Explaining Southern California's economy

Jerry Yang resigns from Yahoo, the tech company that never was

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A Yahoo! billboard is visible through trees in San Francisco, California.

Yahoo co-founder and chairman (and former CEO) Jerry Yang has resigned completely from Yahoo. The Wall Street Journal has a succinct explanation why:

Mr. Yang's exit is the latest chapter for Yahoo and underlines the widening gap between old Internet companies and newer ones. Yahoo was part of an earlier crop of Web companies from the 1990s that helped spark the dot-com boom and came of age as users world-wide began going online.

But after riding that wave, new companies such as Google Inc. and Facebook Inc.—often with younger leaders like 27-year-old Mark Zuckerberg at Facebook—came to prominence with Web technologies such as search and social networking, leaving older firms like Yahoo struggling to catch up.

Those two paragraphs, in their way, explain the precise problem with Yahoo: it isn't a tech company. Rather, it's a media company and always really has been. Yahoo was conceived in the Web 1.0 world of unruly distraction and idealistic alternatives to legacy media, especially television.

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Where will new Yahoo CEO take the company?

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Justin Sullivan/Getty Images

A Yahoo! billboard is visible through trees in San Francisco, California.

Yahoo, the most confused company in media and technology — and more in a second on why "media" and "technology" are why Yahoo is so confused — has named a new CEO. He's Scott Thompson, who comes to Yahoo from PayPal. The big question is, after the disastrous reign of Carol Bartz, a tough-as-nails Silicon Valley leader, does Yahoo need yet another CEO from the land of tech?

Here's the New York Times:

Analysts said one of the first tasks for a new Yahoo C.E.O. would likely be to oversee the sale of its Asian assets.

"If a CEO who’s respected in the Internet industry takes control and gives it a unified vision, that will be very helpful," said Jordan Rohan, an analyst at Stifel Nicolaus. "The sale of the Asian assets is what happens first and what happens afterwards is just a question of how they deploy the cash they get from the sale."

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Microsoft is back in the driver's seat on Yahoo deal

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Justin Sullivan/Getty Images

A Yahoo! billboard is visible through trees in San Francisco, California.

I used to think that Microsoft should buy Yahoo. It didn't in 2008 — although that was less about Microsoft than it was about Yahoo's unwillingness to sell. Now that Yahoo has entered something of a tailspin, canning its CEO and exploring some sale options, Microsoft is back. And oh boy! What a deal it's looking to make.

But I now don't think Microsoft should buy Yahoo.

This is from the Wall Street Journal:

Potential suitors said they believe Yahoo’s inherent value is lower than its current share price of about $16.12, which they say includes a “deal premium” reflecting investors’ anticipation of the sale of Yahoo, people familiar with the matter said. The stock has run up since Carol Bartz was ousted as chief executive last month and Yahoo launched a strategic review.

In 2008, Microsoft was offering $31/share. It's traded as low as about $11. I'd say it's worth way more than $16, but in any case, Microsoft is now positioning itself to take a sweet stake, in preferred shares. I think this lessens the chance that I'll get my wish, which is to have Yahoo shed its identify as a tech company and remake itself as a Southern California-based online entertainment juggernaut. Microsoft doesn't need to be buying it. Disney does.

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Wait! Maybe Yahoo will move to LA!

A while back, I suggested that Yahoo, the beleaguered technology colossus, should close up shop in Silicon Valley and move all its operations to Southern California. (It already has an office in Santa Monica.) Now CNN's Juilanne Pepitone reports that something along those lines might be in play. Could Disney buy Yahoo? Here's the lowdown:

While Disney hasn't thrown its name into the ring, one analyst thinks it and its big-media rivals should consider a Yahoo buyout.

"The big guys -- Apple, Google -- aren't interested. And either way, it would make more sense for a traditional media company to buy Yahoo," says James Dobson, stock analyst at The Benchmark Group.

That's because traditional media companies are struggling with how to monetize their online presence. They're still working through the transition from old to new media, and they face stiff competition from upstart online publications.

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Yahoo a target for Daniel Loeb's hedge fund? Maybe not anymore

Earlier this week, the Wrap's Fred Schruers had a piece on the post-Carol Bartz Yahoo world and reported that Daniel Loeb, who runs the $8 billion hedge fund ThirdPoint LLC, was making a run at the beleaguered Internet giant. Here's what Schruers had to say, under the headline "Yahoo Under Siege: As Hedge-Fund Raider Closes In, Founders Hint at Sale":

No investor is more of a threat than hedge-fund powerhouse Daniel Loeb, who has recently acquired 5.2 percent of Yahoo's stock. Loeb has gone after companies he thinks are mis-managed before, but the level of vitriol -- and cash -- he’s throwing at the Yahoo board shows that he’s deadly earnest this time.

For a taste of the "vitriol," you can sample this letter that Loeb sent to the Yahoo board earlier this month:

it is evident that merely replacing the Company’s CEO – yet again – will not be enough to alter the direction of the Company.  Instead, a reconstituted Board with new Directors who will bring fresh eyes, relevant industry expertise and increased investor alignment to the table is immediately necessary.

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