All Things Digital

If we were an actual baby, AllThingsD.com would be just about to walk by now.

Hopefully, we have done better than that over the past year and we hope to do even more in the year ahead, attempting to give readers the very best tech news and analysis married with the high standards The Wall Street Journal is known for.

At the same time, we have also tried to capture the excitement and energy of the blogosphere, in what has been an entrepreneurial effort within a major media company.

The site officially launched on April 26, 2007, one year and two days ago.

No presents, but your presence over the next year, as we make even more improvements to our work-in-progress site.

Thanks, of course, go first to my amazing partner, Walt Mossberg, as well as our crack staff (click here to see them in all their glory), partners, designers and all the many Wall Street Journal and Dow Jones folks involved.

To mark the past year, BoomTown could spend a lot of time deeply ruminating on how blogging is so very different than mainstream journalism (much more fun, much less sleep).

Or I could ponder the agonizing quest to improve standards and accuracy in the blogosphere (”I am I, Don Quixote, the lord of La Mancha/Destroyer of evil am I/I will march to the sound of the trumpets of glory/Forever to conquer or die.”)

Or I could discuss widgets and how they have changed my life (I don’t know what I would have done had Scramble not inspired my empty soul!).

But, no!

Instead, I will just re-post here one of the very first posts I had up on that first day, about…drum roll, please…my worries about the situation at Yahoo (YHOO).

I don’t want to say I am a psychic or anything, but in this piece, called “Terry in Turnaround,” I begin my obsessive coverage of the Internet portal, which I thought a year ago could be headed for trouble.

(Interestingly, my other post that day was about Facebook trying to become more mature.)

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One of the more oft-repeated legends I am suddenly hearing lately from folks inside and close to Yahoo (YHOO) is of CEO Terry Semel getting and turning down what amounted to a $50 billion offer from Microsoft (MSFT) in early 2006.

The tale has become a bit of an urban legend within the company for some, who point to it as part of the complex web of reasons the Internet portal cannot seem to accept a lesser price now.

(Microsoft’s original $44.6 billion unsolicited bid has dropped several billion dollars in value since it was revealed in February, due to a decline in the software giant’s stock.)

While I am not so sure that Yahoo is paralyzed by regret, such pricey possibilities from years past probably do have some weight today.

And, in fact, there is a continued and stubborn insistence on the part of Yahoo’s top brass and board that the company is worth a lot more–and I don’t believe it is simply a negotiating ploy to squeeze more dollars out of Microsoft.

“We’re that proverbial diamond in the rough right now,” said one person close to Yahoo.

Maybe so, but, as I wrote earlier this week and for a while now, Microsoft remains just as insistent that the price of such a jewel has declined from those supposed and heady 2006 prices.

Still, back in May of 2006 in an interview with the Financial Times, Semel denied that any substantive conversations were taking place with Microsoft about a takeover, saying the talks centered on Microsoft buying a stake in Yahoo’s search business.

Wrote the Times then: “‘Microsoft taking over Yahoo–that conversation has never come up,’ Mr. Semel said at a question and answer session organised by Syracuse University’s Newhouse School. ‘[We discussed] search, and Microsoft co-owning some of our search. I will not sell a piece of search–it is like selling your right arm while keeping your left. It does not make any sense.’”

Still, several people recently said Semel has since told them that Microsoft was indeed interested in the whole company and willing to pay a premium. In fact, many sources at Microsoft say today that it was indeed intent then on making serious overtures to combine the two to beat Google.

And because of lack of interest from Yahoo to merge, Microsoft decided to create its own search offering in place of a longtime deal it had had with Yahoo.

At the time, Semel thought that move a bad decision, as quoted by the Times: “My impartial advice to Microsoft is that you have no chance. The search business has been formed.”

Apparently not.

