Yahoo’s board is reportedly going to make some sort of a decision about the future of the company and the Microsoft bid later today. What took them so long?

There is word on the street that Yahoo’s board is going to make some sort of a decision about the future of the company and the Microsoft bid later today. (Kara Swisher says its going to happen next week.)

What has taken them so long? Nearly a week has passed since Yahoo received an unsolicited offer of $44.5 billion from Microsoft.

Since then everyone — including Google — has had his or her say on the deal. The only group that has been silent on the topic – Yahoo’s board of directors -– is the one that really matters. Reuters is running a long piece on Yahoo’s board and its role in this merger. It is a bit of PR puffery; it tries to position the board as key players in the deal, and notes how they need to deliberate everything in order to get it right.

That would surely be a change from their track record thus far. Their silence — a week is long enough for them to say yeah, neah, or give us more money — is typical of their lackluster performance as a board.

A 62 percent premium to Yahoo’s stock price is as good an offer as Yahoo can hope for. The company’s turnaround efforts, the Peanut Butter Manifesto, and Jerry Yang’s 100-Day Plan are all delusions of (lost) grandeur. After all, the stock’s value had been sliced in half long before Steve Ballmer showed up on the door, dragging bags of money behind him.

Yahoo should have teamed up with eBay when it had a chance, but a $44.5 billion offer is pretty darn good. Yahoo is simply delusional if it thinks it can find someone more desperate than Steve Ballmer & Co.

While it is easy to blame the management, Yahoo’s board of directors can’t duck the blame. It was on their watch that a culture of mediocrity enveloped this once-iconic company. The board, instead of being proactive, sat idly by as the company lost its direction, focus and eventually, its market leadership.

If Wall Street and the media were aware of Terry Semel’s rumored lack of interest in the job, why wasn’t the board aware of it? Instead they decided to reward him with $71 million, much to the chagrin of the investors, before showing him the door. As one talented executive (and engineer) after another left the company, looking to go chase opportunities at either Google or with other Silicon Valley startups, what, exactly, was Yahoo’s board doing?

Where was the board when the company was making one strategic blunder after another -– losing its technology focus and instead chasing the ephemeral opportunities in la-la land? Where were they when politics and bureaucracy started to eat at Yahoo’s insides?

Whatever spin you might read in the news media about Yahoo’s board, simply put, they have failed in their duties.

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  1. Your pretty tough on them Om. We all know how fast technology can change. This all comes with the territory. You can’t blame the board for losing a technology battle on the frontlines. I haven’t heard anyone suggest a winning strategy for Yahoo! We can blame the board, but really it was lost in the LEARNING and KNOWLEDGE of engineers. Google just kicked their butt. Take Microsoft’s $$$ and move on.

  2. Alan Wilensky Friday, February 8, 2008

    People say, people say, but it was said best by a Yahoo I interviewed, which I will paraphrase: “…Big Purple used to be a place where a smart tech visionary could at least get an internal hearing. That all changed when Semel got his hands around the company’s throat, ditto Decker.”

  3. Having been on a board of a major company in the past this is NOT taking very long. They need to talk amongst themselves, with investors, partners, customers, employees, etc. They don’t want to go into a board meeting with lots of open questions that don’t have solid answers. I appreciate your enthusiasm to write a tough story but any reader that’s been on a board will know that this is pretty normal.

  4. Micrsosoft buying yahoo is not a bad thing after all. It happens all the time in all the mature industries. Despite beig a die-hard google fan, I don’t think there is any harm in Yahoo going to Microsoft. After all, it will remove lethargy in both yahoo and microsoft for betterment of internet.

    And BTW, ‘Yahoo Live’ and ‘Microsoft buying Upstream.tv(still a rumor)’ , don’t it look ironical??

  5. So sad that despite a magnificent footprint of users, a decent average number of services used by users, and a strong arsenal of content, media and agency relationships, Yahoo has never seemed to be able to connect the dots in a more than the sum of the parts fashion.

    In this age, that is a cardinal sin IMHO, but organizationally, they are too silo’d to make it work.

    The irony is that Microsoft used to be the bastion of the embrace, integrate, extend (MS proprietary-ness) mindset but now are too big, bureaucrat and slow to employ their time-tested ‘serial killer’ (of the competition) tactics.

    Some further analysis of the deal is here: http://thenetworkgarden.com/weblog/2008/02/the-market-make.html

    Hope that you are feeling better, Om. :-)


  6. Krishna Chodavarapu Friday, February 8, 2008

    @ Rick, I don’t think Om is too tough on them. It is fine for a company to lose some battles. But I don’t think there has been a company more unsuccessful as Yahoo (well, I’m sure we can think of a few.)

    No, what I think is really unforgivable about Yahoo BoD is that the company was going down the shitter for eons and they were so slow at not only trying to fix their problem, but recognizing they had a problem at all.

    Om is right, the media and Wall St. was much more aware of the problems than was Yahoo BoD.

    While $31/share is a significant premium over the recent Yahoo share price, it wasn’t so long ago that Yahoo was at that price. I think MSFT got a bargain. I remember rumors of a $50 billion offer not too long ago.

  7. If Yahoo’s TV grid (no fix for more than 10 months) is any indicator of the rest of its technology, you hit the nail on the head!

  8. I think Om is off on the board timing – it does take more than a week of due diligence to decide on a $40 billion deal – but right on everything else. The Yahoo board, in its various incarnations, has been a disaster since the hire of Semel. By IMHO the best measuring stick for a CEO, relative change in value to your closest competitor, Semel is the worst CEO in the history of the world. It was under his watch that Google went from being a small, private company more than a little dependent on Yahoo, its biggest partner, to eating Yahoo’s lunch. And along with that came a $170 billion or so increase in market cap while Yahoo’s barely moved upwards. Giving up more than $150 billion in 6 years is pretty amazing. It started with the board thinking Yahoo was a media company and not a tech company, and thus hiring a Hollywood big media guy to run it (in absentia from Hollywood no less!), then never realizing their disastrous mistake as the rising tide of search advertising lifted Yahoo a little while Google rose to the moon. It was that terrible decision back in 2001 and the subsequent satisfaction with it that has brought Yahoo to this point.

  9. In hindsight it’s easy to criticize the board but in truth, at the time Yahoo was gambling on the future of the Internet closely tied to media. Semel was a logical choice because he was a Hollywood guy and the hope was that he could bridge the worlds. The Broadcast.com deal is the shinig example that Yahoo bit into that strategy hook, line, and sinker. We can see now that Yahoo bet wrong and that users are more interested in creating their own content and interacting with each other rather than with media companies. Even after this became apparent, the board continued to hope that Semel could be a technology CEO. By the time they figured out technology wasn’t his thing, it was too late.

    Had Yahoo bet on the Internet itself and brought on a technology CEO like Eric Schmidt, Yahoo would be a very different company right now, certainly one that would be much more competitive with Google. Granted some of the blame does fall on the directors and C-level execs for not properly watching and reacting to Yahoo’s progress in relation to the direction of the industry. But I think a fair amount also sits on the fact that Yahoo bet on the losing horse.

    Question now is if Yahoo can reposition itself as a competitive, dynamic technology company and whether it can do it alone or with Microsoft’s help.

  10. Good points by all. I agree that the real blame here belongs to Terry Semel and Sue Decker. Terry had very poor vision which affected everything Yahoo did or didn’t do over the past 3-4 years. Sue Decker has been the #2 or #3 person during this same period and she has failed. I’ve yet to see anyone take this on but it is an irrefutable fact.

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