• Roy Bostock: This guy is chairman of the Partnership for a Drug-Free America. Can you imagine anyone more out of touch with Yahoo's workforce?
• Art Kern: On the board since January 1996. Used to own some radio stations. Gives a lot of money to good causes. Great — how about you do that full-time, Art?
• Ron Burkle: Politically connected former grocery-store owner.
• Gary Wilson: Used to run Northwest Airlines. Shouldn't that be a disqualifier to do anything?

If Yahoo just gave up on search, it would be at Google's mercy, like so many other Web publishers. What Google gives, it can take away. And Yang surely knows this, since it's exactly the game he used to play with other websites.

When MarketWatch, the finance-news site, was preparing to go public — this was long before its sale to Dow Jones, of course — Yahoo Finance was linking to its stories for free. As founder Larry Kramer told the tale to me, he thought this was great — free traffic, right? His investment bankers disagreed, seeing this as a big risk, since Yahoo could stop linking at any time. Eventually, MarketWatch struck a commercial deal to pay Yahoo in exchange for a guarantee of continuing traffic.

One of the few Yahoo sites that gets more traffic from Yahoo Search than from Google is Yahoo Maps. When users typed an address into Google, in the early days, Google would link directly to a Yahoo Maps page for the location. And then Google created its own maps site. Links to Yahoo Maps grew less prominent, than disappeared altogether.

The same could happen to any of Yahoo's Google-dependent properties. Yahoo Search is, at the least, a hedge against such a move. Or it would be, if its share of the search market weren't ever dwindling.

The reality: If Microsoft bought Yahoo's search, nothing would really change for Yahoo's valuable, profitable media properties. Traffic from Yahoo Search would continue to decrease — perhaps more sharply, with Microsoft's incompetent Web executives in charge — while traffic from Google would continue to increase. That's where Jerry Yang and Microsoft CEO Steve Ballmer find common ground, in a shared delusion — that either of their search engines, alone or together, amount to anything.

In recent days, representatives for Microsoft have met with Mr. Icahn to encourage him to press his proxy contest as a way to keep pressure on Yahoo to enter into a deal that would lift its share price, say people familiar with the matter.

A more likely explanation for Icahn's quietude: despite early indications he'd profit from the ordeal, he's since taken a bath on his investment. (Photoillustration by Jackson West; photo of Icahn by AP/Mark Lennihan)

Google's general counsel Kent Walker (pictured) feels it's a competitive deal, with the company arguing that Google's better contextual ad placement algorithms make both users and advertisers happy and that other competitors share and license technology amongst themselves. Not cited, but mentioned in passing? Microsoft, party to one of the largest anti-trust investigations in recent memory and currently desperate to get a sizable share of the search advertising business.

When you look back at this fiasco, the critical error on Yahoo's part was doing nothing for 5 weeks after the initial offer. They thought they could play hard to get. We've gotten a round-trip back to $19.

Yahoo wants to play it now like Microsoft was the one that rejected the deal, but even when Yahoo execs finally did meet with Microsoft on March 10, they refused to discuss how much they actually would sell the company for. Yahoo used antitrust concerns — the one's they've ignored doing a deal with Google — as excuse for why they couldn't talk price. Even an April 15 meeting at Bill Gates's father's law firm in Portland went without Yang saying how much it would take. Microsoft's top lawyer Brad Smith called it "one of the strangest meetings that we've ever had." Finally, on May 2, Yahoo's board came up with a number: $37 per share. But by then, four months after Microsoft made its offer public, Ballmer had already decided he didn't want the deal. In fact, reports the Wall Street Journal, Ballmer made his decision in the middle of March — after about 5 weeks of Yahoo silence.

Vallewag: What would you think of Jon Miller going to Yahoo?

Calacanis:

Jon Miller would be amazing for Yahoo because he is extremely good at building display advertising businesses and buying young startups. Remember, when they let him go he was coming off back to back 40%+ gain quarters in advertising revenue—second only to Google (and well ahead of Yahoo). His biggest strength at AOL—in my mind—was buying promising startups and giving them tons of support, no red tape, and breathing room. Yahoo needs new blood and a focus on display advertising, with Ross [Levinsohn, former CEO of Fox Interactive and Miller's partner at VC firm Velocity Interactive] at his side you would have a very potent operator and M&A team.

Yahoo's best strategy right now is probably to build display advertising while buying and growing promising startups. Yahoo needs growth, Jon and Ross are growth guys (i.e. MySpace, Advertising.com, Weblogs, Inc, etc). As a bonus you have hundreds of VP/SVP/EVP level executives out there who are loyal to Jon and Ross, so you might see a talent influx with them at the helm, and talent wins.