But to underscore Yahoo’s lack of regret at not taking that critical road diverging in the digital woods, here’s the great Edith Piaf singing an appropriate tune for the company:

BoomTown wrote a few weeks ago that Microsoft (MSFT) was fishing in Silicon Valley and also for “three to four big-name CEOs” for directors to nominate for its own Yahoo (YHOO) board slate, in the event the software giant took off the gloves and tried to oust Yahoo’s current board and replace it with its own.

For the life of me, I could not think of anyone at all in the Web sector who would turn on Yahoo’s CEO and Founder Jerry Yang like that, except perhaps Facebook CEO Mark Zuckerberg, who owes Microsoft $240 million worth of loyalty. Helping Microsoft in its hostile bid to acquire Yahoo would make them even.

Yesterday, TechCrunch threw out several very interesting prospects in a post, none too flashy, except perhaps for former Viacom (VIA) President Tom Freston. The others named are former Grey Advertising CEO Edward H. Meyer; former Nextel Partners CEO John Chapple and former eHarmony CEO Jaynie Studenmund.

That’s certainly a lot of formers!

Ironically, the well-respected Freston was often floated as a possible CEO candidate of Yahoo, if former CEO Terry Semel ever stepped down, especially after he was ousted by Viacom’s wacky owner Sumner Redstone, who was upset that Freston let News Corp.’s (NWS) Rupert Murdoch snap up MySpace. Freston has recently become active in the online video space, as an investor in sites like Veoh.

We’ll see if it comes to this for Microsoft and Yahoo, who were reportedly in informal talks, as a proxy fight is probably the last choice for both sides.

From our Monday post called “Say Hello to the Yahoo Board Members”:

Recently, [former CEO Terry] Semel revived his Los Angeles-based new media investment firm, Windsor Media, and rumors abound to his intentions–including possibly making a play for a Hollywood studio. Big question: Will Semel continue as chairman of Yahoo in 2008?…

“What to make of Roy Bostock, who has been on Yahoo’s board since 2003? I’ll tell you what: If Semel were to step down as chairman, the chatter is that the former top-level advertising exec (chairman and chief executive officer of D’Arcy Masius Benton & Bowles) is best suited to the job, given the importance of Yahoo’s ad business.”

From a press release today by Yahoo:

Yahoo Inc. (Nasdaq:YHOO), a leading global Internet company, today announced that Terry Semel, the company’s non-executive chairman, will step down from the Board of Directors, effective Jan. 31, 2008…

“Yahoo also announced today that Roy Bostock, who has been a member of the company’s Board since May 2003, was unanimously elected by the Board to serve as Yahoo’s non-executive chairman.”

Our next prediction: Yahoo has exclamation point surgically removed until happiness returns once again to Sunnyvale.

And can they ever get along?

At the SIIA Information Summit yesterday, New Yorker writer Ken Auletta, who recently did a piece on Google, noted:

We’re in an engineering culture. You couldn’t put a [Rupert] Murdoch or a [Michael] Eisner in charge of a company like that. It’s been tried. Terry Semel led Yahoo. I just spent some time with Google engineers. I couldn’t understand a thing they were saying. I don’t think [Semel] understood the engineers’ language, so he couldn’t challenge them. I suspect that’s one reason he didn’t last.”

Auletta is right, and it is an increasingly interesting issue as we move forward with the hyper-digitization of content.

While, for example, the use of online video increases exponentially, how big an audience can be created for any one property without the kind of intense programming and marketing that the entertainment industry is famous for?

On the other hand, is an increasingly massive reliance on e-metrics–the ability to minutely tell and even predict what an online audience wants by their clicking and being perfected by engineers at widget companies like Slide–the right direction?

I have no idea, but the delta is one that needs bridging.

One of the most overlooked parts of Web companies are their board members, so I think it is time to start looking more carefully at those firms where the role of directors is going to be increasingly important in 2008.

First stop, obviously, is Yahoo, which reports its fourth quarter and also full-year earnings (and also perhaps some board-approved layoffs) tomorrow after the markets close.

With everything from consistently persistent takeover rumors, a still-lagging stock price and continued scrutiny on its moves to revive itself, the company’s managers and–it must be assumed–its directors obviously face challenges in the year ahead.

