KEY POINTS:
Yahoo faces a revolt by shareholders furious that it spurned repeated takeover offers from Microsoft and sent its shares plunging.
A group of small investors is trying to amass support to oust the board, including the founder and chief executive Jerry Yang, who it says has lost the "moral authority" to lead the firm.
Yahoo's biggest shareholders are also putting significant pressure on Yang to change course and come up with a plan to boost the share price beyond the level of Microsoft's final offer of US$33 ($42), which valued Yahoo at US$46 billion.
Many of the investors who remained bullish on Yahoo shares yesterday were pinning their hopes on a deal to outsource its search-based advertising business to the market leader Google, or a massive shares buy-back scheme.
Yahoo shares shed US$4.30, or 15 per cent, to close at US$24.37. That wiped out nearly half the gain they made after Microsoft made its bid on January 31. The drop left the Sunnyvale-based company's market value about US$12.5 billion below Microsoft's last offer. Eric Jackson, a small shareholder whose criticisms of the former Yahoo chief executive Terry Semel at last year's shareholder meeting were the most vocal challenge to the board at that time, is seeking other investors to join a petition to force out the board.
He had already formed a pressure group, called Plan B, which represented 140 small investors, and dozens pledged to back his attempted coup.
"We believe the Yahoo board does not have the moral authority to represent our views as shareholders in discussions with Microsoft or any other company who wants to buy Yahoo," Plan B's petition says.
Jackson added: "Boards need to be the eyes and ears acting on behalf of the best interests of the shareholders. Our interests have not been served by this outcome. Hubris and pride got in the way. We need new blood on this board. We need to know that our interests as shareholders are being properly represented."
While the efforts of small shareholders are likely to cause discomfort, Yang's fate hangs more directly on the support of his largest investors, many of whom had demanded that Microsoft raise its bid to clinch a deal.
They were shocked when Steve Ballmer, the Microsoft chief executive, met Yang and became furious that he was still demanding a price of US$37 or above, then decided to walk away.
Bill Miller, a portfolio manager at Legg Mason, has urged Yahoo to launch a shares buy-back to boost the share above $33.
- INDEPENDENT
