Sunnyvale, California — Yahoo Inc.’s Jerry Yang, who co-founded the most popular web portal nearly 17 years ago and had an ill-fated stint as chief executive, abruptly relinquished his board seat and “all other positions” with the struggling Web giant, the company announced on Tuesday.
Yang, 43, a Web pioneer and one of the original dotcom billionaires, also vacated, effective immediately, from the boards of Yahoo! Japan and Alibaba Group Holding Ltd., Yahoo said in a statement.
Yang’s surprising departure comes barely two weeks after the company announced that former PayPal chief Scott Thompson would take over as new CEO with the task of returning the once-leading Internet portal to the heights it enjoyed in the 1990s, though it is unclear if Yang’s departure is related to that hire.
Yahoo co-founder Jerry Yang (Credit: Yahoo)
Respected in the industry as one of the founding figures of the Web, Yang, who resisted Microsoft’s takeover attempt several years ago, has come under fire over from investors and to some extent within the company’s internal ranks when Carol Bartz took over the top spot in January 2009. Her profane outbursts and failure to bolster the internet giant’s sagging share price led to her ouster last September.
Surprisingly, Yang’s departure from Yahoo removes one of the last traces of a management team constantly criticized by investors for failing to find a buyer or negotiate a sale of stakes in Asian assets worth more than $10 billion. Besides, Wall Street considers the exit of “Chief Yahoo” Yang as freeing the way for a major infusion of cash from private equity, or a deal to sell off much of its 40 percent slice of China’s Alibaba, unlocking value for shareholders.
“Lots of people think he resisted innovation there with old ideas and (is) slow to decide and that he is not an innovator himself for being at such a high level,” said one former Yahoo employee.
“People have very high hopes for founders. Everyone wants a Steve Jobs,” the employee quoted as saying, referring to Apple’s co-founder who brought the company back from near death and transformed it into the world’s most valuable tech company.
In a letter to the Yahoo Board Chairman Roy Bostock, Yang wrote:
“My time at Yahoo!, from its founding to the present, has encompassed some of the most exciting and rewarding experiences of my life. However, the time has come for me to pursue other interests outside of Yahoo! As I leave the company I co-founded nearly 17 years ago, I am enthusiastic about the appointment of Scott Thompson as Chief Executive Officer and his ability, along with the entire Yahoo! leadership team, to guide Yahoo! into an exciting and successful future.”
Yang co-founded Yahoo! Inc. in 1995 along with David Filo and served as a member of the board of directors since March 1995. Yahoo went public in 1996.
“Everyone is going to assume this means a deal is apparent with the Asia counterparts,” Macquarie analyst Ben Schacter said. “The understanding among shareholders is that Yang was more focused on trying to rebuild Yahoo than necessarily on maximizing near-term shareholder value,” he added.
“It certainly seems things are coming to a head as far as realizing the value of these assets.”
However, Yahoo Chairman Roy Bostock offered nothing but praise for Yang in the company press release.
“While I and the entire board respect his decision, we will miss his remarkable perspective, vision, and wise counsel,” Bostock said in the statement.
Yang, who has constantly been criticized by investors who expected change at the battling company. Daniel Loeb, manager of hedge fund Third Point, which owns Yahoo shares, called on Yang to resign last November. Loeb cited, among other shortcomings, Yang’s “ineptitude in handling the Microsoft negotiations to purchase the company in 2008.”
The decision to reject Microsoft’s $44.6 billion bid for Yahoo will likely define Yang’s leadership at the company more than any other–perhaps even more than his co-founding of the company. It was, in retrospect, one of the biggest strategic blunders in corporate history, as Yahoo’s value tanked after the company walked away from Microsoft. Yang was said to be one of the biggest obstacles to the deal, unwilling to let go of the company he helped create.
Finally, as the co-founder and one-time CEO Yang has severed all his leadership ties with Yahoo, newly hired CEO Scott Thompson has a free hand to unwind the company’s part-ownership of Alibaba Group Holding and Yahoo Japan. He may also do a better job mounting a credible threat to Google and Facebook in online advertising, said Clayton Moran, an analyst at Benchmark.
Yahoo shares rose more than 3.5 percent to $15.99 in after-hours trading following the announcement that Yang was leaving the Sunnyvale, California, company.