Valleywag: You think he'd take the job?

Calacanis:

• Pro: It is the most challenging job in the space second to AOL
• Pro: Having reinvented AOL this would be cake walk/much more pleasant.
• Push: It would require a move from East to West coast—which is both a + and -
• Pro: It would be a great way to show the folks at [Time Warner] who's the man

I'd say if he gets the call he would most likely take it... big opps like this come along once every 5-10 years.

It's a claim that could end Yahoo CEO Jerry Yang's time at the company. While in Yahoo's presentation there are other, truer claims — for example, that Carl Icahn typically wrecks havoc on most public companies under his influence — claiming Microsoft never really wanted to buy the company is outright lie. And its one so bold that it subverts Yang's efforts and screams the truth: that until it was too late to fix them, Yang and the board know all they did was blow Microsoft negotiations. Yahoo's presentation is embedded below.

Our new org chart shows absolutely no changes at the top. We can’t get our stock price anywhere near what Microsoft (MSFT) offered. The new reorg had one objective: personal power plays or internal politics. We lost a few executives after we announced the end of all discussions with Microsoft — a lack of confidence in our own prospects. We lose market share in search to Google (GOOG) every month and we lose market share in pageviews to social networks. As for the Google deal, nothing indicates a job well done better than outsourcing your own job to the competition. After all, it is not as if we had sold the entire search team to another company for a premium price.

What hasn’t been discussed is that the company isn’t really facing up to the fact that its layers of management have resulted in a state of masterful inactivity, masked perhaps as a culture of consensus. This starts at the top - from the company’s board and senior management down to VP level where people are prone to organizing and attending twenty meetings before deciding the fate of a project.

Granted, he may be a little petulant that Yahoo wasn't well-represented at the Structure 08 conference he threw this week — even after he gave the company's open source cloud computing software Hadoop center stage at an earlier after-work presentation GigaOm hosted. He has, however, been covering Yahoo for longer than many other publications working the story have existed, and breaking his relative silence to predict doom for the company will hopefully shake up some of the executives down in Sunnyvale. (Photo by Pete Jelliffe)

This is my first afternoon back at the 'Wag, so I've got nothing to report that pint-sized supersleuth Kara Swisher hasn't already posted. (Note to Swisher: Great job! Now please stop patting yourself on the back, it's embarrassing.)

The only other journo as obsessed with Yahoo is Valleywag's editor-on-vacation Owen Thomas. I thumb-typed Owen to deliver Valleywag's official analysis from fog-free Florida. "I don't think of this reorg as a layoff," Owen replied. "I think this is more about promoting those who don't have enough sense to leave. I mean, the more power Sue Decker has, the worse Yahoo gets. Why is she still there?"

In fact, since details of Decker's plan leaked last week, Yang has little to say about them at all except to insist that Patel get the gig. This despite vocal protests presumably similar to the one we got from commenter bluepurple:

I'm appalled a the above comments implying that Ash is even remotely qualified. In my time he was focused on looking the part of an executive. Flashy car - check, Steve Jobs uniform - check, ridiculously expensive watch - check. He's unable to inspire, is a terribly unfocused speaker, and had no concept of how to execute. His teams were mostly shuffling around throwing out words like "platform" and "innovation". He was a non-factor at Yahoo. Placing Ash (who was not part of Weiner's team) in such a large role is clearly Sue seizing control of the entire company. Ash is just a stand in.

The events of recent weeks underscore the fact that your board of directors is far better qualified to represent your interests in the effort to maximize stockholder value than the slate put forward by Carl Icahn.

Bostock and Yang just want you to express your mutual affection by replying with your white card in the proxy vote dating game. The profession of sweet love in full after the jump.

Dear Fellow Stockholders:

We are writing to update you on the latest developments here at Yahoo!, including our recently announced commercial agreement with Google and the outcome of our discussions with Microsoft regarding a potential transaction.

On June 12, we announced a non-exclusive agreement with Google that we expect will generate approximately $250 to $450 million in incremental operating cash flow for Yahoo! in the first twelve months following implementation. This cash flow will enhance our profitability as well as help support achievement of our key strategic objectives. Combined with continuing advances in our own search capability, the agreement is an important step in our efforts to capitalize on the high-growth online advertising opportunities where we are best positioned to compete successfully and create more value.

Let us explain why we find this new agreement so exciting.

The Yahoo!-Google Agreement is Financially Attractive and Strikes the Right Strategic Balance.

