Monday, November 17, 2008

Understanding Jerry Yang

Jerry Yang is resigning as CEO of Yahoo! This is the right move, Jerry had to go.

I wanted to call this article "In Defense Of Jerry", but I can't. His position during talks with Microsoft is not defensible. As CEO, his duty to shareholders was to get maximum value for their money. Which meant to sell the company. $31 a share was a great price and $33 offer, if it ever really existed, was an incredible price.

But as a programmer myself I perfectly understand Jerry. The systems you created are like children to you, and you never sell your children, in good times or bad (well, most people don't). Microsoft (MSFT) - Yahoo! (YHOO) deal could never happen with Jerry at the helm. But, according at least to some reports, not only Ballmer wanted Yahoo!, but he wanted it with all best geeks, Yang and Filo included. Reports could be wrong or right, I don't know. I know one thing for sure: neither Jerry Yang, nor David Filo would work for Microsoft. Probably half of key programmers wouldn't work for Microsoft either.

There are plenty of rumors around that Microhoo! deal might be back in some form now. I'm not that sure. If Yahoo! goes up in price now, I'd probably short it or buy puts. Microsoft just doesn't get the Web. Never did, never will, it's not in company's DNA. I already wrote here what would happen if Microsoft buys Yahoo! Such deal is off the table now. There are some other possibilities, for example buying just search technology, or some shared interest. Maybe it happens, don't know.

Yahoo! shareholders shouldn't complain. They had their chance. When Microhoo! deal was announced, I wrote here that Yahoo! shares are to be sold right there and then. Even big holders could unload significant part to arbitrageurs. They had their chance and blew it. C'est la vie.

I bought Yahoo! shares in 1998 and sold last year.It's not an investment for me anymore. But it's still a service I use every day, and for that I'm grateful to two geniuses, Jerry Yang and David Filo.

Full disclosure: at the time of publication author didn't have any positions in YHOO or MSFT. Positions can change any time.

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