Missed Microsoft Deal:
Jerry Yang explains that Yahoo was willing to sell to Microsoft at the right price but the deal fell through due to Microsoft’s withdrawal of their public offer. Yang emphasizes that the board and shareholders were involved in the decision-making process, and they believed they were acting in the best interests of the company. He refutes the notion that his ego or reluctance to be acquired by Microsoft was the sole reason for the deal’s failure.

Negotiation Attempts:
Yahoo attempted to negotiate with Microsoft even after their initial offer was withdrawn, but Microsoft declined further discussions. Yang expresses his belief that a deal could have been reached if Microsoft had been willing to continue negotiations.

Ego and Independence:
Yang clarifies that his decision-making was not driven by ego or a desire to maintain independence for the sake of it. He emphasizes his role as a shareholder and CEO, where his priority was to find the right path for Yahoo, not just preserving its independence.

Alternative Acquisition Strategies:
Yang highlights the need to explore various acquisition options to ensure the best terms for Yahoo. He acknowledges that the process could have been handled differently, but argues that it’s unfair to suggest that he was solely responsible for the deal’s failure.

Respect for Steve Ballmer:
Yang expresses his respect for Steve Ballmer, Microsoft’s CEO, and acknowledges their positive conversations throughout the process. He emphasizes that from his perspective, the situation was not personal, but rather a matter of finding a mutually beneficial outcome.

Google Deal Collapse:
Yahoo and Google had a 10-year deal for Google to monetize Yahoo’s long-term search terms, potentially bringing in hundreds of millions of dollars. The deal was modified last week and ultimately fell apart. Yang expresses disappointment in Google’s decision to withdraw from the deal, particularly given the ongoing discussions with the Department of Justice to secure approval.

Overall Impression:
Jerry Yang, co-founder of Yahoo, expresses his thoughts on the failed Google deal, emphasizing that it was not crucial to Yahoo’s financial projections and that Yahoo’s search marketplace has improved despite the deal’s failure.

The Deal’s Significance:
Yahoo made it clear that the Google deal was subject to Justice Department approval, indicating that it was not a major factor in their financial projections. The deal was motivated by competition between Yahoo and Google, aiming to enhance user and advertiser experiences. Yahoo believed that leveraging Google’s listings would improve ad relevancy for users and expand inventory options for advertisers.

Yahoo’s Search Performance:
Yahoo’s search marketplace has grown more robust since the Google deal fell through. Yahoo has made significant improvements in search, particularly on the query side. The notion that Yahoo’s search performance is declining due to the failed deal is inaccurate; Yahoo is performing better than before the deal.

Google’s Withdrawal:
Yang expresses disappointment over Google’s decision to withdraw from the deal, believing it was defendable. He attributes Google’s withdrawal to the government’s opposition and their narrow market definition.

Government’s Role:
Yang criticizes the government’s understanding of the industry, arguing that their market definition is too narrow. He believes that the government’s actions may have unintended consequences for the broader industry. Yang acknowledges the government’s authority to make decisions but questions the necessity of blocking the deal.

Jerry Yang’s Role at Yahoo:
Jerry Yang, co-founder of Yahoo, explains his decision to return as CEO in 2007 and his vision for the company. He emphasizes his passion for Yahoo and his commitment to making significant changes to transform it into a platform company.

Yahoo’s Transformation into a Platform Company:
Yang’s goal is to rewire Yahoo into a platform company, focusing on becoming a better platform for both consumers and advertisers. He believes Yahoo has the talent and market opportunity to achieve this transformation.

Yahoo as a Consumer Brand and Starting Point:
Yang emphasizes Yahoo’s identity as a consumer brand that allows users to get what they want from the internet in a unique way. Yahoo’s focus is on providing starting points for users, making them more open and accessible.

Introducing Yahoo! OS (YOS):
Yang introduces Yahoo! OS as a platform that enables third parties to develop applications for Yahoo audiences. He highlights the difference between Yahoo! OS and Facebook, emphasizing Yahoo’s focus on content, communications, and personalization.

Response from Advertisers:
Yang acknowledges the initial positive response from advertisers to Yahoo! OS. He explains that Yahoo aims to provide advertisers with access to a wider range of inventory and help them discover new opportunities.

Expanding Yahoo! OS Inventory:
Yang discusses the initial focus on newspaper partners for Yahoo! OS inventory. He sees the local market as underserved and believes newspapers have strong channels to address this gap.

