that content, and then we'll shove ads down your eyes as long as we can." Under Semel's stewardship, Yahoo increased its revenue ninefold and more than tripled the number of employees to 12,000. Staff writer Frank Ahrens and researcher Rena Kirsch contributed to this report. *** CNet News via ZDNet Australia - Jun 19, 2007 http://www.zdnet.com.au/news/communications/soa/Semel-out-Yang-in-at-Yahoo/0,130061791,339278745,00.htm Semel out, Yang in at Yahoo Elinor Mills, CNET News.com Struggling search company Yahoo has a new chief executive, with Terry Semel stepping down after six years on the job, while Jerry Yang is stepping up to lead the company he co-founded in 1994. Susan Decker, former chief financial officer and head of the advertiser group, has been named president. Semel, meanwhile, will assume the position of non-executive chairman and serve as an adviser to the management team and board of directors. "This is the right thing to do for Yahoo and the right time to do it," Semel said in a conference call with analysts and media. The shake-up comes nearly one week after a somewhat contentious shareholder meeting in which stockholders criticised Semel's pay in light of the company's lacklustre stock price and failure to mount any serious challenge to Google on search and search advertising. Shareholders re-elected the board members with only 66 percent approval, which is low compared to the 80 or even 90 percent approval that is usual. In addition, 34 percent of shareholders voted in favour of a proposal to link Semel's pay with the financial performance of the company. With the personnel changes, the company also is undoing some of the reorganisation plans the company made six months ago in which it formed three business units: Technology, Audience and Advertising. Now, Decker will oversee Audience, which she previously headed up, and Advertising, whose head had not been named. The Technology group, which has been searching for a unit head since the departure of Chief Technology Officer Farzad Nazem several weeks ago, will report to Yang. Co-founder David Filo will oversee the technology organisation until a replacement for Nazem is named. "The past year has been a difficult one for Yahoo and none of us has been satisfied with the company's financial performance," Semel said in a statement. "As the board and I discussed my future goals and plans I was clear in telling them of my desire to take a step back from an executive role sooner rather than later. We therefore concluded that this is the time for new executive leadership to step in and drive the company to realise its full potential." Yang and Decker will be an "unbeatable team", he said. Decker is a "strategic powerhouse" and a "financial wizard" and "one of the best business people around," Semel said. Yang and Decker both sounded choked up in speaking about Semel. "It is an emotional time for us at Yahoo," Yang said. Semel "has not only been a strong leader, he's been a consummate partner b& Terry has been a true role model and a mentor to me," he added. "I've learned how to become a better leader and a better person" because of Semel. Yang credited Semel with re-focusing the company on key priorities after the dot-com bust and helping Yahoo increase its revenue nearly nine-fold to US$6.4 billion last year, boosting operating income from a loss to nearly US$1 billion and overseeing the number of users to grow to more than 500 million and employees to nearly 12,000. Decker called Semel a "true leader of leaders" and said Yang "really represents the heart and soul of Yahoo." Yang said he was ready for the challenge of leading the company. "I know the business and market dynamics well," he said. "Yahoo is in the midst of a multi-year transformation b& It's imperative that we execute with speed and clarity and discipline," Yang added. Decker said that while the company's affiliate search business was running slower than expected and growth of its display advertising business had slowed, executives were pleased with early financial returns for the company's new paid search-marketing platform, Panama. "We expect year-over-year growth versus what we saw in Q1," she said. The company's second-quarter revenue will be at the mid-point to the low-end of its previous guidance of US$1.2 billion to US$1.3 billion, she added. The company reports its second-quarter results on 17 July. Eric Jackson, a shareholder who had told Semel during the shareholder meeting last week that he should apologise publicly for the company's lagging financial performance, said he was pleased with the management changes. "I think that Semel was the right person at the time he came in in 2001. He did a lot of great things to stabilise the company and set it on its path after the bubble burst, but shareholders were looking for some new blood and direction," said Jackson, chief executive of consultancy Jackson Leadership Systems. "No question, the meeting and the voting results were weighing on the minds of the board and co-founders," he said. Greg Sterling, principal of consultancy Sterling Market Intelligence, agreed. "I think the public speculation over Semel's fate and future had been getting louder and there was enough discontent at the shareholder meeting to show that that was only going to increase if Yahoo didn't deliver a very solid quarter and perhaps even out-perform," he said. "This may be a mature recognition on [Semel's] part that it is time for a leadership change." However, Sterling said: "They still have real issues to solve. This takes the pressure off and the