November 18th, 2008
Yang out: Justice scrutiny paved the way
Some things are clear. If Jerry Yang had merely been doing a lousy job at running Yahoo, there would have been no “mutual” decision that he should step down as CEO. (NYT: “Jerry and the board have had an ongoing dialogue about succession timing, and we all agree that now is the right time to make the transition to a new C.E.O. who can take the company to the next level,” Roy J. Bostock, Yahoo’s chairman, wrote in a statement.)
No, what’s been the subject of ongoing dialogue is Yahoo’s stock price since Microsoft told Yang and Yahoo to take their web portal and shove it. Yahoo dismissed an offer of $31 a share and the stock is now trading at $12, and that’s up a buck and a half since the announcement. With Yang out of the way, maybe Steve Ballmer would be interested in putting some money on the table. If so, whatever Microsoft offers, Yahoo will take.
But other things are also clear. Yahoo hung its hopes on a deal with Google. That deal died under the poisonous glare of Justice Department scrutiny, scrutiny that Microsoft obtained through massive lobbying.
At News.com, Declan McCullaugh has gathered these numbers: In 2005, Microsoft spent $12 million on lobbyists; in 2006, roughly $14 million; in 2007, a little less, again roughly $14m.
But since early February 2008, when the advertising pact was announced, Microsoft has doubled its lobbying budget: almost $25 million in a nine-month period.
And the Justice Department responded with new-found energy over the Google-Yahoo deal. But since when has the Bush Justice Department frowned on anticompetitive mergers? In 2007 – before Redmond dug deep into its pockets – Justice approved the Google-DoubleClick deal, which really had much more important antitrust implications.
Other deals Justice had no problem with: XM and Sirius; Sprint and Nextel; AT&T and SBC; Verizon and MCI; and AT&T and BellSouth.
Since the new CEO’s job will be to simply usher in an agreement with Redmond, I can think of no better candidate than Carl Icahn.
