Yahoo - The Worst Managed Major Internet Brand On Earth?
I've remarked on here before that Yahoo is a terribly managed organization. The internal resentment over poor leadership and the festering of internal politics points to a company in very serious trouble. A company with very poor leadership. And, a company where good talent has been draining at a rapid pace. We've seen leaked internal memos criticizing management and we've seen the CEO walk off with hundreds of millions of dollars while their core business was ravaged by Google. In fact, we still see senior executives being compensated richly without any seeming regard the business results. All while what was once the premiere brand on the Internet disintegrates before our very eyes.
We saw Jerry Yang, its founder and current leader, embrace the outsourcing of their primary product to their biggest competitor rather than embrace an incredibly rich offer by Microsoft. An offer that has no grounding in reality or in the fundamental valuation of the company using reasonable metrics such as cash flow. After management rebuffed Microsoft's very rich offer, it appeared shareholders were ready to revolt in an attempt to sack the board of directors. It's too bad we don't see more of this activism. Shareholder transparency and rights are most likely to increase significantly in coming years. As is the transparency of board level activity, if not outright board accountability. We have a generational dilemma in this country - competent management capable of running business operations has been replaced with a circus.
Now Jerry Yang is feeling the heat after Google walked away from this latest drama. He has told Microsoft to make him an offer. Huh? You had an offer for nearly $40 a share and now your stock is close to $10. Microsoft is now in the driver's seat. If nothing, Yahoo's share price is likely to continue its implosion and there is always a possibility Microsoft could pick up the pieces in bankruptcy. Frankly, with financing risky deals falling off of a cliff and private equity headed for the scrap heap, Microsoft has the luxury of playing a game of Chicken. I believe Microsoft should steer clear of Yahoo but egos may prevail. The only Yahoo property worth any value to Microsoft is the brand itself. Microsoft is likely to get this at a very significant discount to even today's price if it is willing to walk. And, it appears they are. Yang is desperate because he has no plan to save his creation. Now he has substantially diminishing opportunity to "dump" the business. Yahoo is in serious trouble.
We saw Jerry Yang, its founder and current leader, embrace the outsourcing of their primary product to their biggest competitor rather than embrace an incredibly rich offer by Microsoft. An offer that has no grounding in reality or in the fundamental valuation of the company using reasonable metrics such as cash flow. After management rebuffed Microsoft's very rich offer, it appeared shareholders were ready to revolt in an attempt to sack the board of directors. It's too bad we don't see more of this activism. Shareholder transparency and rights are most likely to increase significantly in coming years. As is the transparency of board level activity, if not outright board accountability. We have a generational dilemma in this country - competent management capable of running business operations has been replaced with a circus.
Now Jerry Yang is feeling the heat after Google walked away from this latest drama. He has told Microsoft to make him an offer. Huh? You had an offer for nearly $40 a share and now your stock is close to $10. Microsoft is now in the driver's seat. If nothing, Yahoo's share price is likely to continue its implosion and there is always a possibility Microsoft could pick up the pieces in bankruptcy. Frankly, with financing risky deals falling off of a cliff and private equity headed for the scrap heap, Microsoft has the luxury of playing a game of Chicken. I believe Microsoft should steer clear of Yahoo but egos may prevail. The only Yahoo property worth any value to Microsoft is the brand itself. Microsoft is likely to get this at a very significant discount to even today's price if it is willing to walk. And, it appears they are. Yang is desperate because he has no plan to save his creation. Now he has substantially diminishing opportunity to "dump" the business. Yahoo is in serious trouble.
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