Yahoo’s annual shareholder meeting is due to start soon. It’s the first Jerry Yang has faced since becoming CEO - it just feels like a lifetime. This is what he should say, but won’t:

Good morning. I’m glad to see so many loyal shareholders here today. I’ve had the distinct pleasure of meeting many of you face to face in recent weeks, and I can tell you it has been a deeply invigorating experience. Carl sends his regrets, but he asked me to pass on his best wishes.

I’ve thought long and hard about this, and I realise that what I’m going to say runs counter to much of what I’ve been telling you over the last year - but, hey, what is management all about if it isn’t learning how to deal with changed circumstances? I’ve always told you that this company has some of the best assets in the internet industry and a great long-term future. That’s still true. Only, the way things are going there won’t be a long term.

Carl’s brand of capitalism is a bit ugly but it has it’s point. So this is what I’m going to do for you. First off, we’re in advanced talks to sell our minority interests in two great Asian companies - Yahoo Japan and Alibaba. I hope you will take a minute to consider what great investments these have been for us. Getting into bed with Softbank in Japan was a stroke of brilliance that has created massive value for you, our shareholders, with little management distraction. And I know a lot of you had your doubts when we cozied up to Jack Ma in China - but trading in our own weak position there has turned into a home run. I still believe there’s much more mileage in these investments, but as I say, I can see the attraction of jam today.

We’ve pencilled in $10bn from these sales. The cash from these deals will be returned to shareholders immediately, through a buyback or special dividend.

Next up is the Google search deal. This will eventually bump up our free cashflow by more than a third with zero risk. I’m still confident we will get this through the regulators. However, if the Department of Justice stands in the way I will not hesitate to go back and get the best price I can for selling our search business to Microsoft.

I know I’ve told you before that, strategically, we need to stay in search. Really, though, it’s a question of price. Through a partnership with Microsoft we will still have access to all the same data from our search advertising system, and we will still be able to use this to devise campaigns for advertisers that combine the best of display and search. Also, since this is a time for realism, let’s admit it: we really don’t have much chance of a win head-to-head against Google on our own. I don’t think Microsoft does either, but if they want to try, that’s up to them.

There’s one other thing I’m here to tell you today. After careful thought, I’ve decided to step down as CEO, effective immediately. This is the one truly long-term decision I have to present to you today. You see, business is going to be tough in the next few months and I know you’ll all be watching me very carefully to see if I can turn the company around. Well, the truth is there won’t be any good news to report, not for a while, and I know I’ve exhausted your confidence and you won’t give me the benefit of the doubt. So I’m handing over to a new management team that will push forward with the things we’ve already set in motion. There is no change in strategy here, and none is needed. It’s all about execution now: I hope you will give the new team time to prove we are on the right course: they will need it.

It’s been an honour to serve as your CEO. Thank you.

Update: As usual, Yang did a better job at the shareholder meeting of describing Yahoo’s enviable assets than of explaining exactly what he is going to do with them. This has been his shortcoming for months, and it’s one he’s clearly aware of. There were a number of telltale moments today, like this one:

The strategy is quite simple. We have some tremendous consumer assets, we are focusing them around what we are calling starting points [like mail, search and the Yahoo home page.] Our goal is to create better and better starting points for more and more consumers.

That is a strategy? More and better?

To be fair, if Yahoo can get its advertising plans to work then it could finally start to make some headway. The current team has been talking for the past couple of years about the potential for “converged” online campaigns that combine search and display, but nothing’s come of it so far - just one more failure to execute. Sue Decker offered the closest thing to an actual promise that any Yahoo executive was prepared to make today:

If we can start to make display [advertising] as easy to buy as search is, we can then start to position ourselves for convergence. You’ll begin to see that later this year.

Time is not on her side, but at least the sense of urgency in Yahoo’s upper ranks now seems to be acute.

August 1, 2008 5:39pm in Internet | Comment