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Resistance is Futile

I had posted on the madness of Jerry Yang a couple of weeks back. And today, Reuters reports that:

Microsoft Inc is in talks with Yahoo Inc to buy the U.S. internet company’s online search business for $20 billion, according to a report in Britain’s Sunday Times.

The proposal under discussion involves a complex transaction that would see the U.S. software giant support a new management team to take control of Yahoo, but it has no intention of refreshing its bid, said the newspaper.

Microsoft withdrew its $47.5 billion buyout offer for Yahoo in May after Yahoo chief executive Jerry Yang and his board rejected the bid as too low.

Tough to go up against the Borg, Jerry. And saving them $25 billion or so in the process just does not make sense for the shareholder. Except perhaps for Carl Icahn. He seemed to know that something was up.

The Madness of Jerry Yang

Jerry Yang stepped down as CEO of Yahoo. You can read his memo to his employees here.

Another victim of Microsoft. And a victim because business became a religion.

Dan Lyons asked why Jerry Yang was still in charge back in October. His very direct article highlighted the following point:

No matter how it happened, Yahoo’s failure to hook up with Microsoft may rank as one of the greatest boneheaded moves in the history of tech…

And now he resigns. Such a strange ending. Granted, with a net worth of $2 billion or so, he won’t starve.

Wired summarized the madness of Jerry Yang this way:

When business is about business and not about religion, these can actually be happy endings. Stockholders inside and outside the company get a price for their shares they probably wouldn’t see for years, and every one moves on to the next phase of their lives. It’s bittersweet to be sure. Watching a once-great company get gobbled up feels to loyalists like a close friend has died. But the premium prices paid in takeovers have a way of making those emotional wounds heal faster.

But when business is about religion, as it clearly has been at Yahoo, the end is typically not bittersweet but just bitter. Yahoo, whose stock is trading at around $12, could have sold to Microsoft for $33 a share nine months ago. But Yang, who started Yahoo in 1995 when Microsoft was still the evil empire, hates everything about the company. According to those who know him, Yang still won’t use any device remotely associated with Microsoft technology. And so it is no surprise to anyone that he figured out a way to scuttle that deal. Instead he tried to partner with Google, only to have that deal shot down earlier this month on antitrust grounds.

Yahoo says it is looking for a successor to run the company. But that seems to be more spin than reality. With its search business decimated by Google and its display ad business gasping, thanks to the global financial crisis, it’s hard to see why anyone would subject himself to that kind of abuse. My bet is that Microsoft, despite its claims to the contrary, offers to buy the company for $20 a share by Thanksgiving. If Microsoft believed Yahoo was worth $33 a share nine months ago, don’t you think it believes Yahoo is worth $20 a share today?

And so now Jerry Yang is out of the company he co-founded, looking less like a visionary and more like another high tech entrepreneur, a la Ken Olsen of Digital Equipment a generation ago, who didn’t realize that time had passed him by.