Kara Swisher

Recent Posts by Kara Swisher

Semel Out, Yang In, Yahoo Uncertainty Remains Exactly the Same

In the end, it was too much, and Terry Semel, the beleaguered CEO of Yahoo, had to go.


Did he go willingly? No, if you talk to a lot of sources at the Internet giant, who fingered Yahoo co-founder Jerry Yang as the one who–politely–pulled the trigger yesterday on the CEO he had been key to hiring with much fanfare and initially terrific results many years ago.

Just last week, in fact, Semel told a disgruntled shareholder at its annual meeting, “absolutely,” when asked if he still had the fire in his belly to lead Yahoo out of its morass.

The move came as a shock to much of the upper echelons of Yahoo, many of whom had no idea it was coming at all until the announcement. I actually was the one to tell two executives.

That’s the sign that there was more to the abrupt departure, which took shape over the weekend in discussions between Semel, Yang and other board members.

But did Semel want to go? Absolutely. “He’s 64 years old and this drumbeat was not going to let up for a long time, so who would want to deal with it forever?” said one company executive. “And when perception overcomes reality to such an extent, who can fight that?”

In fact, at last week’s annual meeting–which I think he handled well–Semel himself looked exhausted. Even a more vibrant and aggressive executive probably would have had a hard time fighting the tide that he was up against.

That included: continued lackluster results, which will be underscored when the company reports its financial results in the coming weeks, led by a falloff in its display-ad business; the recent hubbub over Semel’s $71.7 million pay package (mostly options and, to be fair–until a spike in the stock after his departure announcement today–mostly underwater); and, most of all, an inability to catch up with rival Google in the search advertising business.

“So Panama is finally working, and the graphical ad business falls off the cliff,” said one top executive, referring to Yahoo’s overhaul of its search ad-monetization product designed to compete better with Google. “It’s like Semel was Job and God was sure pissed.”

While there were no plagues in Sunnyvale, it was clear that all the bad vibes were sticking to Semel, which made it impossible both externally and, perhaps most important, internally to make the kind of major changes needed to turn the situation around.

Interestingly, that was the exact same scenario when Semel was brought in to Yahoo after the executive team under Tim Koogle was moved aside when morale was low and results weak.

And, as before, it meant someone had to pay the price.

So Semel was the designated fall guy, although he will remain nonexecutive chairman, with Yang taking over as CEO and Sue Decker–a Semel protege–taking on the new role as president.

Not giving Decker the big job, to me, adds a level of complete uncertainty that is troubling.

Because while Yang is obviously an accomplished guy and a genuine visionary, many within Yahoo and outside would be right to question his ability to steer such a large and complex company.

While “interim” was not affixed to his name–and Yang clearly thinks he is there for the long haul in his statement today–focus will naturally fall on Decker, the former CFO.

If I hear the phrase “She’s not ready yet” from executives inside the company, I think I will scream. If she is not ready, what does she need to do to be ready? One hundred push-ups without touching the ground?

And if she is not ready, perhaps a good idea might be to bring in a seriously ready and experienced executive to take over now.

This move, as with all things Yahoo of late, is typical–a lot of very dramatic things happen all the time, but nothing actually seems to change dramatically.

Will Semel’s departure really set off a spate of excited innovation within the company or will it further exhaust the troops by coming off as more deck-chair movement?

And to hang all the problems on Semel, which is clearly being done here, is both unfair and untoward. He clearly did not perform in the past three years, fighting an onslaught from Google that was almost impossible given both his and Yahoo’s lesser technical proficiency by comparison.

Neither Semel nor Yahoo has been nimble or nerdy enough to pull it off, although that perhaps is no surprise. Let’s remember–Yahoo started off as a directory, compiled by actual “surfers,” and Semel was a Hollywood studio chief.

Beating Google, if Yahoo were truly serious, would require it to hire Bill Gates.

And, after this move–which, I will say, came as a surprise to me, as I thought it would take place after results were in for the recent quarter–being acquired by Microsoft might now be a pretty good idea.

While I have long opposed such a move by Yahoo, the strong arms of the tech giant might be just the place to land and lick its wounds, before making the next big move.

Much more to come, obviously, as the calls come in.

Please see this disclosure related to me and Google.