Kara Swisher

Recent Posts by Kara Swisher

Yahoo Board and Investors Burn, While Everyone Else Fiddles

Could Ross Levinsohn and Jon Miller reinvent Yahoo (YHOO)? What about OpenTable’s Jeff Jordan? Or various and sundry Google (GOOG) or Microsoft (MSFT) execs?

It could happen.

That specific scenario of putting someone like the two former Internet execs (they ran Fox Interactive Media and AOL, respectively) in charge of the troubled Web giant is one of the many being bandied about, as Yahoo shares tumble and the company heads toward a potentially ugly annual meeting everyone involved desperately wants to avoid.

In fact, Yahoo’s board and major investors are talking today about various options for the company, including Yahoo’s receptivity to a sweetened deal with Microsoft and also other ways to pull the asset-rich company out of its stock doldrums.

It is not likely to be a very chummy meeting, of course, considering Yahoo’s stock (see this depressing chart to the right) has been drifting inexorably downward with nary a lifesaver in sight.

Yahoo shares sunk ever closer to $20 (it closed today at $20.66, down more than three percent)–a worrisome crossing of the digital Rubicon for the company, given that it makes Yahoo more vulnerable to all sorts of Wall Street machinations.

Besides allowing other large companies like News Corp. (NWS) and Comcast (CMCSA) to consider bids for Yahoo–both have been watching the situation very carefully, sources said–it also opens Yahoo up to attacks from more rapacious private equity investors.

And there is a lot of machinating already, of course, as I have found poking around, with more to come.

Like what?

Like Yahoo back in discussions with AOL once again. Sources close to the situation said that the idea of hooking the pair up have been revived, as Yahoo looks to strengthen itself and Time Warner (TWX) searches for any way to spin off a division it has never been able to juice up.

Of course, Microsoft has also been sniffing around the property too–and almost bought AOL several years ago–and would be unlikely to sit still and let Yahoo grab AOL’s most attractive asset, its Platform A online advertising unit.

(Memo to Time Warner CEO Jeff Bewkes: You’re known as a smooth deal-maker, so paste on that million-dollar smile and get dealing!)

And, more interestingly, are the moves to try to find another CEO and top leadership to come in and run the company instead of Yahoo CEO Jerry Yang and President Sue Decker.

(I had previously posted on possible picks for that job here.)

That could come in either a friendly or non-friendly approach, according to several people close to the situation.

Under the friendly scenario, Yang would voluntarily step aside–and even be upped to non-executive chairman status–while a new CEO and team would be put in place.

A less dulcet approach, which would require an aggressive move by Yahoo’s board–who make head-in-the-sand ostriches seem active–against Yang directly is less likely.

Still, many investors, increasing numbers of employees and even some Yahoo board members have lost confidence in Yang and Decker, who have been trying to set a new course for the company.

But does a new course require new leaders?

Levinsohn and Miller (pictured here, left to right), who now run an online-focused investment fund called Velocity Interactive, are two high-profile former Web execs mentioned most frequently by major Yahoo investors as candidates for that idea.

Sources said could either come in as board members or actually run the company for a time period, while searching for a new CEO, like OpenTable’s Jeff Jordan, Google’s Tim Armstrong or even Microsoft’s Kevin Johnson.

Such as plan could include additional investments by new investors and critical buy-in by current investors–including billionaire activist Carl Icahn, who is waging a proxy fight against Yahoo that is set to come to a head at the Aug. 1 annual meeting.

Most important would likely be cooperation from Microsoft too, which could offer to also buy some of Yahoo and also sweeten its search-ad deal.

It would also require a new plan for Yahoo, which will likely include job cuts and a more drastic refocusing of its business that perhaps only outsiders can do.

As its founder, not surprisingly, Yang has been slow to make the kinds of deep changes many think Yahoo requires to reinvent itself, and Decker has been part of the team that has gotten the company mired in its current state.

While this all sounds incredibly complex, all scenarios point in one inevitable direction: Massive change is coming to Yahoo in the next 30 days, one way or another.