Thursday, April 23, 2009

Yahoo! Will Be a Good Long -- In Three Quarters

I've had a love-hate relationship with Yahoo! (YHOO) for nearly three years now. I led an activist campaign against the company in 2007 encouraging it to make a number of changes (from a new CEO to revamping the board to restructuring and simplifying the operations) to better take advantage of its many strengths (strengths Yahoo! still retains to this day, including its tremendous brand and traffic).

Unfortunately, I (and other shareholders) was only successful in helping to effect one important change: a new CEO after Terry Semel stepped down thanks to a large "against" vote at the June 2007 annual meeting.

I sold my Yahoo! stake last September at $20 after being frustrated by the "status quo" message coming out of the board and management at last August's shareholders' meeting. With the exception of Icahn and his associates, the Yahoo! board is substantially the same as it has been for the past five years, when the company sagged behind Google (GOOG) and others.

I think Carol Bartz seems to be saying and doing all the right things since she came aboard (with the exception of offering a bounty to employees who turned in other employees for leaking news to the press). She's cutting and consolidating in a way that Yahoo! has desperately needed for years. Just last week she sold off the Korean Gmarket stake to eBay (EBAY) and could still monetize other Asian assets.

Yet, even without the headwinds of the ad market, she has a lot of work still ahead of her in restructuring -- and she still is overseen by a terrible board of directors. The Yahoo! bulls seem to overlook how real organizational and cultural change takes time.

Yahoo! has a lot of upside -- in three quarters -- after Bartz has more time to clean things up.

Originally published in on 4/20/2009 10:20 AM EDT

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