Pummeled In The Stock Market, Yahoo's Yang Looks Ahead

By Thomas Claburn
InformationWeek Mon May 5, 7:10 PM ET

Yahoo's stock took a beating following the Microsoft's decision to withdraw its offer to its purchase offer over the weekend.

At the close of the stock market on Monday, the search and community portal's shares were down about 15% from their closing price on Friday. Shares of Google, meanwhile, rose about 2%.

Yahoo is now selling for about $24 per share. Microsoft initially offered to buy Yahoo for $31 per share and later increased its offer to $33 per share. Yahoo co-founders Jerry Yang and David Filo wanted $37 per share because they believed that Microsoft's offer undervalued their company.

On Sunday, Yahoo CEO Jerry Yang said Microsoft's offer had changed the company for the better, making it stronger and more focused.

"With Microsoft's withdrawal, we'll be better able to focus our energy on growing our industry leadership and maximizing value for stockholders," said Yang in a blog post. "We'll continue to execute on our plan -- making your Internet experience as personal, relevant, open and social as possible, serving advertisers so well they insist on working with us, and opening up Yahoo in a way that developers dream of. And, we'll also continue to pursue strategic opportunities that position us for long-term success. "

Among the more than 100 people leaving comments on Yang's post, many expressed support for Yahoo's continued independence. Others expressed skepticism about Yang's stewardship of Yahoo.

Someone posting under the name Joseph Hunkins, who identified himself as a Yahoo shareholder, said Yang was overestimating the value of Yahoo and urged him to be clearer about how the company's position can be improved.

"Jerry, although I remain a huge fan of Yahoo's great potential as the online environment evolves, it strains reasonable economic assumptions to suggest that the market has been consistently undervaluing the company so much," Hunkins wrote. "$33 was an excellent offer all things considered. This was not about valuations - rather it was about MS [Microsoft] controlling 'your' company. One has to give you credit for sticking to your guns about a 'free' Yahoo, but it would sure be nice to hear about some aggressive and innovative plans for the future or some huge cost cutting measures that will make Yahoo more profitable. I can't help but think that a lot more passion and energy went into fighting Microsoft than has been going into innovation at Yahoo -- is that an unreasonable assumption?"

Yahoo has staked its future on its ability to make its ads more effective and more profitable. One way the company aims to do that is by opening up its search platform to better integrate information provided by third parties and to enhance social connectivity across Yahoo's various services. What Yahoo now has to prove is that opening its platform and making it more social leads to more relevant information and a better user-experience.

And that may be difficult because, at least for Google, social networking sites have been something of a letdown. Back in January, Google co-founder Sergey Brin acknowledged that ads on social networking sites weren't performing as well has well as hoped. That's a message Yang can't afford to bring to shareholders in the next few quarters.

See original article on InformationWeek.com