Under the agreement with Google, Yahoo! will continue to provide algorithmic and sponsored search results, but now will also have the ability to run sponsored search ads supplied by Google alongside Yahoo!’s search results. Advertisers will pay Google directly for each click on Google paid search results appearing on Yahoo!. Google will then pay us a fee (in industry jargon, traffic acquisition cost) based on revenue realized from click-throughs on ads supplied to Yahoo! by Google.

This carefully structured agreement strikes the right strategic balance, enhancing our financial results while advancing our strategic objectives of being the “starting point” for the most users on the Internet and offering such compelling value that advertisers will see us as the “must buy” in online advertising.

One of our key strategies for achieving these objectives is to capitalize on the increasing convergence of search and display advertising, where we are especially well positioned to compete and succeed. We have already accelerated our efforts to strengthen our presence in display through a variety of initiatives and acquisitions in recent months. Our new commercial agreement with Google enhances our ability to pursue this strategy.

Another key strategy is to open our platform to other developers to optimize monetization for our advertisers and publishers and provide the best experience for our users. We see this agreement as a natural extension of the efforts we have already made toward an open marketplace.

The Google agreement is non-exclusive and provides strategic and operational flexibility for Yahoo!. It allows Yahoo! to use Google’s services in those areas where Google monetizes our inventory more effectively but also permits us to continue to use our own search technology in areas where we believe we are most competitive. The net result is that the agreement helps us accelerate one of our strategic aims–closing the monetization gap. At the same time, it allows Yahoo! to continue to compete aggressively in search and display advertising.

Importantly, the agreement does not prevent Yahoo! from pursuing other alternatives that could increase stockholder value. Because the agreement can be terminated by either party upon a change in control, it would not preclude a transaction with Microsoft or any other potential acquiror in the future.

The Yahoo!-Google Agreement Does More for Stockholder Value than Microsoft’s Search-Only Hybrid Proposal.

We also want to update you on the conclusion to our discussions with Microsoft regarding a potential transaction. As we explained in our last letter, our board and management held numerous meetings and conversations with Microsoft about its proposal to acquire Yahoo!, both before and after Microsoft withdrew that proposal on May 3. On June 8, our Chairman, Roy Bostock, other independent board members, and members of Yahoo!’s management team again met in person with Microsoft representatives. At that meeting, Microsoft stated unequivocally that it has no interest in acquiring all of Yahoo!, even at the price range Microsoft had previously suggested.

Microsoft did propose an alternative transaction. Rather than acquire our whole company as it had been proposing for months, Microsoft now proposed to acquire only our search business for $1 billion and a share of future search advertising revenue. This proposal also included an $8 billion investment in Yahoo! but required Yahoo! to commit to a 10-year exclusive arrangement that would have made us dependent on Microsoft for all of our search business. It would also have given Microsoft veto rights on certain future Yahoo! actions, including a sale of Yahoo!. Our board of directors and management made a great effort–and conducted in depth negotiations–to elicit a feasible proposal from Microsoft that made strategic and financial sense for Yahoo!, but without success.

While Microsoft’s search-only hybrid proposal may have been helpful to Microsoft, our board and management concluded it would have had a significant adverse impact on Yahoo! strategically, leaving the Company without the operational control of search assets and technology we view as critical to our objective of becoming a leader in the converging search and display advertising business. The board and its advisers also carefully studied the financial impact of Microsoft’s proposal and concluded that it would have provided no meaningful improvement to our operating cash flow. In short, this proposal would have generated substantially less value for Yahoo! stockholders than Microsoft has suggested.

Based on all the key factors–strengthening our competitiveness, protecting our strategic position, generating attractive financial returns–the Google agreement is far better than Microsoft’s search-only hybrid proposal. That’s why we moved forward with it.

Your Current Board of Directors Has the Knowledge, Experience and Commitment to Best Represent Your Interests and Maximize Stockholder Value.

The events of recent weeks underscore the fact that your board of directors is far better qualified to represent your interests in the effort to maximize stockholder value than the slate put forward by Carl Icahn.

Based on Mr. Icahn’s narrow agenda, it seems highly unlikely that either he or his slate would bring added value to Yahoo!. Consider the following:

– Mr. Icahn put forward his slate so as to sell Yahoo! to Microsoft, even though he had no knowledge of the sustained efforts made by your current board and management to determine whether Microsoft was willing to engage in a transaction that would provide appropriate value and certainty of achieving that value. On June 8, Microsoft once again made it perfectly clear that it is not currently interested in acquiring Yahoo!.
— Mr. Icahn publicly opposed any alternative form of transaction with Microsoft. Your board and management, after thorough and deliberate negotiations and evaluation, separately concluded on its own that the alternative hybrid deal proposed by Microsoft was, indeed, not in the best interests of the Company or its stockholders.
— Mr. Icahn urged, as an alternative to a Microsoft transaction, that Yahoo! find a way to partner with Google that would not preclude a transaction with Microsoft in the future. We have done exactly that through the commercial agreement with Google we announced on June 12.

