Tuesday, October 21, 2008

What were those Yahoos thinking?

Yahoo is cutting employees again. It’s hard to see how another 10% is going to cut “fat” without also cutting meat (i.e. the company’s ability to perform against its more affluent rivals).

I liked the AP report (published, natch, on the Yahoo website) on today‘s dead cat bounce in the stock price:

Yahoo's determination to rein in its expenses seemed to please investors, who have been disillusioned with the company's direction for years.

Yahoo shares gained nearly 7.6 percent in extended trading after ending the regular session at $12.07, down 79 cents.

The depressed stock price is particularly galling to Yahoo stockholders, given that Yahoo had a chance to sell to Microsoft for $33 per share in May.

But Microsoft withdrew its offer after Yahoo Chief Executive Jerry Yang balked at the price, arguing his turnaround plan would yield even bigger returns.

Yang's rebuff is now looking like a horrible mistake as online advertisers curtail their spending in anticipation of the worst recession in a quarter century.
As was clear at the time, Yang didn’t say “no” because he had a better turnaround plan or could create better value for shareholders. Instead, he didn’t want to be acquired — or at least he didn’t want to be acquired by Microsoft, the only bidder. This time, Carl Icahn rolled over rather than fighting to fix the problem.

So my riff on lack of accountability certainly would certainly extend to self-serving, value-destroying CEOs of publicly traded companies. Yang is neither the first nor the last.

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