Why Jerry Yang's resignation is a great, if belated, move

Yang infamously turned down a $31 a share, or $44.6 billion, offer from Microsoft. He should have left 10 minutes after screwing that Microsoft deal up.

Yahoo co-founder Jerry Yang

The resignation of Jerry Yang from Yahoo's board--as well as Yahoo Japan and Alibaba--removes an obstacle that could set the company up for a more dramatic restructuring. Shame Yang didn't split earlier.

In a letter to Yahoo Chairman Roy Bostock, Yang wrote that he wanted "to pursue other interests." He added that he was enthusiastic about Scott Thompson as CEO.


The reality is that Yang should have gone years ago. In fact, Yang's decision to turn down an offer from Microsoft in 2009 was a fatal management move that was nearly impossible to recover from. Yang infamously turned down a $31 a share, or $44.6 billion, offer from Microsoft. He should have left 10 minutes after screwing that Microsoft deal up.

Now what?

Yang's resignation could set up a more dramatic restructuring at Yahoo that could revamp the company. The departure of Yang also gives Yahoo more time to think through its next move. Yang was too emotionally tied to the company he co-founded. With Yang gone, Yahoo can better pursue a few options that may have clashed with its co-founder. Among them:

  • The stage is set for Yahoo to elegantly--and profitably--exit its Asia assets for a nice windfall worth billions.
  • Yahoo can sell out more easily. Yang wanted Yahoo to stay independent and previously spurned Microsoft. Thompson has no such ties to the past. In other words, Yahoo can now more easily work around Yang's 3.6 percent stake in the company. It's much easier to work around Yang if he's not on the board.
  • The company buys itself time to restructure and figure out its future course. Yang was a lightning rod for disgruntled shareholders such as Third Point LLC. With Yang out of the picture, Yahoo can relieve some pressure while restructuring in or out of public view.

The afterhours movement in Yahoo shares--up 3 percent--tells you Yang's departure is welcome but there are doubts about the company's turnaround prospects.

This item first appeared on ZDNet's Between the Lines blog under the headline "Yahoo's Yang resigns: Why it's a good, but late move."

 

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