Jerry Yang, CEO of Yahoo (YHOO) is a complete and utter moron. His failure to consummate a deal with Microsoft (MSFT) will go down as one of the most obvious destructions of value seen in a long time.
The situation is reminiscent of AOL. Do you remember how the management team there deftly unloaded the entire company to Time Warner? At that time, those in the know recognized that AOL was sinking and sinking fast. (See also: "Yahoo Lays an Egg.")
That they were able to sell was a minor miracle. They were to be commended for a job well done.
Unfortunately for YHOO shareholders, the same outcome does not appear to be likely. Instead of celebrating a partnership with the greatest software company on the planet, the shareholders are left holding the bag.
That bag is running on empty. Do I have this right? The whole justification for walking away from MSFT was a plan of operating independently with a better advertising model and a partnership with Google (GOOG). (See also: "Will Google’s Chrome Chip Away at Microsoft’s Veneer?")
Wait a minute, Jerry, you donkey. Did anyone tell you a deal with GOOG would likely meet resistance by anti-trust regulators? Gee, even in a period of massive deregulation this deal with GOOG had no chance from the get go.
Regulation is coming back into vogue. There is simply no way the regulators let you and GOOG dominate search. It ain’t gonna happen!
For you to sit there and sell a deal with GOOG as the end-all be-all is a stunning example of CEO bravado. Did you not think about the scrutiny you would receive?
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Apparently not.
I guess I should not be surprised. Anyone that decides to run the company independently when that company is sinking takes guts. That fearlessness may have been helpful when the company was starting out, but such an approach is disastrous given today’s circumstances.
Investors are growing impatient by the day. They already sold shares heavily in the aftermath of the deal collapsing, but that selling accelerated on the credit crisis and slowing economy story.
Your company is hosed. Not even Tuesday’s earnings report will help you in the long term. Investors beware. There is something horribly wrong when comments on YHOO’s performance are suggesting that things could have been worse.
They will get worse.
There is nothing to like about the company going forward. As I said, I am very skeptical that a deal with GOOG will ultimately come to fruition. Even worse, the slowing economy could potentially depress results for many quarters to come.
YHOO is at risk for a short seller attack. In fact they are in the midst of a short seller attack. It is entirely reasonable to think that YHOO will drop another 50% in value here.
It will take that type of an ice cold shower to get Mr. Yang to wake up. Get this guy out before more damage can be done.
This article was written by Jamie Dlugosch, contributor to InvestorPlace.com. For more actionable insight like this, go to: www.InvestorPlace.com.
