Yahoo co-founder Yang to replace Semel as CEO
SAN FRANCISCO (Reuters) - Yahoo Inc. on Monday tapped co-founder Jerry Yang to replace Chief Executive Terry Semel, bowing to investor pressure as the Internet media company has failed to keep up with rival Google Inc.
In addition, the company warned that slower growth in its graphical display advertising business would offset better-than-expected performance from its recently upgraded search advertising business. As a result, quarterly revenue is expected in the lower half of its prior outlook, Yahoo said.
The Silicon Valley-based company had said in April it expected revenue, excluding the cost of payments to advertising partners, of between $1.2 billion and $1.3 billion.
Yang's return to the head of the company he helped set up 13 years ago also heightened speculation that Yahoo may be poised for more drastic moves. These could include possible partnerships with rivals or a merger with the likes of Microsoft Corp., Time Warner Inc.'s AOL or News Corp.'s MySpace, CNBC reported.
Shares of Yahoo were the most heavily traded on Nasdaq on Monday, gaining as much as 6 percent after the news.
"The shareholders certainly want management to explore all M&A options and it certainly looks like they are now going to have to do that," said Kim Caughey, analyst at Fort Pitt Capital Group.
The company said Semel would take the role of nonexecutive chairman of the company's board. It also named Susan Decker, the company's former chief financial officer, as president.
Yang, 38, co-founded the company in 1994 with fellow Stanford University student David Filo, and remains the public face of Yahoo.
"I am committed to do whatever it takes to transform Yahoo to greater success in the future," Yang said, adding he expected Yahoo to remain a "vibrant independent company."
"While it is a tremendous responsibility, I am ready."
Semel, a long-time Hollywood studio executive who took charge of the loss-making company six years ago in the wake of the bursting of the technology stock bubble, is credited with helping rebuild Yahoo's advertising and media businesses.
But in recent years he has met with a chorus of criticism for failing to move faster to meet the challenge first of Google in Web search and advertising and, more recently, in the rise of social networking sites such as MySpace and Facebook.
"The past year has been a difficult one for Yahoo. I know that none of us has been satisfied with the results," Semel said on a conference call. "I saw myself more as a coach rather than as a player, going forward."
Last week, a strong minority of Yahoo shareholders challenged the Sunnyvale, California-based company's direction at its annual meeting, voting against board-nominated directors.
"I am surprised that you didn't apologize for the last three years of performance," activist shareholder Eric Jackson said at the meeting, in comments directed at Semel.
Yahoo's key Internet advertising business has suffered with economic weakness in some markets and delays in upgrading its search ad system to better compete with Google. The company's share fell about 38 percent last year, but have gained around 10 percent to date in 2007.
"We face a growing competition from a broader and broader set of competitors," Yang acknowledged on the call with investors.
Shares of Yahoo traded up $1.21 at $29.33 in after-hours trade following the company announcement. Ahead of the news, the stock had risen 81 cents, or 3 percent, to close at $28.12 on Nasdaq. More than 72 million shares traded hands.
