MOUNTAIN VIEW, Ca. – Yahoo Inc. co-founder and Chief Executive Jerry Yang will step down after the company finds a replacement, closing a tough tenure marked by Yahoo’s rejection of a takeover bid by Microsoft. The move could now pave the way for Yahoo to complete the deal with Microsoft, and make it a more formidable competitor for Google.
Yahoo Chairman Roy Bostock and Yang, who will stay on as a senior executive and board member, have been discussing for weeks the possibility the CEO might step aside, said people familiar with the matter who were cited by The Wall Street Journal. His impending exit leaves much unresolved for the Internet company, which has been fighting a battle to remain independent for months.
For his role in those talks, Yang has been taking a beating from investors for months as concerns from inside and outside the company that he wasn’t the right person to help Yahoo make painful strategic choices continued to mount. Activist investor Carl Icahn said he would replace Yang as CEO if his proxy campaign succeeded. After Yahoo agreed to a truce with Icahn, allowing him to join the board, shareholder resentment lingered. Yang received the support of only 66 percent of shareholder votes cast at the company’s recent annual meeting. He stayed on, arguing that he was the best person to help Yahoo turn itself around.
That became increasingly difficult as the board was unwilling to abandon the notion that a deal with Microsoft could yet be struck, said people familiar with the matter. And while Yang is not opposed to a deal, and recently said publicly that he thought Microsoft should try to buy Yahoo, his relationship with Microsoft has been strained by months of tense negotiations.
A person familiar with Microsoft Chief Executive Steve Ballmer’s thinking said that the Microsoft chief is still interested in buying Yahoo’s search business, which could help the software company with the critical task of ratcheting up its market share against Google Inc. But Ballmer is in no rush, this person said, and will likely wait until a new Yahoo chief executive is named before making any new entreaty.
The current economic turmoil might strengthen Microsoft’s hand because Yahoo is dependent on advertising revenue, which has fallen. Microsoft has a broader range of businesses with which to weather rough economic waters. News that the board had begun a search to replace Yang was first reported Monday evening by AllThingsD, a Web site owned by Dow Jones & Co., publisher of The Wall Street Journal.
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