Does Yahoo! exodus signal sinking ship?

20 Jun 2008

It has been one week since Yahoo! came out and quashed all rumours of a possible merger with Microsoft by announcing its non-exclusive search advertising partnership with reigning web kings Google.

While Yahoo! CEO Jerry Yang feels this deal is perfect because the “convergence of search and display is the next major development in the evolution of the rapidly changing online advertising industry”, senior staff within Yahoo! do not seem to agree. Three executives have left in the past week: Qi Lu, executive vice-president of engineering for Yahoo!’s search and advertising technology group; Brad Garlinghouse, communications and communities at Yahoo!; and Vish Makhijani, senior vice-president and general manager of search.

All this is aside from the fact that Flickr founder and husband and wife team Stewart Butterfield and Caterina Fake also announced their plans to exit Yahoo!. In fact, the list of senior staff who have parted ways with Yahoo! in the past year is pretty long – as TechCrunch chronicles. 

This emerging pattern seems to suggest that CEO Yang is not in sync with the wishes of executives surrounding him, who may have looked at a Microsoft merger as a good move for an ailing company. Shares of Yahoo! fell by US$0.18 on Thursday, following news of the latest departures.

On top of this, billionaire investor Carl Icahn has openly made known his wishes to get rid of Yang and the rest of the board who support him. However, he had this ousting in mind in order to secure a Microsoft deal which never materialised.

With the proposed US$47.5bn offer from Microsoft behind it and the outsourcing of some of its advertising to Google, it remains to be seen what will happen next at Yahoo!. However, a shareholder Mithras Capital yesterday sent a letter to Microsoft’s Steve Ballmer asking the Redmond company to gun again for Yahoo’s search business.

By Marie Boran