Yahoo yhoo CEO Jerry Yang is understandably relaxed, as a man who just dodged a bullet. But he isn't ready to breathe too easy.
"Look, I think we cannot go back to business as usual," Yang said during a 40-minute phone interview last week. "The last six months have been a test for Yahoo, but we are stronger for it and ready to move forward."
Since January, Yang and the rest of Yahoo's nine-member board have been hammered by investors and Wall Street analysts for snubbing takeover offers from Microsoft, including one for $47.5 billion. Yang now is girding for an annual shareholders meeting in San Jose on Friday. It had loomed as D-Day, before an 11th-hour settlement with activist investor Carl Icahn, who owns 5% of Yahoo's shares and had vowed to displace the board with his handpicked group.
Yang took over as CEO last year to engineer a turnaround at the Internet pioneer he co-founded. He replaced Terry Semel, who was ousted after six years. Icahn and other critics say Yang and the Yahoo board backed themselves into a corner because of the way they handled — some, including Icahn, say bungled — Microsoft's takeover bid despite an economic slowdown and Yahoo's struggles to compete with Google.
Yang and Yahoo Chairman Roy Bostock dispute the characterization. In separate interviews, they say the software giant repeatedly got cold feet whenever they seriously discussed a deal. Yang went so far as to advise Microsoft on how best to combine the companies, but Microsoft backtracked, Bostock says.
"It's unlike any hostile takeover I've ever seen. Unbelievable," says Bostock, who had been in the chairman's job just 15 minutes when Microsoft CEO Steve Ballmer faxed the company's first takeover offer on Jan. 31. "I wake up some mornings wondering if this is Alice in Wonderland."
Microsoft had no comment for this story.
The latest twist occurred last week, when Yahoo reached a truce with Icahn, who owns Yahoo shares worth about $1.5 billion. Icahn, whom Yahoo at one time dismissed as a technological neophyte, will join an expanded, 11-member Yahoo board with two of his surrogates. Yang and Bostock remain leaders of the Yahoo board, which will make the changes by Aug. 15.
Meanwhile, Microsoft and Yahoo have ceased communications for more than two weeks — signaling that perhaps the unsettled times are finally over. Ballmer, speaking to analysts last week, said the company was "done," for now, with pursuing Yahoo.
Or maybe not. Yahoo remains in play as a takeover target, tech analysts say.
Jonathan Yarmis, an analyst at AMR Research, says Yang "now has his fiercest critic and two of his friends on the inside, agitating for a sale. The fat lady hasn't sung yet."
Says a philosophical Yang, "I just don't know what's going to happen with Microsoft. They may come back tomorrow or a year from now."
A troubled recent history
Yahoo remains an Internet powerhouse and one of the most popular websites in the world, with nearly 600 million unique visitors each month, according to ComScore.
It has weathered corporate storms, including the dot-com meltdown in 2000 and the financial calamity after 9/11. It is No. 1 in market share for e-mail and instant messaging and No. 2 in search and search ads. It has a market value of $27.7 billion.