Analysts Look For Different Direction From New Yahoo CEO Yang - InformationWeek

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Analysts Look For Different Direction From New Yahoo CEO Yang

Co-founder Yang took over the job of chief technology officer in April and has been very involved in product development, possessing the strong technical background Semel lacked.

Now that Yahoo chairman and CEO Terry Semel is out of running the company on a day-to-day basis, Wall Street and shareholders will be looking to Yahoo's co-founder and new CEO Jerry Yang for a new direction for the faltering company.

The board announced Semel's resignation on Monday, and said Yang had taken the reins, with Susan Decker, executive VP and head of Yahoo's key Advertiser and Publisher Group, taking on the post of president. Semel will become a non-executive chairman and serve as an adviser to the company.

Semel's resignation wasn't a surprise for some analysts. Yahoo's stock price has failed to recover after falling 38% last year, there was growing discontent among stockholders, and even senior execs were unhappy with the company's direction. In what became known as the "peanut butter manifesto," senior VP Brad Garlinghouse complained in an internal document last November that the company lacked direction and was spreading its resources too thinly, like peanut butter on a slice of bread.

Even Semel knew it was a time for a change. In a company statement announcing his resignation, he said, "This is the time for new executive leadership, with different skills and strengths, to step in and drive the company to realize its full potential -- it is the right thing to do, and the right time is now."

While Semel's resignation was expected by some observers, "the pleasant surprise is Yang stepping up," Charline Li, analyst for Forrester Research, said in an interview. In addition, having Decker, Yahoo's former chief financial officer, at his side to handle the daily operations of the company will go a long way in raising investors' comfort level. "There's a lot of firepower there," Li said of Yang and Decker.

Yang took over the job of chief technology officer in April, following the retirement of Farzad Nazem, who had led the company's technology initiatives for more than a decade. As a result, Yang is very much involved in product development and has the strong technical background Semel lacked.

As a former Hollywood executive, Semel shaped Yahoo into a media company, but it will also need a strong technical component to compete with Google in providing Web services for consumers, and in matching the latter company's wildly successful search-advertising system. "It wasn't keeping up against Google," Li said.

Indeed, contributing to Yahoo's poor performance in the stock market is its inability to show much progress in closing the extensive lead Google has in the multibillion-dollar search-advertising market.

David Card, analyst for JupiterResearch, said in his blog that of several potential "game-changers" for Web portals like Yahoo, AOL, Microsoft MSN, and Google, the evolution of online advertising and the incorporation of social media to engage visitors are among the most important. "Yahoo continues to be very well-positioned to take advantage of some of the key trends online," Card said.

But it will be up to Yang to prove he has the vision to define the company's direction to exploit those trends. "He's going to be under pressure for the next 90 days to provide that vision," Li said.

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