They certainly seem to be a pretty experienced group, with just the right kind of expertise in retail, telecommunications, engineering and entertainment.

Curiously, with all the noise around Yahoo, this has been a circumspect bunch and it’s not clear how much influence this group is exerting over management or how willing it is to roll up its sleeves and get into it.

Still, board members are supposed to be where the buck actually does stop, so, as a BoomTown public service, here’s a little primer of who’s who on the Yahoo BOD, so you know who is actually in charge (and, of course, who is to blame):

First among equals is obviously Yahoo CEO and Co-Founder Jerry Yang, who needs no introduction. Born in Taiwan and raised in San Jose, Calif., he has been trying to bring back the company he founded with David Filo since taking over the top slot at Yahoo last June. The obviously iconic figure within the company, he occupies the hottest seat of all. Some think his leadership has not been nearly bold enough, while others think his steadier approach to Yahoo’s revival is just what the company has needed.

Terry Semel served as Yahoo CEO from 2001 to 2007. After he left that job when the company’s troubles became more pronounced (to be fair, Semel did do a great job getting Yahoo back from its last brink when the first bubble popped), the former Hollywood mogul kept his title as chairman. He is also on the board of Polo Ralph Lauren, as well as many arts and cultural organizations. Recently, Semel revived his Los Angeles-based new media investment firm, Windsor Media, and rumors abound to his intentions–including possibly making a play for a Hollywood studio. Big question: Will Semel continue as chairman of Yahoo in 2008?

What to make of Roy Bostock, who has been on Yahoo’s board since 2003? I’ll tell you what: If Semel were to step down as chairman, the chatter is that the former top-level advertising exec (chairman and chief executive officer of D’Arcy Masius Benton & Bowles) is best suited to the job, given the importance of Yahoo’s ad business. Bostock also serves now has chairman of Northwest Airlines and is on the board of Morgan Stanley and is a principal at Sealedge Investments LLC.

Ron Burkle, founder and managing partner of the Yucaipa Companies, a private investment firm, has been a director since 2001. The high-profile Burkle, of course, is better known for being best billionaire buddy of Bill Clinton (and big fundraiser for Hillary Clinton). He is a curious choice to be on the board, although he is said to add an interesting perspective and also has obvious experience in retail and distribution (largely in the supermarket industry). He is also on the boards of Occidental Petroleum and KB Home.

Vyomesh Joshi joined the Yahoo board in 2005. He probably brings a good consumer product perspective to the company from his perch as executive vice president of the Imaging and Printing Group at Hewlett Packard, a $26 billion business with an operating profit of $3.8 billion, which is a whole lot of the kind of ink Yahoo needs. The longtime HP exec also has responsibilities in the entertainment arena for HP, which should be a boon to Yahoo.

The same goes for Robert Kotick, the chairman and CEO of games maker Activision, which recently merged with Vivendi’s Blizzard Entertainment unit, to create one of the biggest gaming companies in the world. Yahoo could use a little Guitar Hero buzz that Kotick’s company has gotten from the third version of the popular interactive game, a big holiday success, and also Blizzard’s World of Warcraft.

The other Northwest Airlines link is its Chairman Emeritus Gary Wilson, who has been on the Yahoo board since 2001. Wilson, who is also on the board of CB Richard Ellis, has an extensive financial background, working as the top numbers guys at places like Walt Disney (where he was a longtime board member) and Marriott. But can he lend his expertise to make the numbers work better at Yahoo?

The only woman director, Maggie Wilderotter, joined last July and serves as the chairman and CEO of Citizens Communications, which is an independent provider of telecommunications services. That background is important for Yahoo, but perhaps more important is her experience as a SVP at Microsoft (rumored to be the main company interested in acquiring Yahoo). Wilderotter has also been president and CEO of Wink Communications and has held a number of jobs at AT&T, and serves on the board of Xerox and the Tribune Company.

