January 17, 2012 / 10:34 PM / 6 years ago

Instant view: Yahoo co-founder Yang is out, shares jump

(Reuters) - Yahoo Inc co-founder Jerry Yang, who started the company in 1995, has quit the board of the struggling Internet company.

His abrupt departure comes two weeks after Yahoo appointed Scott Thompson to serve as its new CEO. Yang is leaving the company’s board of directors as well as all other positions within the company, effective Tuesday, the company said.



“It probably increases the likelihood of a transaction happening. It makes it more flexible for a potential transaction to happen. Some investors could view Jerry as a thorn on the board.

“What i do find surprising is he resigned from all three boards: Yahoo Japan, Alibaba as well as Yahoo.

“I had thought that Jerry Yang was a lifer at Yahoo ... What’s more interesting is what he plans to do next. We don’t know what that is. Some people are speculating whether a PIPE deal is off the table because Jerry is no longer part of the process, but I think that actually could increase the chance of a PIPE deal because some private equity investors might view Jerry as a potential thorn in a transaction.

“Without him on the board, this could smooth a potential transaction. What that transaction is, is any of our guesses right now.

“We’re sticking to our thesis. I think it still takes awhile. A transaction is obviously more complicated than anybody thinks it is. We said that six months ago, and we’re saying that again right now.”


“Everyone is going to assume this means a deal is more likely with the Asia counterparts. The perception among shareholders was Jerry was more focused on trying to rebuild Yahoo, than on necessarily on maximizing near-term shareholder value. The perception was that he had an emotional attachment that obviously a non-founder might not have.

“The stock is up after hours. People are going to assume the deal is more likely.

“It certainly seems things are coming to a head as far as realizing the value of these assets.

“Shareholders that own (shares) just for the deal are going to react positively. I’m not sure this is in any way a positive for the underlying fundamental asset of Yahoo.com. That’s not what drives the stock. Yahoo.com is in a lot of ways almost inconsequential to the value of the overall stock.”


“We have been relatively pessimistic on the likelihood of any sort of major divestiture creating a great deal of upside for investors. Jerry Yang was certainly an impediment toward anything happening.

“This is a company that’s been mired by a bunch of competing interests going in different directions. It was never clear what this board’s direction has been. We can certainly look back to several years ago, when they were not able to get a successful exit or sale to Microsoft. We obviously know that was not a particularly prudent move.

“Still, however, here we are. If you are to believe that the board was somewhat misdirected, we have largely much of the same board in place.

“We would caution folks to be not overly enthusiastic. It’s certainly not a negative for the stock, not a negative for the business. Clearly, how many times can this company stumble and not try and rectify any sort of situation here.

“Taking action at the board level, I think that’s a good thing. I think it’s good to have a fresh perspective.”


“This is clearly a positive. Yang has been viewed as a roadblock to a deal or even a restructuring. Hopefully it leads to new blood on the board. It provides a more objective and unemotional approach to strategic alternatives.

“It’s also good for the new CEO. He has one less entrenched legacy board member to resist his vision.”

Reporting by Liana Baker in New York, Poornima Gupta in San Francisco and Lisa Richwine in Los Angeles; editing by Andre Grenon

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