Nobody seemed too surprised when Yahoo fired Carol Bartz as the company's CEO on Tuesday. A unanimous vote from the board and a phone call from the chairman Roy Bostock sufficed to remove the struggling executive from the helm of the struggling company, but as a number of Silicon Valley experts have pointed out, Yahoo will need to do a lot more than that to save their company. Looking ahead, some are wondering whom Yahoo will tap to take Bartz's place. Others speculate that Yahoo will overhaul the company and start from scratch. And of course, tons of people have considered Yahoo as a takeover target--and one blogger has raised his hand to be taken over.
Yahoo founder and former CEO Jerry Yang reportedly told the company's 13,500 employees that they're not for sale, but the company's future is inevitably unclear. As Silicon Valley scoop wizard Kara Swisher, who broke the news of Bartz's firing, reports:
The board of Yahoo, which ousted its CEO Carol Bartz today in a unanimous decision, is exploring a range of possible strategies to turn around its moribund growth, including possible acquisitions, shedding units, bringing in new investment partners and even taking the company private or selling it.
A sale is the least likely of options, said sources close to the situation, but--given today’s news--Yahoo might attract a lot of attention from investors seeking to take advantage of the company’s powerful but troubled assets.
"It is all on the table," said one source close to the company.
This wouldn't be the first time that Yahoo has approached these crossroads. As long ago as 2006, venture capitalists floated the idea, and in 2008, Microsoft made a generous bid of $31 per share, a 62 percent premium on the share price. Yahoo balked, and Microsoft eventually pulled their bid. Just before Bartz's firing three years later, the stock closed at just under $13. The sad current stock price is bad news for Yahoo investors who missed out on the Bill Gates-sponsored payday, but it's great news for prospective buyers.
Let's make a list of past and current merger and reverse merger possibilities. If nothing else, it will provide an interesting snapshot of the industry.
AOL - This was a big rumor last October. Then flush with cash and eager to reinvent their business model in the wake of the failed merger with Time Warner, AOL weighed the option of a reverse merger. At the time, Yahoo's market cap was roughly ten times the size of AOL's and as The Wall Street Journal reported at the time, "A combined Yahoo-AOL would have greater scale to compete in online advertising against industry juggernaut Google." However, the rumors never materialized and two months later, AOL bought The Huffington Post in an effort to focus on becoming a premium content company. A takeover now seems very unlikely, as the now suffering AOL might actually be looking for a buyer itself.
Alibaba Group - Yahoo already owns a large percent stake in this Chinese e-commerce company, but as Yahoo has floundered, Alibaba has grown. Bartz and Alibaba Chairman Jack Ma evidently did not get along one bit. Financial advisor Michael Clendenin suggested to The Wall Street Journal. that "the new Yahoo CEO can smooth over some ruffled feathers," but a closer relationship between the two companies is probably the opposite of what will happen. "Alibaba wants Yahoo out of its life, but Yahoo refuses to go unless it gets a big payout," said Clendenin.
Business Insider - Less than 24 hours after news broke about Bartz's departure, Business Insider founder and Wall Street vet Henry Blodget penned an inconspicuously titled blog post: "Announcing our offer for Yahoo!" It's not what you think. "We offer to allow Yahoo to buy Business Insider, Inc., for $150 million," wrote Blodget, echoing AOL's $315 million takeover of HuffPost. "And we offer to allow Yahoo to then appoint us acting CEO of the company. Once we have been appointed acting CEO of Yahoo, we will implement our plan." We can't tell if he's kidding.
News Corp. - This is an old idea from venture capitalist Fred Wilson. Back in 2006, Wilson predicted the Microsoft bid but didn't think it was the right fit. "I think the better buyer is a media company," wrote Wilson on his blog. News Corporation is the one that most comes to mind. Rupert has shown that he's serious about the Internet and that he is not afraid to make big bets." With the phone hacking scandal continuing to cause problems in the UK, Murdoch is probably not in a buying mood, but should the scandal force him to close his newspaper business, he might want to play his hand in the new media game.
Private Equity - Ding! Ding! Ding! Although it's fun to imagine Rupert Murdoch owning Yahoo--or even uttering the word in his sort of weird Australian-like accent--the most likely scenario for a Yahoo takeover would come from any of a number of private equity firms, according to Shira Ovide at The Wall Street Journal. "So with Yahoo relatively rudderless at the moment, be prepared to hear weeks and perhaps months of rumors and news stories about various combinations involving Yahoo, AOL, the sixth-runner-up on “American Idol” and anyone else who has more than $100 in his pocket," says Ovide. "Bankers will dust off three-year-old pitch books with their ideas. None of it will make much sense. In short, good luck, Yahoo."