Eric Hippeau, managing partner at Softbank Capital Partners, is one of the two granddaddy Yahoo board members (along with Arthur Kern), having served as a director since 1996. Before Softbank, he was chairman and CEO of Ziff-Davis in its heyday. Hippeau is also on the board of Starwood Hotels and Resorts Worldwide.

Arthur Kern has also been on the Yahoo board since 1996. Kern made his fortune selling off American Media, an owner of radio stations, which he co-founded and ran. Kern now invests in marketing and media companies. (BoomTown, with great regret, has never met him after all these years–lazy, lazy BoomTown! And everyone says how nice he is. Lunch, Arthur?)

Ed Kozel, the CEO of the start-up Skyrider (a P2P search engine), is perhaps the most experienced technologist on Yahoo’s board and another key member of the board, say many, where he has served since 2000. He’s been a VC (Open Range Ventures), a consultant (Integrated Finance) and also was a longtime Cisco exec (he was CTO and SVP of business development there) and board member. He’s also been on the board of Reuters and is a director for Network Appliance.

How glad BoomTown was to finally see Jerry Yang up close and personal, after our valiant but futile efforts to get near the Yahoo co-founder and CEO in 2007.

No, we’re not stalking him in a restraining-order kind of way, although I did stake a claim to a front-row seat in the intimate theater at the Las Vegas Hilton for his keynote this morning at the Consumer Electronics Show, where Yang couldn’t help but see me.

Like he cared!

Not at all, as he was riveted to delivering his shtick about Yahoo’s mobile efforts (it’s a 3.0 version, according to Yang, which is a good move since Web 2.0–in general and in particular–has not been so kind to the Internet giant), as well as giving the audience a glimpse of some interesting new concepts related to its popular email program.

The front rows were so packed with top Yahoo execs–including President Sue Decker, as well as David Filo, Jeff Weiner, Brad Garlinghouse, Ash Patel, Dave Karnstedt, Bradley Horowitz, Hilary Schneider and even Chairman and former Yahoo CEO Terry Semel–that you had to wonder who was running the show back in Sunnyvale, Calif.

(I mean, say, if Google had decided to launch a sneak attack today with their bicycle brigade, it could have taken over Yahoo without a shot fired!)

Yang maintained a low-key tone throughout the presentation, as is his way (I kept imagining the performance being done by Microsoft’s Steve Ballmer, who would have sold it all hard until he popped a vein).

Nonetheless, Yang did get the message through that opening its platform up to third-party developers would be a big push in 2008 for Yahoo.

So, the widgets in the excellent mobile product, called Yahoo! Go 3.0, are laudable and much more innovative than anything out there, even though Yahoo has been too quiet about marketing its Yahoo! Go product until now.

But at CES, Yang brought Yahoo Connected Life Executive Vice President Marco Boerries (pictured here) out to show off the mobile apps, including one from MTV (Viacom head Philippe Dauman and MTV Networks head Judith McGrath were in the audience) that seemed fun.

More interesting was Yang’s presenting new concepts for its Yahoo Mail product, which will be more social, relevant and integrated. A lot of this functionality is already being used by the open-source email company Zimbra, which Yahoo recently acquired (and whose head Satish Dharmaraj I interviewed last week).

As I wrote in that piece, I love the innovations, including ranking of those you email with most frequently and instant mapping from email, as well as a plethora of great features for email.

So, one vexing part of Yang’s presentation was that this concept needs to become a reality tomorrow. He brought out Co-Founder and interim CTO Filo to basically promise “soon,” but I say: Make it snappy!

I know, we’re pushy when it comes to Yahoo, but it’s because we care!

Well, care is not the right word exactly, but we are certain that a powerful and pioneering company like Yahoo can out-innovate these Web 2.0 newbies who get ridiculous funding to make goofy widgets and have the nerve to call it a business.

Thus, we took the chance and his prone position after the speech surrounded by well-wishers to go up and say hello in person to Yang, whom BoomTown has known for longer than either of us would care to say.

