With the Monday evening announcement that Jerry Yang would step down as its chief executive,will not only be closely watched by its investors but also by the folks at Microsoft, according to sources.
In part, two people industry players and headhunters point to as possible good fits already have Redmond running through their veins. One is former Microsoft online and Windows chief Kevin Johnson, who, and the other is Brian McAndrews, senior vice president of Microsoft's Advertiser and Publisher Solutions Group, who came by way of the Aquantive digital-advertising acquisition.
"Kevin is the kind of guy that Yahoo needs," a Microsoft source said. "He has excellent execution, understands technology, is a hard worker, and people like working with him."
The source did note that it may be difficult to lure Johnson to Yahoo, given that he only recently started at Juniper, which may make McAndrews a stronger candidate.
"Take a sharp guy like a Brian McAndrews, who built up Aquantive and later sold it to Microsoft. He would be a good fit for Yahoo," said David Nosal, who heads up executive search firm Nosal Partners.
A digital-media executive also pointed to McAndrews as an excellent fit for Yahoo's top job, given his prior experience as a CEO in the digital-media industry.
Yahoo is seeking to replace its embattled CEO, who will be stepping down from his post after a successor is found. The company has hired executive search firm Heidrick & Struggles International to assist it in its search.
Microsoft declined to comment on Yang's announced resignation plans.
The Internet search pioneer also has an internal CEO candidate, its president and former Chief Financial Officer Sue Decker.
"Sue received great press as Yahoo's CFO, but her president's role has not generated as much good press," the Microsoft source noted, adding that it will be interesting to see whether Yahoo will use the CEO search process as a means to validate its selection of Decker as the CEO or to undertake an extensive CEO search.
One major Yahoo institutional investor hopes that Yahoo will name an outsider as Yang's replacement.
"I hope (Decker) doesn't get it. She's been part of the problem," the investor said, noting that Yang's CEO resignation is long overdue. "They need to clean house."
Yahoo's investors have been incensed sincefor the entire company last May. Yahoo had rejected the offer, countering with a proposal for $37 a share, before Microsoft broke off talks.
The Microsoft source said it will be interesting to see whether Yahoo names a CEO with a strong background in marketing, technology, or business.
Executive recruiter Nosal said he could think of several people from Google, four from Microsoft, and some from multimedia advertising companies who could serve as Yahoo's CEO.
"There are about 15 to 20 people around the world who could (fill) this role," Nosal said, adding that the search process could take approximately 50 days.