Yahoo, based in Sunnyvale, California, climbed $1.23 to $11.86 at 12:16 p.m. New York time in trading on the Nasdaq Stock Market. The gain was the largest in a month.
Before today, the company's market value had fallen by more than $20 billion since Yang took over last year as discussions with Microsoft failed, an ad partnership with Google Inc. collapsed and talks with Time Warner Inc.`s AOL stalled. Goldman Sachs Group Inc. said the resignation may fuel speculation of renewed talks with Microsoft or another suitor.
``The strategic necessity here is for this company to merge with Microsoft,'' Larry Haverty, a fund manager at Gamco Investors Inc. in Rye, New York, said in a Bloomberg Television interview. Gamco manages about $24 billion, including Yahoo shares. ``This is just unmitigated good news for the Yahoo shareholders.''
Microsoft and Yahoo trail Google, which controls more than 60 percent of the Internet-search market in the U.S. Microsoft has said that while it's open to a search-ad deal with Yahoo, it isn't interested in buying the company outright. Microsoft bid as much as $33 a share for Yahoo this year, and Yahoo now trades at less than a third of that value. Microsoft may end up paying between $15 and $18 for Yahoo, Haverty said.
CEO Candidates
Yahoo President Susan Decker is a candidate for Yang's job, said Brad Williams, a spokesman for Yahoo. Yang, 40, will stay on the board and remain CEO until Yahoo finds a replacement, Yahoo said yesterday. He took the top job at the 13-year-old Internet company in June 2007.
``He played one too many poker hands up there and got caught,'' said Pat Becker of Becker Capital Management in Portland, Oregon. His firm owns Microsoft shares but not Yahoo. ``Microsoft still believes that it needs scale'' in the online advertising business.
Microsoft spokesman Bill Cox declined to comment. The Redmond, Washington-based company will hold its annual meeting for shareholders tomorrow.
There isn't a timeframe on finding a replacement for Yang, Yahoo's Williams said. Yang had been in discussions with the board about seeking a replacement for ``some time.''
Chief Yahoo
After Yahoo finds a new CEO, Yang will return to the role of ``Chief Yahoo,'' a title shared with co-founder David Filo. Yang held that position, which involves overseeing corporate strategy, partnerships and recruiting, before former CEO Terry Semel departed last year.
Other potential CEO candidates include Jonathan Miller, the former chairman of AOL; Dan Rosensweig, once Yahoo's operations chief; and Meg Whitman the former chief of Internet auctioneer EBay Inc., UBS analyst Ben Schachter said in a report today.
Yahoo hired Heidrick & Struggles International Inc. to help find a new CEO. The task may not be an easy one, said Neil Sims, a managing director in the San Francisco office of Boyden, an executive search firm.
``Whoever would inherit that role would be taking a huge personal career risk because they're handed a company in crisis,'' Sims said. ``If you were going to rebuild a viable organization, that was the time in 2007 to recruit an accomplished executive.''
Google, based in Mountain View, California, abandoned an agreement to sell ads alongside Yahoo's search results this month after U.S. regulators threatened a lawsuit to block the partnership, saying it would give Google too much power.
Global Crisis
Yang's plan to reverse Yahoo's slowing sales growth and profit declines was hampered by the global economic crisis, which caused advertisers to cut back on Internet spending. Yahoo announced plans in October to cut at least 1,500 jobs and reduce the number of contractors as finance, travel, retail and automotive advertisers scaled back their spending.
Yang's departure ``may open the door for dialogue that might not be there otherwise,'' said Michael Cuggino, a portfolio manager at Pacific Heights Asset Management in San Francisco. ``It may allow for some new blood, some new energy for maximizing shareholder value.''
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