Can Jerry Wang turn Yahoo around?

Since the Microsoft/Yahoo deal collapsed we have seen Jerry Wang and team under siege. In early June Carl Icahn claimed that Yahoo sabotaged the deal, and that he would push to remove the entire board at Yahoo’s August 1 shareholder meeting (BBC). Mr. Icahn now has had to scale back the number of members he wants to un-seat because of a lack of support from large institutional investors (Doran, 2008).

Will Jerry survive and can he turn things around?

Yahoo’s stock price dropped to around $19.05 Jan 30 of 2008, then surged to $28.38 February 1 after Microsoft announced their acquisition intent (2008) reaching $30 a share by February 14 (Yahoo Finance, n.d.)

In terms of fundamentals, Yahoo top line revenue has been growing at a modest 2.3% the past four quarters while recording over half a billion in net income this past quarter (Yahoo Finance, 2008). In the past four quarters Yahoo net income averaged a growth rate of 68% indicating some internal efficiencies to squeeze costs out of internal operations.

Wall Street and investors want to know what is Yahoo’s clear strategy/vision going to be in order to grow and increase value, and is Jerry Wang the guy that can deliver that vision (Yen, 2008). I say give Jerry and team one more quarter to optimize and communicate their strategy coupled with two more quarters of positive financial results. If the opportunity is fumbled then we are sure to see a shake-up or perhaps another acquisition episode.


References
BBC (2008, June 4). Yahoo 'sabotaged' Microsoft deal. Retrieved June 20, 2008 from http://news.bbc.co.uk/2/hi/business/7436856.stm

Doran, J. (2008, June 22). Icahn to soften his approach to Yahoo! as investors get nervous. Retrieved June 24, 2008 from http://www.guardian.co.uk/technology/2008/jun/22/yahootakeover.yahoo

Microsoft. (2008, February 1). Microsoft proposes acquisition of Yahoo for $31 per share. Retrieved June 21, 2008 from
http://www.microsoft.com/presspass/press/2008/feb08/02-01CorpNewsPR.mspx

Yahoo Finance. (2008). Quarterly income statement. Retrieved June 21, 2008 from http://finance.yahoo.com/q/is?s=YHOO

Yahoo Finance (n.d.) Interactive stock chart: Yahoo. Retrieved June 21, 2008 from http://finance.yahoo.com/echarts?s=YHOO#chart10:symbol=yhoo;range=20070924,20080620;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on

Yen, Y. (2008, June 20). Yahoo exodus adds to Yang's burdens. Retrieved June 21, 2008 from http://money.cnn.com/2008/06/20/technology/yahoo_yang.fortune/index.htm?section=money_latest