Yahoo boss Yang’s resignation sends shares soaring
The announcement that Jerry Yang is to resign as Yahoo chief executive on Tuesday unleashed renewed speculation that the company may be taken over by Microsoft and sent the recently heavily buffeted shares soaring. The chief executive and co-founder of the pioneering internet company had, for many months, vehemently opposed any takeover by the world's largest software vendor, incurring the wrath of many shareholders in the process. Yang's resignation pushed Yahoo's share price significantly higher, with the official price on the New York Stock Exchange rising 8.65 per cent to $11.55. In after-hours trading, the shares rose a further 1.30 per cent to $11.70.
With his resignation Yang is finally yielding to the huge pressure which has built up on him and the company following the failed takeover by Microsoft. Microsoft originally offered more than $40 billion for the company – Yahoo's market capitalisation has since dropped to less than a third of this. Yahoo is continuing to struggle with falling profits and is in the process of making around ten per cent of its worldwide staff redundant. Yang took up the reins at the company for a second time just eighteen months ago.
Michael Cuggino, an analyst at Pacific Heights Asset Management in San Francisco, told financial new service Bloomberg that the resignation of the fiercest opponent of a takeover by Microsoft, "may open the door for dialogue that might not otherwise be there." Financially, many observers see an "urgent need" for the battered internet company to recommence takeover talks. At the end of the failed negotiations, Microsoft was offering $33 per Yahoo share. By close of business on Monday, the shares were being quoted at just $10.63. Microsoft has, however, repeatedly stressed recently that it is no longer interested in a complete takeover.
By taking over Yahoo, Microsoft had hoped to break internet company Google's dominance in the booming online search advertising business and the promising new field of web-based applications. The Yahoo board, led by Yang, rejected the offer as being too low, and instead planned to enter into an alliance with Google. Some weeks ago, however, Google dropped the plans as a result of concerns from anti-trust authorities and protests from advertising customers. A partnership in certain areas of advertising or a sale of the search division may now be on the table for discussion with Microsoft. Microsoft's annual meeting of shareholders is scheduled for today (Wednesday).
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