Yahoo (YHOO) co-founder and former CEO Jerry Yang announced on Tuesday that he was resigning from the board of the company he helped start some 17 years earlier. Shares of the embattled internet giant jumped almost 3.7 percent today as shareholders believe the prospects for an outright sale of the company is much less difficult.
Departure Could Pave Way for Sale
After market close on Tuesday, Chairman Roy Bostock announced that Yang would be relinquishing his seat on the board effective immediately. Yang was perhaps the last major roadblock stopping Yahoo from selling its Asian assets. Yahoo owns a 40 percent stake in Chinese internet giant Alibaba (1688.HKG) and a 35 percent stake in Yahoo Japan (4689.TYO).
“Everyone is going to assume this means a deal is more likely with the Asia counterparts,” Macquarie analyst Ben Schacter said. “The perception among shareholders was Jerry was more focused on trying to rebuild Yahoo than necessarily on maximizing near-term shareholder value. It certainly seems things are coming to a head as far as realizing the value of these assets.”
Yang gave no specific reason for his departure, but the market reaction seems to indicate that Yang’s influence on the company had been viewed as a negative. Yang’s stoppage of the sale of Yahoo to Microsoft (MSFT) in 2008 for $47.5 billion, or about $31 per share, is seen as one of the biggest blunders in recent history. This distressed shareholders at the time and appears to have been the wrong move as Yang now leaves the company with a market cap of less than half that value.
“Arguably Jerry Yang is the person best known and associated with Yahoo,” says Scott Kessler, an analyst at Standard and Poor’s. “It is fair to say that, whether in terms of reality or perception, he has detracted from the company’s ability to realize shareholder value.”
New Path Forward
Yang’s resignation from the board comes amidst a wave of changes for the internet giant. Just two weeks earlier the company announced the hiring of Pay-Pal’s Scott Thompson as the new CEO. Yahoo’s market share has steadily declined in recent years as Microsoft’s Bing increases its market share and Google (GOOG) continues to hold sway as the world’s most dominant search engine.