Call for Semel’s Head

"Go for a business that any idiot can run – because sooner or later, any idiot probably is going to run it."
              – Peter Lynch

I have often thought that I could do well managing public company investments based upon the experiences, perceptions and fears of our early stage companies interacting with them. During the Carly era, none of our companies had any kind of rational interactions with HP. Everything was mired in bureaucracy and crazy decision making. In came Hurd and things changed almost overnight.

Well, I have been waiting for this to happen at Yahoo. They have an amazing franchise with an incredible subscriber base and yet Semel can’t get out of his own way. Google is running rings around him. TechCrunch commented on a recent Seeking Alpha story laying out Semel’s dismal performance and his excessive compensation ($550m over 5 years is outrageous). When Semel gets the boot, get ready to buy Yahoo stock as it will move big-time…

"Seeking Alpha
has a long story outlining Yahoo CEO Terry Semel’s failings since his
hiring in 2001, and basically calls for his head on a platter. The
bottom line: Google has grown its shareholder value 21 times more efficiently than Yahoo during the time Semel has been at the company.
Semel supporters point out the Yahoo did buy Overture, keeping them in
the game, but others note that Semel had the opportunity to buy Google
instead for $3 billion or so in 2002 (Yahoo also didn’t buy YouTube or
MySpace when the opportunity came up). The article also mentions
Semel’s total compensation over the last 5 years – $550 million.

Panama is off to a brisk and surprisingly strong start
(more on this in an upcoming post). Forgetting Semel for a moment, it
may be the single most important factor keeping Yahoo an independent
company in the near term. It also might be the product that allows
Semel to keep his job, or at least make a graceful exit later this year."

4 thoughts on “Call for Semel’s Head

  1. Matt –

    If you asked any online publisher out there they would say the same thing — Google drives way more search traffic, delivers way more dollars, and if you are doing SEM is much better, for *now.* I did like the MyBlogLog acquisition a lot the problem is they need to make big big moves to move the needle.

    Check out http://www.buzztracker.com/category/yahoo for more commentary!

    –Alan

  2. Congratulating Yahoo on the relevancy changes in Panama is like congratulating a grown man for tying his shoelaces. Maybe more like congratulating a grown man for taking five years to tie his shoelaces.

    Question: why does Yahoo trade at a P/E premium to Google (nearly double!) when Yahoo increased its earnings 4% last year, while Google increased theirs 35% (both project 30% next year)?

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