Edgelings

Yang Reopens Door To Microsoft

by Robert Grove

“To this day, I believe the best thing for Microsoft to do is to buy Yahoo”. 

Shareholders and board members reading the morning news must be shaking their heads in dismay to find that it was Jerry Yang who uttered these words to a public audience last night.  Every recent move by Yang has been aimed at fending off Microsoft — thus making his statement last evening seem Fellini-esque. It almost sounds a bit like a dumb boyfriend begging to be taken back. It’s a small glimpse into the thinking inside Yang-world, and the disconnect is obvious.  Google’s withdrawal from the planned Yahoo ad deal has left Yahoo with three options: Sell to Microsoft, buy AOL or go it alone. 

Really there is only one option.

A merger with AOL only doubles Yang’s troubles; and it’s becoming very clear that he isn’t the guy to turn around his beloved Yahoo.  And then there’s Redmond.

And now he thinks that selling to Microsoft is a good idea – at the right price! 

Sorry, Jerry but you’re in no position to play hardball negotiations. You tried that once – don’t do it again.   Microsoft wins this one. It has been obvious to everyone but Jerry Yang for quite a while that it was going to come to this. Yang’s ego is in the way and his desperate attempts to hold on have cost shareholders tens of billions of dollars.  We said it several months ago and we’ll repeat it again. Here’s what Jerry Yang must do:

Proactively approach Balmer, hat in hand. It will be a humbling experience, for sure. Don’t overplay a weak hand because Balmer has shown that he’s willing to take the time and make the plays that will drive Yahoo even closer to the edge. 

Take an offer of $17 a share. Make one run at a $20 price point – you owe that to shareholders, but don’t push too hard.  We’ve seen what Steve will do to you if you try. You do have some leverage here – Microsoft needs to buy Yahoo. But with their war chest, they have a lot of options to explore. So, be nice. Be reasonable. Be gracious.  BUT CUT A DEAL.

Bow out. Don’t get pushed out. You’ve built an exciting and important company.  You’ve helped define how users will use the Web and your impact will be felt for a long time. You are a legand – don’t tarnish that with further skirmishes.  Bow out gracefully and take your place as a founding father of the web.  You’re young and will have a lot of other opportunities.  Hanging on any longer will only hurt your reputation more than it already has. Staying on too long at your own party is the cardinal sin of Silicon Valley entrepreneurs.

Do it all FAST!

I would have paid good money to see Carl Ichan’s face when he heard Yang’s comment.

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