Yahoo co-founder to take on CEO role

American internet firm Yahoo has appointed co-founder Jerry Yang as its new chief executive after chairman Terry Semel stepped down from the role.

Semel’s decision marked a surprise move, ending his increasingly ineffectual pursuit of online search leader Google – a losing battle that had demoralised Yahoo’s shareholders and employees.

The Sunnyvale, California-based company also yesterday named Susan Decker as its president.

Decker, who had been touted as Semel’s heir apparent, was recently promoted from Yahoo’s chief financial officer to oversee the company’s advertising operations.

Semel, 64, will remain chairman in a non-executive role after spending the past six years running the company.

The shake-up unfolded less than a week after Semel faced off with shareholders disillusioned with a nearly 30% drop in Yahoo’s stock price during the past 18 months as the company’s financial growth fell further behind Google’s torrid pace.

“The company is in good hands,” Semel said in an interview yesterday. “I felt like it was time for me to move more into a coach’s role than a player’s role.”

Wall Street was clearly ready for a change.

Yahoo shares gained 81 cents to finish at over $28, then surged by more than a dollar, or 4.7%, in extended trading.

Signalling Semel’s decision was voluntary, Yahoo said he will not receive a severance package.

The former movie studio executive has already made a fortune since joining Yahoo in May 2001, having realised nearly $450m (€335m) in gains by exercising some of the stock options he received during his tenure.

In yesterday’s conference call, an emotional Yang hailed Semel as “a role model and mentor” and then sought to defuse recent speculation that Yahoo might be sold to Microsoft or another suitor hoping to exploit the recent turmoil at the company.

“I am totally excited and energised about assuming the leadership of this great company,” Yang said. “We have a long and prosperous future if we execute correctly.”

In an interview later, Yang reiterated his belief that Yahoo will remain independent. “We are well aware of the challenges facing Yahoo,” he said. “We need to execute better and to get better talent. I feel Yahoo needed someone to be here for the long haul.”

Yang, 38, still owns a 4% stake in the company currently worth about $1.5bn (€1.1bn).

Fellow co-founder David Filo, who is helping to run Yahoo’s technology group after the sudden retirement of the department’s leader earlier this month, owns a 6% stake worth about $2.3bn (€1.7bn).

This will mark the first time that Yang – previously known as “chief Yahoo” - has been in charge of the company in more than a decade.

Since Semel’s arrival in May 2001, Yahoo’s stock has nearly tripled as the company benefited from the influx of advertising flowing to the internet from newspapers, magazines and other more established media.

But Yahoo’s inability to capitalise on the shift as adroitly as Google tarnished Semel’s legacy.

Mountain View-based Google now makes more money in a single quarter than Yahoo does in an entire year. The contrast represents a harsh comedown for Yahoo, which was the larger of the two companies when Google went public in August 2004.

The last 18 months represented Yahoo’s toughest stretch since the dot-com bust.

With Yahoo’s losses mounting as ad revenue evaporated, Yang recruited Semel to take the reins.

The choice confused much of Silicon Valley because Semel was already old enough to qualify for senior citizen discounts and by his own admission barely knew how to use email.

After an initial backlash, Semel won over many investors by streamlining Yahoo’s operations and then engineering a series of deals that gave the company the tools it needed to build its own search engine rather than rely on technology licensed from Google.