SAN FRANCISCO — Yahoo co-founder Jerry Yang is leaving the struggling Internet company as it tries to revive its revenue growth and win over disgruntled shareholders under a new leader.
The surprise departure, announced Tuesday, comes two weeks after Yahoo Inc. hired former PayPal executive Scott Thompson as CEO.
Thompson is the fourth CEO in less than five years to try to turn around Yahoo – a challenge Yang couldn’t pull off during his tumultuous 18-month reign in 2007 and 2008. Yang, 43, endorsed Thompson in his resignation from Yahoo’s board of directors. He had been on the board since the company’s 1995 inception.
“My time at Yahoo, from its founding to the present, has encompassed some of the most exciting and rewarding experiences of my life,” Yang wrote in a letter to Chairman Roy Bostock. “However, the time has come for me to pursue other interests outside of Yahoo.”
The letter didn’t say what Yang plans to do next. He doesn’t need to work, thanks to the fortune he has amassed since he began working on Yahoo in a trailer at Stanford University with fellow graduate student David Filo. Yang is worth about $1.1 billion, according to Forbes magazine’s latest estimates.
Yang is also stepping down from the boards of China’s Alibaba Group and Yahoo Japan. Yahoo is negotiating to sell its stakes in both as part of efforts to placate investors. The deal could be worth as much as $17 billion but still faces a series of obstacles.
Yang is also giving up his position as “Chief Yahoo,” an honorary title he held as he mingled among workers while keeping tabs on various company projects.
Though popular among Yahoo employees, Yang had alienated shareholders by turning down a chance to sell Yahoo in its entirety to Microsoft Corp. for $47.5 billion, or $33 per share, in May 2008. Yahoo shares haven’t topped $20 for more than three years. The stock gained 47 cents to $15.90 in extended trading after Yang’s decision was announced.
Yahoo’s revenue has been falling in recent years even as advertisers have poured more money into the Internet. Yahoo has fallen further behind in the race to innovate and develop products that attract Web traffic.
Despite its struggles, Yahoo remains profitable and still boasts a worldwide audience of 700 million people. But visitors aren’t sticking around Yahoo’s services as much as they once did, depriving the company of more opportunities to sell ads – the main source of its revenue.
It has been a jarring comedown for Yahoo, which emerged as one of the Internet’s first stars after Yang and Filo expanded the service beyond its roots as a hand-picked directory of websites.
Yahoo’s early success turned it into a Wall Street darling and landed Yang on the covers of leading business magazines. At the height of the dot-com bubble 12 years ago, Yahoo’s stock was trading above a split-adjusted $100 amid talk that the company might eventually try to buy a long-established media franchise such as the Walt Disney Co.
But now investors widely regard Yahoo as a misguided company that can’t come up with a cohesive plan to define itself for Web surfers and advertisers.
Yang and Bostock have been the focal point for much of the criticism, partly because of their key roles in the Microsoft talks in 2008. After buying a 5.2 percent stake in Yahoo last autumn, hedge fund manager Daniel Loeb demanded that both Bostock and Yang step down from the company’s board. If they refused, Loeb indicated he would finance a shareholder rebellion to oust both men from the board.
Loeb’s fund, Third Point LLC, didn’t immediately return a phone called Tuesday.
Bostock, Yahoo’s chairman for the past four years, has given no indication that he plans to step down.