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As reasons for defenestration go, missing out on $28bn is pretty emphatic. Such is the difference between the value of Microsoft’s January approach to Yahoo and its market capitalisation on Monday before news of Jerry Yang’s resignation as chief executive broke. No doubt he will be dismayed by yesterday’s one-tenth jump in the share price of the company he co-founded. Hewlett-Packard managed a similar leap yesterday following strong fourth quarter results. Yet the writing was on the wall at Yahoo the moment a search deal
with Google collapsed this month.

Blame should be spread more broadly. Mr Yang had the support of the board, even after the activist investor Carl Icahn joined in the summer. Roy Bostock, Yahoo chairman, was at least as culpable in the failure of negotiations with Microsoft. Meanwhile, the seeds of Yahoo’s predicament – that it allowed Google to build an unassailable lead in search – were planted well ahead of Mr Yang’s latest 17-month tenure.

Before any further board shakeout, however, Yahoo needs both a new leader, and a strategy. Susan Decker, Yahoo president, is one potential candidate, but carries the baggage of the current regime. Jonathan Miller would likely be keen, and have Mr Icahn’s support, but the former head of AOL is prevented from competing against his old employer until March – an eternity for Yahoo to remain rudderless in these markets.

If a tie-up with AOL remains in prospect then an experienced cost cutter might be desirable. But there are bigger issues than improving Yahoo’s efficiency. If Microsoft returns, it will likely be just for the search business. If not, Yahoo cannot catch Google anyway. Yahoo should take its technology and half a billion users, and try to be a dominant online media company – the portal to the world envisioned by Mr Yang in 1994.

Copyright The Financial Times Limited 2017. All rights reserved.

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