San Francisco — After exasperating investors for most of the past 18 months, Yahoo Inc. on Monday tapped co-founder Jerry Yang to replace Chief Executive Terry Semel, bowing to investor pressure as the Internet media company has failed to keep up with rival Google Inc.
In the post since 2001, Semel has been under pressure for some time amid disappointing trading results and the growing dominance of rival Google.The firm suffered a 16% fall in profits in the first three months of 2007.
Semel’s capitulation, announced late Monday, came less than a week after he faced off with shareholders disillusioned with the company’s lackluster performance as Internet search leader Google Inc. pulled further ahead in the lucrative online advertising market.
Wall Street has grown increasingly impatient with the company as its growth has slowed and its efforts to compete with Google have faltered. Since the beginning of last year, its share price has fallen from about $43 a share to less than $30.
Unconfirmed rumors of Semel’s resignation lifted Yahoo’s stock price by 3 percent in trading today, to $28.12. When the company announced the personnel shuffle after the market closed, Yahoo shares climbed above $29 in extended trading.
The announcement comes less than a week after the Internet giant faced a humbling annual meeting in which about a third of its shareholders voted against re-electing one or more company directors. The rich compensation package of Semel was at issue.
To fill the void created by Semel’s departure, Yahoo appointed company co-founder Jerry Yang as its new CEO and named Susan Decker as its president. Decker, who had been touted as Semel’s heir apparent, was recently promoted from Yahoo’s chief financial officer to oversee the company’s advertising operations.
Semel, 64, will remain chairman in a non-executive role after spending the past six years running the company. “The company is in good hands,” Semel said in an interview Monday. “I felt like it was time for me to move more into a coach’s role than a player’s role.”
Yang, 38, co-founded Yahoo in 1994 with fellow Stanford University student David Filo, as a navigational guide in the Web’s early days. Born in Taipei, Yang was raised in the heart of Silicon Valley, after his family immigrated to San Jose.
Yang’s return to the head of the company he helped set up 13 years ago, which now has more than 500 million users’ worldwide, also heightened speculation that Yahoo may be poised for more drastic moves.
These could include possible partnerships with rivals or a merger with the likes of Microsoft Corp, Time Warner Inc.’s AOL or News Corp.’s MySpace, CNBC television reported.
For more than a decade Yang has had the title of Chief Yahoo, playing a key role in negotiating business development deals for the company. In an interview, Yang credited Semel for pushing him to play a greater role in operations and technology decisions, preparing him to be CEO.
“While it is a tremendous responsibility, I am ready,” Yang said on a conference call, adding that he expected Yahoo to remain a “vibrant independent company.”
In a statement, Semel said his resignation was his choice. The board and I have long talked about the importance of ensuring a smooth succession in Yahoo’s senior leadership, he said. “As we discussed my future goals and plans, I was clear in telling the board of my desire to take a step back sooner rather than later.”
A longtime Warner Brothers executive, Semel was brought into Yahoo in 2001 to add grown up discipline to a company strung out from the frenzy of the Internet bubble and the wrenching aftermath of its implosion. He did that, imposing methodical management and hiring experienced executives. But from the start, some in the company saw more indecision and delays than discipline.
Under Semel, Yahoo was the first company to take advantage of the resurgence in Internet advertising. It had the largest audience on the Web and was able to appeal to big marketers with creative advertising formats, like ads that animated its home page.
But in recent years he faced heavy criticism for failing to move faster to meet both Google’s challenge in Web search and advertising and, more recently, the rise of social networking sites such as MySpace and Facebook.
Semel’s departure is the second high-profile resignation at Yahoo this month. Farzad Nazem, the chief technology officer and one of the company’s longest-serving executives, left on June 8. Several other senior executives, including the chief operating officer, have also left in recent months in the wake of a companywide overhaul.
Semel will apparently not receive a severance package. “Because Semel resigned as C.E.O. and will continue on as non-executive chairman,” Yahoo said in a statement, “there will be no separation agreement with him.”
In a conference call Monday, an emotional Yang hailed Semel as “a role model and mentor” and then sought to defuse recent speculation that Yahoo might be sold to Microsoft Corp. or another suitor hoping to exploit the recent turmoil at the company