Simply put, you can choose to vote for a slate of nominees with no articulated plan for the future of Yahoo!–and who now have essentially no alternative agenda to offer you–or you can choose to vote for your existing board of directors which has the independence, experience, knowledge and commitment to navigate the Company through the rapidly-changing Internet environment, execute on our strategic objectives and deliver value for Yahoo! and its stockholders.

It is time for Yahoo! to turn its undivided attention to implementing its key strategies, and we therefore urge you to reject Mr. Icahn’s slate and his ill-defined agenda.

We strongly urge you to vote your WHITE Proxy Card today for your current board of directors.

We look forward to sharing our progress with you as we move forward and we thank you for your support.

Sincerely,

Roy Bostock Jerry Yang
Chairman of the Board Chief Executive Officer

It's a way for the buy side to match what's happening on the sell side. The sell side is consolidating in these big platforms and Publicis thinks it needs to organize its buying to hook into these platforms so Google doesn't have all the data. Clients have lots of data. Their agencies need to be able to organize that data to better run campaigns.

Very informative, no? We asked Morrissey if anybody's ever told him he should write about the ad industry for a living. "If Twitter doesn't work out, totally looking into it."

TCI/3G are activist investors trying to get a minority slate elected to the CSX board (I think the vote is today). They ran 5 board members, including Gary Wilson (Yahoo board member). Wilson was the only one ISS/RiskMetrics didn't recommend shareholders to vote for. Other Yahoo board members will pay the price for these bungled negotiations for years to come.

Since choosing Google, Yahoo's experienced only more internal turmoil. The kind that hardly makes the company or any part of it more appealing for acquisition. Yahoo's angstiest shareholder Carl Icahn is said to favor outsourcing Yahoo's search to Google, rather then selling part of the company to Microsoft. And finally, Yahoo CEO Jerry Yang already spent a week in Washington trying to convince lawmakers that a Google deal won't destroy the search market. The most likely explanation for News.com's story? A desperate Yahoo shareholder, anonymously leaking contrived news in order to jumpstart the negotiations or at least boost Yahoo's dismal stock price.

Basically, you've got a lot of guys in their 30s and older who are not really contributing that much in terms of innovation. They should clear out and let the 25 year-olds get going again. If you look back at AOL, it had many purges in the post-bubble period, but by and large, it flushed out the people who had been occupying senior management posts for a long time and they didn't make much of a difference to the business.

Two (2) 21” & one (1) 18” LCD monitors
One (1) 10.4” LCD touch-screen monitor in galley
One (1) 10.4” LCD touch screen in crew area − Six (6) 6.5” LCD monitors
Two (2) Digital Video Disc (DVD) players
One (1) Video Cassette Player (VHS)
All-in-one cabin fax/scanner/printer
Airshow Network In-Flight Information System
Heads up Display XM 8 receiver Satellite Radio
Honeywell AIS-2000 “One View” DBS Satellite Television
EMS HSD-128 high speed internet system
EMS CNX-200 data accelerator and wireless LAN
RJ45 data jacks throughout cabin
VGA and camcorder input connections, fore and aft, to send laptop or camcorder output to any of three large monitors.

(Photo by Scott Wright)

I was largely sidelined by the decisions of my management. So that was mostly the result rather than the cause, if that makes sense. It was an incredibly frustrating experience and I wish I was a lot more like Stewart [Butterfield] in terms of pushing my point of view.

Our question is what took him so long? With a $15 million pay day from the sale of his startup, he could have walked away from the start to enjoy "glorious unemployment." Butterfield could have told him there was no room for tinkers at Yahoo. (Photo by Enrique Dans)

I definitely sense less sensitivity for Jerry in the conversations I have with people who are still with the company. Six months ago, whenever I mentioned that I feel sorry for Jerry (because I do) given everything going on, most people would nod or say, ‘me too.’ Now, the reaction is usually a groan or rolling eyes.

Know what all this reminds me of? When I was a kid and my parents finally put my great-grandmother in a nursing home. Sure, no one wants to condemn a loved one to tapioca pudding and bingo for the rest of their life — and we all feel bad about doing it — but really, how much longer do we have to put up with changing her smelly stockings every night?