Dead deal puts Yang on hot seat
Yahoo CEO must deliver or face shareholder wrath.

SAN FRANCISCO (AP) Yahoo shares fell more than 15 percent today as hopes for the once-dominant Internet icon dimmed following Microsoft’s withdrawal of a $47.5 billion takeover bid.

The sell-off wiped out a large chunk of the 50 percent gain in Yahoo Inc.’s stock price since Microsoft Corp. made its initial offer on Jan. 31 in an effort to challenge online advertising and search leader Google Inc. The downturn left Yahoo’s market value about $14 billion below Microsoft’s last offer.

Last-ditch talks between Yahoo and Microsoft were fruitless, leading Microsoft to walk away from a deal Saturday.

In late-morning trading, Yahoo shares shed fell $4.43, or 15.5 percent, to $24.24.

Chief Executive Officer Jerry Yang remained convinced that Yahoo, a company he started in a Silicon Valley trailer 14 years ago, was worth more than the money Microsoft Corp. had offered for the Internet pioneer.

Now he might have only a few months to convince Wall Street that his rebuff of Microsoft’s takeover bid was a smart move - and if he can’t, analysts won’t be surprised if Yang is either replaced as CEO or forced to consider accepting a lower offer if Microsoft comes knocking at his door again.

"This squarely puts the pressure on Jerry Yang to deliver results and shareholder value," Standard & Poor’s analyst Scott Kessler said.

Yahoo shares finished last week at $28.67, slightly less than the $29.40 per share that Microsoft offered before Chief Executive Steve Ballmer raised the offer to $33 per share in a last-ditch effort to get a deal done.

Disillusioned shareholders are bound to question whether the rejection of Microsoft’s sweetened offer was driven more by emotion and ego than sound business sense.

"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."

Accompanied by fellow Yahoo co-founder David Filo, Yang flew Saturday to Seattle to inform Ballmer that the company wouldn’t sell for less than $37 per share - a price Yahoo’s stock hasn’t reached since January 2006.

To win the faith of shareholders, Yang will have to execute 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.

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