A Farewell to Jerry Yang

Today Jerry Yang announced that which was probably inevitable: his resigning as CEO of Yahoo!. To be honest, I can’t blame him. He recieved heavy fire for refusing Microsoft’s buyout offer a few months back, and now the companies stock is worth half of what it was when the offer was still a possibility. He was forced to bring a pirate onto his board, in the form of [Carl Icahn](http://en.wikipedia.org/wiki/Carl_Icahn], and then was still at the helm as the economy began to collapse around him, a collapse that was, unfortunately, long overdue.

Personally, I don’t blame Jerry for any of Yahoo!’s woes, largely because I don’t think Yahoo! is that bad off, but also because I firmly believe that a Microsoft-Yahoo! merger would have been distinctly negative, at any price. Yahoo! shareholders will probably disagree with me on that one, and while I’m more concerned with the long-term health of the industry, if I did own Yahoo! stock, I suppose I might be annoyed that I’d missed my payday.

So, why do I think Yahoo! isn’t that bad off? According to Alexa’s Top 500 websites list as of right now, Yahoo! has more traffic than Google. More traffic than anyone else on the Web. It’s really easy for those of us who follow the Tech news and try to keep up on what’s hot in web technologies to forget that Yahoo! is the oldest name on the Web, and for many, many people, they’re still the only name that matters. I even know people who are starting to leave Google for Yahoo! in the search arena because they’re finding that Yahoo!’s results are often more relevant. Admittedly, this is just because everyone is concerned today with gaming Google for high Pagerank, but I challenge each and everyone one of you to use Yahoo! as your default search engine for a week, and see if you really depend on the Big G that much.

So what is Yahoo!’s problem? Traditionally they’ve had trouble monetizing their products. Yes, they sell ads. Yes, they are the second biggest ad company on the web today, but if you look at the Yahoo! Publisher Network, their ad offerings look like a poor attempt to beat Google at their own game. Yahoo! does innovate, but their innovations as of late have not been in big money making areas. Honestly though, Google has traditionally had the same problem, where the majority of their properties do not earn them money directly, and it’s questionable if even the indirect money making efforts (advertising and collecting data for more effective advertising), directly pay for a site. Admittedly, Google is profitable, so their entire ad network is clearly effective, but at the moment, I’m talking about individual applications.

This is not meant to be an indictment of Google. Google has done well for themselves, and while it seems to me that Yahoo! is merely trying to play catch-up, it’s hard for me to condemn them for doing so. Google has done very well, and tapping into even a small part of that success would be huge for Yahoo! Jerry Yang knows this, I believe. While some people believe that the handing of the company over to a new leader will cause talks to reopen with Microsoft, I tend to believe that from Microsoft’s perspective that ship has truly sailed. The hope now, is that new leadership will be able to make the decisions that Jerry Lang wouldn’t, perhaps couldn’t. That new Leadership could help drive innovation in spaces that stand to actually make Yahoo! more profitable.

I say ‘more’ profitable, because Yahoo!’s P/E is almost as good as Google’s, even if their Market Cap is significantly lower. Admittedly, the Earnings Per Share is significantly lower, but this, this is what the new CEO may be able to correct. I believe that Yahoo! still has a place. I believe that Yahoo! can still be relevant, and while Yang is leaving as CEO and is returning only as the Chief Yahoo! (essentially the Chief Architect for the company), I hope that the company survives. Perhaps this will be like when Bill Gates handed the reins of Microsoft over to Steve Ballmer, and Yahoo! will come out stronger than before. Yang may “bleed purple”, but I’m definitely hoping that turning the company over to someone more business minded will spell a new future for Yahoo!