distraction around Semel, but now they've got to right the ship." Yahoo lost its lead in the search market to the younger Google in recent years and watched as Google turned search advertising into a cash cow. Yahoo has only 27 percent share of the search market share compared to Google's nearly 50 percent. Yahoo's stock has dropped about 10 percent from a year ago, while Google's has jumped about 30 percent. Yahoo also took a hit on Wall Street after it reported that first-quarter net profit was down from a year earlier and failed to report any positive effect from Panama. However, the latest news sent Yahoo shares up nearly 3 percent in after-hours trade to US$28.12. Putting to rest any speculation that Yahoo is a takeover target, Semel said: "The board and I believe Yahoo is, and can be, a vibrant independent company." The Wall Street Journal and New York Post reported in May that Microsoft and Yahoo were in talks on either a merger or a partnership to help them both take on Google. The Journal later reported that the talks were off, but the reports posed the question of whether Yahoo would or should merge to better compete. Analysts concluded that merging with Microsoft would ultimately not be wise for Yaho. [no shit, Sherlock.) *** Business Week - Jun 19, 2007 http://www.businessweek.com/technology/content/jun2007/tc20070618_257432.htm?chan=top+news_top+news+index_top+story Yahoo! Turns to Yang Semel's out; Yang and Decker are taking the top spots. Can this duo revive the struggling company? by Robert Hof Except for the sudden timing, Yahoo!'s announcement June 18 that Terry Semel is leaving as chief executive was remarkable only for how few people were surprised. After all, the Internet pioneer had turned in one disappointingly slow quarter after another recently. And Yahoo couldn't seem to catch up to today's online hot hands, from search giant Google (GOOG) to social-networking services such as News Corp.'s (NWS) MySpace and upstart Facebook. At Yahoo's annual meeting on June 12 (see BusinessWeek.com, 6/13/07, "Yahoo's Semel Faces the Music"), shareholders very publicly laid the problems squarely at the feet of Semel, slamming his strategy, execution, and $72 million pay package last year. But Yahoo's choices of co-founder Jerry Yang as new chief executive and veteran executive Susan Decker as president raises as many new questions as it answers. Chief among them: Is this just a temporary move, a safe choice to keep the Yahoo troops on board and investors at bay while Yahoo scrambles to come up with a new strategy? Or, after a year or more of rumors and talks of a Yahoo acquisition, does this just buy more the company more time to field purchase offers? Temporary Tenure? Close observers aren't sure even Yahoo's board knows the answer. But the betting is that because Yang and Decker have been intimately involved with Semel, who will remain nonexecutive chairman, not much will change in the short term. "I think people that look at this as some kind of watershed event that is going to result in fundamental change at the company are going to be disappointed," says Scott Kessler, an analyst at Standard & Poor's (like BusinessWeek, S&P is owned by the McGraw-Hill Companies (MHP)). "These are two people that I don't see significant change from," says Kessler, who has a hold rating on Yahoo (YHOO) shares. Kessler's pessimism is understandable. Highly respected within Yahoo, Yang nonetheless hasn't been an executive at Yahoo since its early startup phase. And Decker, despite whispers among Yahoos that her elevation to head of Yahoo's advertising group last December was a sign she's being groomed for the top job, apparently hasn't persuaded the board or investors she's ready yet. Nonetheless, some observers believe that Yang's tenure as chief executive, while put forward as more than a temporary appointment, may be short-lived. One executive recruiter familiar with Yahoo's management believes the board will launch a search of outside candidates for chief executive, though it's believed that if Decker proves herself, she could still get the nod for the top job at some point. Investors Are Waiting for Results All that may explain why investors are only mildly pleased with the shake-up. The company's stock rose about 5% in after-hours tradingba tepid response given that shares are still down 17% from their 52-week high, even after a 3% gain before the announcement. Despite continuing speculation that Yahoo might be for sale, many shareholders are clearly not betting on it. Nor should they, it appears. April rumors of takeover talks with Microsoft (MSFT) proved groundless. And one former executive with close ties to people at the company has taken recent calls from private equity firms assessing whether Yahoo would be a worthy purchase. However, this person doesn't think they will make bids because Yahoo's properties are so interconnected that it's tough to see how enough sizable units could be sold to unlock value. At a market value of $38 billion, it's an expensive acquisition for any company. Despite the continuing skepticism by analysts and investors, Yang and Decker signaled during a conference call after the announcement that they will be trying to make some big changes. They mouthed praise of Semel's six-year tenure, including a reorganization last December that they said has speeded decision-making and streamlined operations. But it was hard not to hear an urgent need for change in their comments. Yang emphasized that his key role would be to retain talent in the wake of a steady stream of executive