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Search, Flickr, and Frustrated Investors: Terry Semel's time at Yahoo and a look towards the future

Terry Semel has been replaced as CEO by Jerry Yang. What led to this and what is next for Yahoo?

Yahoo's Terry Semel

It is clear that Terry Semel was forced from his role as CEO of Yahoo today due to increasing concern from Yahoo's investors. Along with not being able to fend off Google's rise to power, investors were also angry over Semel's pay package, which was revealed to be $71.7 million dollars in April of this year. Over the last year, Yahoo's stock dropped 18 percent. That seems to be the final straw, as we see Semel stepping down today.

From 2001 to 2004, Terry Semel seemed to be the cure to Yahoo's woes after the dot com bubble burst. In 2004, everyone was thoroughly impressed by the job that Semel had done at Yahoo. Call it great management, call it a lucky rebound, call it whatever you want, but Yahoo had never been doing better and it was all under the leadership of Terry Semel.

In 2003, Yahoo acquired Overture, looking poised to take another shot at the search market. Sure enough, in early 2004, Yahoo announced that they were dropping Google search results from their site and going with their own search engine. Some people are saying that not buying Google was one of Terry Semel's fatal mistakes. I think that it is really easy to say that right now. I mean, I wish that I had bought Google stock when they had their IPO. However, I bet that Semel is really regretting not going after Google.

Yahoo acquired Flickr in March of 2005.

2005 brought us one of Semel's best moves in recent history. In March, Yahoo acquired Flickr, the hot photo sharing service. This gave Yahoo a much needed bump, but it wouldn't be enough as Google was now outperforming Yahoo. Then, in 2006, Yahoo's negotiations to buy the rapidly growing Facebook fell apart and Yahoo continued its decline.

It's hard to be an old media person at a Silicon Valley tech company and I think that is what really ended up hurting Terry Semel. Semel's adventure into working more closely with Hollywood proved to be the wrong choice for Yahoo. Based on the recent trends at Yahoo, I would say that they are in desperate need of a new media leader. Jerry Yang is clearly more new media than Semel, but is he really what Yahoo needs right now? I think that this move is a step in the right direction, but that Yahoo could definitely use some new and fresh minds filling their executive positions.

Having a new person in charge at Yahoo could definitely spark more talks of an acquisition by Microsoft or Comcast. In fact, MSNBC is already reporting on a rumored deal with News Corp.'s MySpace in exchange for a 25% share in Yahoo. I think that the rest of 2007 is going to be a crucial time for Yahoo. They are in a make or break position right now and we will see if Jerry Yang is the right man to make Yahoo again.