Yahoo Execs’ Reaction: “I Need Some Prozac”
by Kara Swisher
Posted on May 5, 2008 at 12:05 AM PT
Be careful what you wish for, Jerry Yang.
Because after talking to a dozen Yahoo (YHOO) execs over the weekend after the Microsoft (MSFT) takeover deal cratered, most of whom are vice presidents or above, I have to say that your stock drop isn’t the worst thing you will have to deal with this morning when you pull up at work.
The worst? That’ll be the very hairy eyeballs you will be getting from a lot more of your employees, who are scared silly and a lot peeved by the limb many feel you have dragged them and their stock options out onto.
A major decline in the share price today was of prime concern to those I interviewed, with most hoping it would not dip below $20, based on the possibility of signing a long-rumored ad outsourcing deal with Google (GOOG) soon that could potentially keep the stock higher.
Also of concern: making too many sudden moves to placate Wall Street, like a possible alternative merger with AOL (TWX) (which the Yahoo troops still don’t seem to welcome).
But causing particular dismay was the image of Yahoo’s top execs high-fiving after Microsoft CEO Steve Ballmer walked away from the deal, an act reported in the New York Times this weekend after the deal was scotched.
“That was very telling, if it was true,” said one exec, who–like everyone–did not want to be named. “It shows a complete lack of connection to the balance of the company.”
And that was the nice quote!
Last night, Yang tried to placate employees a bit by posting an aptly named communication, “OK, so now what,” on Yahoo’s blog called (not so aptly) Yodel Anecdotal. He also took a slap at, presumably, Microsoft’s PR effort and the press coverage around the takeover attempt.
“By the way, I’m sure you’ve all read or watched the news about this. Frankly, there’s a lot of nonsense and misinformation in what’s being reported. Just so we are all clear, here’s what happened. The board took its mission very seriously. We clearly indicated to Microsoft that we were open to a transaction but only if it were on terms that fully recognized the value of Yahoo and was in the best interests of our stockholders.
“No one is celebrating about the outcome of these past three months… and no one should.”
So no high-fiving anymore, right? And, just so we are all clear, everyone at Yahoo I talked to sure isn’t celebrating.
So, here’s a sampling of the feelings, none of which were positive, even though BoomTown tried mightily to get someone to render a more sanguine spin on the proceedings:
“I am in shock.”
“I don’t know if we won or we lost. I think we lost.”
“I don’t love that it was Microsoft, but I think everyone thought $33 was a pretty good offer from a pretty good tech company.”
“Having to face my staff tomorrow will not be so much fun and I need some Prozac, since I don’t know what I can say to them about how our leadership is going to get our company going again.”
“Where’s the Jelly memo when you need it?”
“I can’t really talk to Jerry, since it is difficult to tell a founder tough things he probably needs to hear.”
And, “Do you think we need to do an intervention with Jerry and the board?”
I am not sure that would work, but most employees I talked to thought a new leader at the top of Yahoo would be a good idea to give employees a fresh start and a new outlook.
Suggestions ranged from former Yahoo COO Dan Rosensweig to former Viacom (VIA) CEO Tom Freston to former eBay (EBAY) CEO Meg Whitman (pictured here).
“Jerry could become chairman, Sue [Decker] could remain president and then someone who can really charge in and make drastic change could be CEO,” suggested one exec. “Do you think Meg Whitman would do it?”
Um, no. But, ironically, Whitman was almost Yahoo CEO in a potential merger between Yahoo and eBay that never happened in the late 1990s.
As they will also say someday about 2008’s stillborn takeover of Yahoo by Microsoft: Could’ve, would’ve, should’ve.
But didn’t.
Comments
Here’s what’s wrong with Yahoo:
“I can’t really talk to Jerry, since it is difficult to tell a founder tough things he probably needs to hear.”
Nice. So Yahoo’s (highly paid) senior managers know what’s wrong, but they’re too scared to let the boss know. No wonder the company’s floundering.
Memo to Yahoo execs: Stop whining and grow a pair.
Posted by Pete Arden at May 5th, 2008 at 9:27 amJerry Yang is the John McCain of the corporate world. Their only solution to Yahoo’s problems and the Iraq War is to “stay the course.” We have to wait until November to learn what voters think of McCain’s position, but Yahoo shareholders are already rejecting Yang’s.
Posted by Bill Bucy at May 5th, 2008 at 11:05 amAnd when the dust settles, I think Microsoft will jump right back and make a new offer. Only this time, it’s going to be lower than the original price. Jerry will come right back and grab the deal faster than he can yodel.
Posted by Abe Olandres at May 5th, 2008 at 11:33 amIf the Yahoo execs are so quick to throw in the towel based on lower stock options today they deserve what they get.
Yahoo has a unique opportunity here to take advantage of classic David and Goliath story.
People love an underdog and just how many companies do you know that have snubbed the Redmond Empire. There is a reason Microsoft wanted Yahoo and it wasn’t just synergy.
Jerry and his gang need to stop worrying about what “the street” thinks and worry about what “the searchers” think.
Time to spin this one in their favor. Saying you won’t do evil is one thing, showing it is something to be proud of.
Bill
Posted by Bill Pytlovany at May 5th, 2008 at 2:17 pmI, for one, don’t see this deal as necessary for either company. This may not make the investors nor b-school people happy, but from a technology and consumer standpoint it’s probably better in the long run. Microsoft is huge, they have no excuses as to why they can’t do it themselves. If — given Microsoft’s size and influence — they can’t execute their own strategy, what makes them think they’ll be able to execute a successful merger with Yahoo? Please!
M&A’s are frequently lies masquerading as needs by people who are only looking for the short-term profit.
One word for you: AOL
If it was my company, and I was more engineer than businessman, I would fight it too.
On a personal note, I am happy to see the would-be email monopoly fizzle out.
Posted by Dylan Carlson at May 5th, 2008 at 4:22 pm