and engineering departures for more than a year. "We want to be a better Yahoo," he said. "It's imperative that we execute with speed, clarity, and discipline." Likewise, Decker said Yahoo will in part dismantle the reorganization that Semel announced only six months ago. Yahoo had been looking for someone to head an audience group aimed at making sure more people flock to Yahoo's myriad properties, from its home page to sports, finance, music, and other sites. Instead, she will combine the advertiser group with the audience group and head it herself. The company is still looking for a technology chief to replace Farzad Nazem, who departed recently. But precisely what moves the two will make remains uncertain. Some analysts believe the company needs to continue scaling back operations that aren't attracting advertisers. Yahoo also has tried to tap into the frenzy for social networking. But beyond some small successes, such as Yahoo Answers, a volunteer question-and-answer service, and the purchase of the fast-rising photo-sharing service Flickr, Yahoo has failed to come up with world-beating social services. Most of all, analysts say Yahoo needs to prove that its new search advertising system, called Panama, will help close the gap with Google. Decker said second-quarter results would show better-than-expected progress with Panama. However, she said earnings guidance issued in April would likely come in only between the midpoint and the low point of those estimates because growth in display advertising continues to slow. Time for a Change For well over a year, talk that Semel's days at Yahoo might be numbered kept rising in volume. But in recent weeks, it appears that discussions of Semel's future intensified. Indeed, Semel said in the conference call that succession discussions had been "going on for quite some time.b&. I saw myself as a coach more than a player going forward," he said. At the June 12 annual meeting, neither Semel nor Yang, who was asked by a shareholder if he would step up to take a bigger role, gave a hint that such a big change was imminent. Some analysts and other observers believe that two shareholder votes at the meeting may have persuaded the board to take immediate action. More than 32% of shareholders withheld their approval of at least one director, and nearly 35% voted for a proposal to tie executive pay more closely to company performance. The only thing some former Yahoos agree on is that the pair must do a better job than Semel. The change, says one former senior executive, was "way, way, way overdue." This person, as well as other former Yahoo executives and managers, say the company became more bureaucratic under Semel, slowing innovation at a time when Google and a raft of new Web companies were coming on strong. Missed Opportunities It's not that Semel and other Yahoo executives didn't realize the urgency of catching Google in Web-search share and revenue. But time after time, Yahoo missed opportunities that others seized. News Corp. bought the social-networking site MySpace nearly two years ago for $580 million, while Yahoo didn't manage to snag now-ascendant Facebook despite offering as much as $1 billion last year. Last year, Google bought the fast-rising video-sharing site YouTube for $1.6 billion while Yahoo struggled to consolidate its 16 video offerings. That trend continued this year in Yahoo's own backyard of online display advertising. Google made a $3.1 billion deal for ad-serving network DoubleClick, which is pending regulatory approval, and Microsoft shortly thereafter spent $6 billion on aQuantive. For its part, Yahoo bought the rest of Right Media, in which it purchased a 20% stake last year, but at a much higher valuation for a company whose presence trails those two. Bringing Back an Insider Semel also represented a different mind-set and culture from Yahoo's Silicon Valley roots. His Hollywood style and focus never meshed there, even after he was credited with turning the company around following the dot-com bust in 2000. "There's always been that chasm between technology and entertainment," says Jim Moloshok, a former Semel cohort at Warner and vice-president for media and entertainment at Yahoo until late 2005. By most accounts, Semel also didn't develop a deep enough understanding of technology. "He was a fish out of water," says former Apple executive Jean-Louis GassC)e, now a venture capitalist with Allegis Capital. "He just doesn't have the touch for technology, which is a necessary but not sufficient condition for success [on the Internet]. That's what propels Google." For all the challenges, both Yang and Decker win kudos, especially inside Yahoo, which as much as anything needs a strong dose of managerial inspiration. "Jerry's got a uniquely honed intuition about the industry," says a former executive. "But does he have the skill set and the guts?" Decker, this person says, is smart and disciplined, but untrained in technology, marketing, or sales. "Together, they might be O.K. But they're exercising these muscles for the first time." [Hof is BusinessWeek's Silicon Valley bureau chief. With Catherine Holahan in New York.] * ================================================================ .NY Transfer News Collective * A Service of Blythe Systems . Since 1985 - Information for the Rest of Us . .339 Lafayette St., New York, NY 10012 http://www.blythe.org .List Archives: https://olm.blythe-systems.com/pipermail/nytr/ .Subscribe: https://olm.blythe-systems.com/mailman/listinfo/nytr ================================================================