And, miracle of miracles, Yang said it had been far too long since we had gotten together and agreed to meet in 2008, a meeting for which we have been asking and egregiously posting about forever, to no avail.

How much does BoomTown love CES? Not so much.

But if it gets me lunch with Yang, I love it. So, Jerry, it’s officially 2008 and I am waiting by the phone for your call.

Here is my video of parts of Yang’s keynote:

They are getting very shy over there at Yahoo about the all-seeing eye of BoomTownCam. On my recent visit to the Internet giant’s New York office, its newly installed U.S. ad sales head David Karnstedt wouldn’t let me make one of my shaky-style, irksome videos of him. Europe head Toby Coppel also demurred recently.

I made the point to Dave (he is the kind of guy you can call Dave, as you can see pictured here), that an ad guy needs to sell himself, but to no avail, so we press on in text. Nonetheless, let me set the visual scene:

Nicest guy you ever want to meet walks into nondescript room, wearing khaki-oxford-jacket Internet uniform 101. Declares Yahoo is going to kick some advertising butt in the nicest possible way. It is revealed this nice guy has been around the Web block for quite a while. Much chitter-chatter ensues. Cut to my clear-as-Fiji-water observation that nice guy, as nice as he is, has his work cut out for him.

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So after this initial post yesterday, I had a chance to get a closer look at Yahoo’s earnings announcement and these are my four takeaways of its execs’ main points:

We know, it’s not good.

We have officially reached the bottom and things might even be looking up.

100 Days!

And no cows.

Sacred, that is, meaning no one at Yahoo is safe from the all-seeing eye of new CEO and Yahoo co-founder Jerry Yang.

“We want to dramatically improve our performance,” Yang said in a conference call with investors. “I am very well aware of the significant challenges we face.”

Indeed. Yahoo served up lowered expectations all around for the second quarter, with net income at $161 million, or 11 cents a share. This was down from a year ago–$164 million, or 11 cents a share. The quarterly revenue (excluding certain payments to ad partners) rose to $1.24 billion, up 11%.

And the Internet giant also dinged its prospects for the rest of the year, blaming a falloff in display advertising. Overall, that means between $4.9 billion and $5.19 billion in revenue, compared to previous forecasts between $4.95 billion and $5.45 billion.

One bright light: its long-in-the-making overhaul of its search ad system, called Panama, was showing gains of 15% to 20%.

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Will this be the last shoe to drop–at least this month–at Yahoo?

Tomorrow, the struggling Internet search giant will announce its second quarter earnings at 5 p.m. EDT (2 p.m. PDT).

The company is expected to have no gain in profit year to year. That translates to 11 cents a share for the quarter on $1.24 billion in net sales, the same earnings as the second quarter last year.

Newly installed CEO and Yahoo co-founder Jerry Yang will have to power through the call with new President Sue Decker. Its former CEO Terry Semel left the company days after the annual meeting last month, when the current weak quarter’s results were obviously going to become a bone of contention.

Having Semel make more excuses to investors would have been problematic, to say the least.

Here’s a video from MarketWatch about analyst expectations on the quarter for the Web giants:

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Eric Jackson, the effectively noisy shareholder advocate who prodded Terry Semel to leave Yahoo as CEO at its annual board meeting just days before he did, is now targeting Motorola and its CEO Ed Zander.

While Jackson runs a small operation, he uses his Web site, YouTube videos, posting to wikis and other online tools in his effort to build a small group of disgruntled investors and offer a “Plan B.”

Zander, who appeared at our D3 conference, might want to be careful. Jackson craftily asked Semel at the Yahoo meeting–see my post on it here and the video from it below–whether he had the “fire in the belly” to continue as CEO at the troubled Internet giant. At the meeting, Semel answered with a hearty yes, but was gone soon after.

As of yesterday, Jackson now has a lot more fodder in his fight with the telecommunications-equipment maker, when Motorola warned of weak shipments of cellphones and said its mobile-devices division would lose money for the year.

