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Can Yahoo's Yang Pull a Jobs?


It's a little early to write off Jerry Yang as a failed visionary leader.


On the surface it seems nothing is going right for Yahoo (YHOO) these days.

  • 4Q net income fell to $205.7 million or $0.15 per share from $268.7 million or $0.19 per share a year ago. Analysts expected earnings of $0.11 per share.

  • FY '08 net sales estimates are for $5.35–5.95 billion, disappointing expectations for $5.89 billion in sales.

  • Yahoo will enact a "workforce realignment' of 1,000 employees in February, but it is unclear how many employees will be laid off and how many will simply be moved to a new department.

  • A key contract with AT&T (T) will be renegotiated to push revenue further out, resulting in a short-term loss of guaranteed revenue.

Thus far, despite an inspiring-named internal memo dubbed the 'Peanut Butter Manifesto' distributed all the way back in 2006, Yahoo executives have been unable to inspire much in the way of shareholder support, and a top-line glance at yesterday's earnings don't do much in the way of changing that. Yahoo's shares traded above 25 at the time of the memo; in pre-market trading the stock is off more than 10% and under $19.

But Yahoo is also the latest in a string of companies to reinstate a visionary early leader after losing ground to competitors in a business it used to dominate. Last year, pressured by competition from Google (GOOG) and a weak share price, Yahoo reinstated co-founder Jerry Yang to revitalize the company's image, its vision and win back the perception of online dominance it once held.

A closer review of yesterday's conference call reveals a long-term plan for righting the ship at Yahoo and pressing ahead on some clear initiatives. The two key strategic objectives, according to company President Susan Decker are solidifying Yahoo as a "key starting point for consumers" and a "must-buy platform for advertisers." There is no doubt that 2008 will be a transitional year for the company. That was made clear on the call. But it's a little early to write off Yang as a failed visionary leader.


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