June 18, 2007 5:08 PM PDT

Perspective: Yahoo blows its big chance

By Charles Cooper

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The chorus baying for Yahoo CEO Terry Semel's scalp finally got what it wanted. After underwhelming the only reviewers who really matter these days, the MBAs on Wall Street, the (now very wealthy) Hollywood guy gets to wave goodbye to Silicon Valley's geeks and return to hang with his old showbiz buddies in Bel Air.

But as much as the financial mandarins hated Semel, Wall Street may well rue the day Yahoo put Jerry Yang back in charge. More about that in a moment.

Semel's been in hot water for most of the last year. It seems hardly a week would pass before some Wall Street hotshot or self-important columnist (no resemblance to yours truly, I swear!) would issue a call for a shakeup in the executive offices of Yahoo. Dump Semel, they said, and put a technologist in charge. The sooner the better.

Their bill of particulars? It varied, but the thrust of the indictment was that Yahoo ain't Google. No news there, folks. Critics did have ample fodder with which to attack Semel, starting with the baffling delay of the Panama search advertising platform. They could also fault Semel for any number of management screwups that convinced talented senior executives to bolt from the company.

And then there was that $71.7 million pay package in 2006--part of what amounted to nearly $450 million raked in since his appointment as chief executive in 2001. (Who says America's not a great country? According to the Associated Press, Semel's take last year was bigger than any of the CEOs running the 386 public companies it tracked in an analysis of executive compensation.)

But the dumbest thing Yahoo could have done was to let "Google envy" panic the company into making abrupt management shifts. Truth be told, I misread the tea leaves. Semel clearly was living on borrowed time--especially after his circle-the-wagons performance last week at the annual shareholder's meeting. Until now, though, I thought the board was stalling while headhunters conducted a quiet search. What superstar CEO wouldn't covet the opportunity to lead Yahoo out of the wilderness?

Just shows how little I understood about the dynamics inside Yahoo. Instead of aiming high, the board settled for what was safe and familiar.

Like most of the digital wunderkind who made it big during the dot-com gold rush, Yang was feted for his business acumen as well as for his technology chops. After all, you don't become a billionaire at 29 by luck. Or do you? Yahoo was an envied company in the late 1990s when the Internet was still in its go-go phase. But when the Internet bubble popped, the Yahoo mystique evaporated.

After the economy went into the tank, Yahoo struggled. No matter what management tried, Yahoo failed to stanch a staggering drop in online advertising revenue. Suddenly, Yang looked more like a deer in the headlights than the second coming of Bill Gates.

And lest we forget, Yang--along with co-founder David Filo--was one of the management goobers (along with former CEO Tim Koogle) who signed off on the insane idea of buying Broadcast.com for about $5 billion. (The bigger sin is that the acquisition condemned NBA fans to a lifetime of watching Marc Cuban make an ass of himself on the sidelines berating basketball referees.) The less said about Yahoo's equally baffling $2.8 billion purchase of GeoCities, the better.

Not that Yang's a bad guy. To be sure, he has a blind spot when it comes to Internet freedom and China. Then again, so do a lot of his brethren in the technology industry. The problem for Yahoo is that Yang's about as exciting as melting vanilla ice cream on a hot summer's day.

Droning on about the management changes at Yahoo during a teleconference Monday, Yang sounded like a male version of the Stepford Wives. Rumor has it that indeed his pulse was working, though you could have fooled the listeners. At any moment I expected a Yahoo PR handler to whack him in the head to coax even a trace of emotion. Opening-day jitters or a sneak peek of coming attractions? Hard to know just yet.

But if Yang can't muster the fire to rally the troops up the hill--and it is a steep one--Yahoo should save everyone the trouble and e-mail the terms of surrender to Google.

Biography
Charles Cooper is CNET News.com's executive editor of commentary.

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