SAN FRANCISCO (AP) — Yahoo co-founder Jerry Yang is
leaving the struggling Internet company, as it tries to revive its
revenue growth and win over disgruntled shareholders under a new leader.
The
departure, announced Tuesday, punctuates the end of an era at Yahoo, a
tarnished Internet icon that has spent much of the last decade
scrambling to catch up to Internet search leader Google Inc. — a company
that got early encouragement and advice from Yang. It comes just two
weeks after Yahoo Inc. hired former PayPal executive Scott Thompson as
its CEO.
Thompson is the fourth CEO in less than five years to try
to turn around Yahoo. It’s a daunting assignment that Yang was unable
to pull off during his own tumultuous 18-month reign as the company’s
CEO in 2007 and 2008.
Yang, 43, endorsed Thompson in his
resignation from Yahoo’s board of directors. He had been on Yahoo’s
board since the company’s 1995 inception.
"My time at Yahoo, from
its founding to the present, has encompassed some of the most exciting
and rewarding experiences of my life," Yang wrote in a letter to Yahoo
Chairman Roy Bostock. "However, the time has come for me to pursue other
interests outside of Yahoo."
The letter didn’t say what Yang
plans to do next. He doesn’t need to work, thanks to the fortune he has
amassed since he began working on Yahoo in a trailer at Stanford
University with fellow graduate student David Filo. Yang is worth about
$1.1 billion, according to Forbes magazine’s latest estimates.
Yang
is also stepping down from the boards of China’s Alibaba Group and
Yahoo Japan. Yahoo is negotiating to sell its stakes in both of the
Asian companies as part of its efforts to placate investors. The deal
could be worth as much as $17 billion, but it still faces a series of
potential stumbling blocks.
Besides surrendering the board seats,
Yang is giving up his position as "Chief Yahoo," an honorary title he
held as he mingled among workers, while keeping tabs on various company
projects.
Thompson could have an easier time overhauling Yahoo
without Yang looking over his shoulder and possibly second guessing his
decisions, said BGC Financial analyst Colin Gillis.
"This has the
fingerprints of frustration on it," Gillis said. "It’s one of those
situations where it looks like (Yang) is losing the battle to control
the company’s direction and now he is saying, ‘That’s it, I’m out.’"
Although
a popular figure among Yahoo employees, Yang had alienated the
company’s shareholders by turning down a chance to sell Yahoo in its
entirety to Microsoft Corp. for $47.5 billion, or $33 per share, in May
2008. Yahoo shares haven’t topped $20 for more than three years. The
stock gained 44 cents to $15.87 in extended trading after Yang’s
decision was announced.
The slump in Yahoo’s stock has diminished Yang’s wealth. He still owns a 3.6 percent stake in the
company.
Yang
conceivably could leverage those holdings to attempt to buy Yahoo’s
U.S. business after the Asian investments are sold. That is, if he can
line up additional financing, Macquarie Securities analyst Ben Schachter
wrote in a research note late Tuesday. Several buyout firms have
already expressed interest in buying a substantial stake in Yahoo,
spurring speculation that Yang might work with them to acquire a
controlling interest in what remains of the company if the Asian assets
are sold.
When he announced Thompson’s hiring earlier this month,
Bostock stressed that Yahoo intended to remain an independent, publicly
traded company.
Yang had been someone more interested in
preserving the company than he created than dismantling parts of its to
boost the stock price, analysts said. "Investors tend to want to keep
trying to fix the company than carve it apart," Gillis said.
Now
that he is out of the way, investors are likely to conclude the sale of
the Asian investments will eventually be completed, Schachter wrote.
Investor
anger over Yang’s handling of the Microsoft negotiations led to his
resignation as CEO in late 2008 and the hiring of Silicon Valley veteran
Carol Bartz to replace him. Bartz and Yang had gotten to know each
other as part of Cisco Systems Inc.’s board of directors.
After
initially hailing Bartz as the solution to Yahoo’s problems, Yang and
the rest of Yahoo’s board fired her as CEO in September.
Yahoo’s
revenue has been falling in recent years even as advertisers have poured
more money into the Internet. Much of the money, though, has been going
to Google and Facebook’s online social network, as Yahoo has fallen
further behind in the race to innovate and develop products that attract
Web traffic.
Despite its struggles, Yahoo remains profitable and still boasts a worldwide audience of 700 million
people.
But
visitors aren’t sticking around Yahoo’s services as much as they once
did, depriving the company of more opportunities to sell ads — the main
source of its revenue.
It has been a jarring comedown for Yahoo,
which emerged as one of the Internet’s first stars after Yang and Filo
expanded the service beyond its roots as a hand-picked directory of
websites.
Yahoo’s early success turned it into a Wall Street
darling and landed Yang on the covers of leading business magazines. At
the height of the dot-com bubble 12 years ago, Yahoo’s stock was trading
above a split-adjusted $100 amid talk that the company might eventually
try to buy a long-established media franchise such as the Walt Disney
Co.
But now investors widely regard Yahoo as a misguided company
that can’t come up with a cohesive plan to define itself for Web surfers
and advertisers.
Yang and Bostock have been the focal point for
much of the criticism, partly because of their key roles in the
Microsoft talks in 2008. After buying a 5.2 percent stake in Yahoo last
autumn, hedge fund manager Daniel Loeb demanded that both Bostock and
Yang step down from the company’s board. If they refused, Loeb indicated
he would finance a shareholder rebellion to oust both men from the
board.
Loeb’s fund, Third Point LLC, didn’t immediately return phone calls seeking comment late Tuesday.
Bostock, Yahoo’s chairman for the past four years, has given no indication that he plans to step down.

Copyright 2012 The Associated Press.