With the stock in the tank, management turmoil, a lackluster product line and rumors of a Zander exit, let us not forget the recent explosive launch of the iPhone to cause even more agita at the company.

But let Jackson take it from here with his recent video on Motorola, followed by mine from the Yahoo board meeting in June:

Now that I have gotten back from a dusty vacation, I can return to my obsessive quest to figure out what Yahoo should do to improve its prospects pronto.

I noted a few weeks ago here that is was time to stop with all the recriminations related to its management turmoil and try to look at what Yahoo needs to get itself back on track. A lot of readers made great suggestions here.

But with its stock still in the tank awaiting what is widely expected to be a tough second quarter earnings call a week from tomorrow, all eyes are going to be on dramatic moves the company can make to turn itself around under the spanking new–yet obviously old, since they have been there the whole time–leadership of co-founder and CEO Jerry Yang and President Sue Decker.

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I had a pleasant outdoor lunch with Yahoo Network division chief Jeff Weiner yesterday in Santa Clara.

That he would have lunch with me and allow me to make a little video interview with him in the midst of all the management turmoil at the company is why I like dealing with the ever-sassy Weiner, who actually seems to enjoy debating a range of Internet issues.

That he was only half-joking when he suggested we play hooky and go see Michael Moore’s new documentary about the U.S. health-care system called “Sicko,” instead of talking about Yahoo, made me like him 15% more.

I have written quite a bit about Weiner: Here about his not taking the big Audience job at Yahoo back in the late spring (and which now does not exist); and here on whether he would leave with departing CEO Terry Semel, with whom Weiner arrived many years ago.

Many speculate that now that the Panama effort to overhaul Yahoo’s lagging search ad-sales system is done (and which Weiner helmed with a large team at Yahoo), and it looks as if it will improve results, he might move along on a high note.

But among the key Semel hires, Weiner is perhaps the best liked within Yahoo, and I doubt he’d do that, given how interesting his job actually is.

Still, Weiner, for one, seemed up for the challenge, as you will see here:

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When I wrote that Wenda Harris Millard had better watch her back last week, in this post I did about my educated guesses about further executive departures at Yahoo, I had no idea that the struggling company was that quick about anything.

In fact, the longtime ad sales chief was out by this weekend, moving on to another job at Martha Stewart Living Omnimedia as its president of media.

But I did have an idea about how cloddishly that Yahoo could handle Millard’s departure, in a vain attempt to make it look like they are on the ball in a time of management turmoil that seems only to roil and boil more as time goes on. The decimation of executive ranks there is like watching an online version of “Ten Little Indians,” or for you kids, “Hostel.”

And when you badly treat an employee who has worked pretty hard over the years for you as Yahoo did Millard, you have to wonder how in the world the company is going to attract top talent from the outside–let alone keep those valuable employees on the inside from bolting.

But Millard’s departure–which seems to be a case of her looking for and getting another job, all while Yahoo was also rejiggering its approach to ad sales–was handled with no grace and much confusion.

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I was wrong.

I have to say I never thought that Jerry Yang would screw up the guts to actually move CEO Terry Semel out of his job and move right in as CEO.

As I have written in many posts, such as this one, I thought Semel would go, but take his own sweet time doing it, after the first promising results of the recent overhaul of Yahoo’s search monetization system called Panama were in.

“Jerry Yang (and also co-founder David Filo) is simply not someone who would ever lead a boardroom coup,” I wrote. “For anyone who knows him even a little bit, such aggressive behavior is just not in the nature of Yang, who is deliberate and not known as a boat-rocker.”

Well, he turned out to have a lot more rocking ability than I thought. While he and Semel insist this move had been long planned, that was simply not the tone that the pair were putting out at the annual meeting just last week, which I attended.

There, Semel said he “absolutely” had the fire in his belly to run Yahoo, and Yang joked about not really wanting to take over the lesser CTO job, which he is doing on an interim basis.

How Semel’s flaming gut suddenly went out, and what got the 38-year-old Yang all hyper-ambitious, will have to remain a conundrum for now.

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