When the stock market opens tomorrow morning CEO Jerry Yang may very well get a dose of tough love from Yahoo shareholders less than forty eight hours after rebuffing a Microsoft merger bid reportedly worth 47.5 billion dollars.
Faced with resistance from Yang and the rest of Yahoo's board, Microsoft withdrew its offer over the weekend.
"Clearly there's frustration," said Darren Chervitz, co-manager of the Jacob Internet Fund, which owns Yahoo stock. "I am not even sure if Yahoo cares about its shareholders because they didn't show much regard for shareholders' best interests in this process."
Yahoo shares finished last week at $28.67, up almost ten dollars a share from their $19.18 pre-bid price. The Drama started to play out this weekend when Microsoft's Chief Executive Steve Ballmer agreed to raise the offer to $33 per share in a last-ditch effort to get a deal done.
Yang flew to Seattle Saturday Accompanied by fellow Yahoo co-founder David Filo to inform Ballmer that the company wouldn't sell for less than $37 per share — a price that Yahoo's stock hasn't reached since January 2006.
Why the two sides couldn't compromise at $35 per share has remained a puzzle to both Analysts and investors or as Chervitz put it "They really didn't seem that far apart. There is probably blame to go around on both sides, but I think most of it is in Yang's hands."
Monday's anticipated shareholder backlash will put Yang on the hot seat as he tries to execute on a turnaround plan that he began drawing up nearly a year ago after he replaced
Terry Semel as CEO amid shareholder angst about the company's financial malaise.
"This squarely puts the pressure on Jerry Yang to deliver results and shareholder value," Standard & Poor's equity analyst Scott Kessler said. "You are going to see a lot of shareholders just throwing in the towel because they are going to realize it's going to take awhile for the stock to get back to where it was Friday."
Kessler believes Yang should placate shareholders by using some of his estimated $1.9 billion fortune to personally buy more Yahoo stock even though he already owns 54.1 million shares, or 3.9 percent of the company.
"Jerry Yang really needs to put his money where his mouth is," Kessler said. "If he really thinks Yahoo is worth $37 (per share), then he needs to step up and buy some shares when they are in the low $20."
