By Scott Morrison Of DOW JONES NEWSWIRES SAN FRANCISCO -(Dow Jones)- Jerry Yang's resignation as chief executive of Yahoo Inc. (YHOO) was seen Tuesday as a catalyst for much-needed change at the struggling Internet giant, but it wasn't clear what kind of changes long-suffering shareholders would see - or when.
A source at Yahoo said the company hopes to appoint a new CEO as early as January and by the end of March at the latest. Yang has said he'll stay on until a successor is found. But top Yahoo officials understand it is going to be tough to find the right candidate because the company has a small budget and huge challenges, the source said.
No matter who, though, Yang's successor eventually will have to decide how to end the company's long-running dances with Microsoft Corp. (MSFT) and Time Warner Inc.'s (TWX) AOL, as well as how to improve Yahoo's competitive position versus Google Inc. (GOOG). And it's not clear how much freedom the new CEO will have in making those decisions or how much the board - which features activist investor Carl Icahn - already has set the course.
Derek Brown, analyst at Cantor Fitzgerald, noted that Yang promised 18 months ago that there would be no sacred cows as he attempted to right the company. Brown notes that Yang's actions failed to live up to his rhetoric and said he hoped that Yahoo's board takes advantage of this opportunity to drive more radical changes at the company.
Yang's imminent departure immediately renewed speculation that Microsoft would make a new bid to buy some or all of Yahoo. Shares of Yahoo, which hit a 5 1/2 year low last week, rose 8.7% to $11.55 Tuesday.
Microsoft has maintained it is no longer interested in buying Yahoo. Analysts, however, say if Microsoft is serious about mounting a credible challenge to Google, it had no clear choice other than to reconsider an acquisition of the company.
"It is not clear if discussions with Microsoft have been reopened but, if not, we believe that it is highly likely that they will be shortly," Bernstein Research analyst Jeffrey Lindsay wrote in a note. Microsoft declined to comment.
Icahn, one of Yahoo's biggest shareholders and a board member, pressured Yang to sell the company or strike a search deal with the software giant. Icahn didn't return a call seeking comment.
Yahoo remains open to strategic alternatives, said another source familiar with the company's thinking, "but that's not the plan, that can't be our only way forward."
The company, once the leader in Internet advertising, has been losing share in the Internet search market to Google Inc., and it has been unable to make as much money per search as its larger rival. Yahoo also has been hit hard by the weakening economy because it is more heavily exposed to the slumping online display advertising market.
Yahoo President Sue Decker has been identified as an internal candidate, but the first source said she is not considered a strong candidate. "She's as equally to blame (as Yang) for everything's that's happened," the source said.
Jefferies & Co. analyst Youssef Squali noted that despite the challenges, Yahoo's next CEO might still attempt to revive the company - a one- to two-year option that would require drastic structural changes and a large degree of patience from investors.
Kathy Sharpe, CEO of digital marketing agency Sharpe Partners, agreed that Yahoo still has a shot at renewed success if it sells its search business and other non-core business so that it can focus on top Web properties, invest heavily in behaviorally targeted display advertising and cut its ad rates to attract more marketers.
"They have too many eyeballs not to have the potential to survive. They have to find the right individual who can turn all its assets into money, someone who is trusted by the industry and advertisers," she said.
Another much-discussed alternative would be for Yahoo to buy Time Warner's struggling AOL unit, an option that Wall Street does not like because it would cost too much and provide too little benefit in return.
-By Scott Morrison; Dow Jones Newswires; 415-765-6118; scott.morrison@dowjones.com
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(END) Dow Jones Newswires
November 18, 2008 17:27 ET (22:27 GMT)

Publié le 18 novembre 2008 Copyright © 2008 Dowjones