Addressing Liquidity Issues in the Newspaper Business:
Yang recognizes the liquidity challenges faced by the newspaper business. He expresses Yahoo’s interest in partnering with newspapers to help them grow their online presence and leverage their websites’ growth.

Yahoo’s Marketplace Strategy:
Yahoo plans to integrate significant portions of its business onto its new marketplace platform. The company has secured partnerships with major players like eBay and Comcast, and is actively seeking additional partners. RightMedia, a recent acquisition, plays a key role in creating liquidity within the marketplace.

Jerry Yang’s View on Acquisitions:
Despite the shift in Yahoo’s acquisition strategy, the company remains committed to acquiring startups. In the past year, Yahoo has acquired 40 companies, demonstrating its active involvement in the startup ecosystem. Acquisitions serve as a means to engage with the startup community and access innovative technologies and talent. Yahoo’s acquisition strategy is driven by the goal of enhancing its core products and services.

Yahoo’s Past Acquisition Spree and Current Approach:
In the past, Yahoo was known for acquiring promising startups, often targeting companies with names lacking vowels. However, the company’s acquisition pace has slowed down in recent years. Jerry Yang acknowledges this change and explains that Yahoo’s current focus is on integrating existing assets and partnerships to build a robust marketplace.

Yahoo’s Acquisition Strategy:
Yahoo focuses on acquiring companies with talented product development teams. These acquisitions may not be as visible as major purchases like Flickr or Delicious, but they are integral to Yahoo’s growth and evolution. The acquisition of Zimbra, now led by Scott, exemplifies this approach, bringing a fantastic product in line with Yahoo’s communication goals.

Challenges in Monetizing Display Ads:
Display ads face challenges in monetization compared to search ads due to difficulties in measuring their impact on conversions.

Potential Impact of a Search Deal:
A search deal with Microsoft or another provider could potentially hinder Yahoo’s ability to monetize its display ad business further. Emerging techniques for tracking visits and impressions from display ads to conversions, however, could mitigate this challenge.

Main Points:
Yahoo recognizes the integration and synergy between search and display advertising, leading to increased conversions and revenue. The company seeks to maintain these synergies in future decisions, considering the uncertain landscape between search and display. Yahoo CEO Jerry Yang clarifies that there are no ongoing discussions with Microsoft regarding a search deal or acquisition. Speculations about a potential deal with AOL are also dismissed, with Yang declining to comment.

Questions and Answers:
In response to a question about a possible search deal with Microsoft, Yang emphasizes that Yahoo is open-minded to such discussions. However, he highlights that in previous negotiations, Microsoft’s lack of interest in acquiring the entire company posed a challenge. Yang reiterates that Yahoo’s preference remains a full acquisition, as opposed to selling only the search business.

Additional Information:
Yahoo CEO Jerry Yang engages in a Q&A session with reporters during a conference. The discussion revolves around the integration of search and display advertising, potential deals with Microsoft, and rumors of an AOL acquisition.

Yahoo’s Deal with Microsoft:
Yahoo CEO, Jerry Yang, stated that the proposed deal with Microsoft was not beneficial for the company. He emphasized the company’s openness to potential deals in the future, provided they make strategic sense. The distractions caused by the proposed deal, including Carl Icahn’s involvement, hindered normal business operations.

Financial Competition with Google:
Yahoo shareholder Bob Peck questioned Yahoo’s ability to financially compete with Google, considering Google’s larger cash reserves and higher CapEx spending. Peck expressed concerns about Yahoo’s declining global search market share and the increased complexity of universal search in terms of infrastructure costs.

Yahoo’s Capitalization for Competition:
Yang acknowledged the need for Yahoo to capitalize adequately to compete in its businesses. He believed Yahoo was well-capitalized for search, despite ongoing debates about the capital-intensiveness of the industry. Yang emphasized that search is still largely innovation-based, and Yahoo’s CapEx spending was appropriate for its search share in the U.S., excluding Asia and Europe. He clarified that Yahoo’s capital constraints did not hinder necessary CapEx spending.

Comparative Capital Spending:
Yang explained that Yahoo’s lower CapEx spending compared to Google and Microsoft was due to Yahoo’s absence in certain capital-intensive businesses, such as Maps.

Yahoo’s Current Capital Investment Strategy:
Jerry Yang emphasized Yahoo’s commitment to investing in critical mass capital to drive innovation, particularly in search. The company aims to achieve a balance between capital expenditure and innovation, rather than focusing solely on capital advantage.

Yahoo’s Approach to Cloud Computing:
Yang clarified that Yahoo OS is not a product designed to compete with cloud computing services like EC3 or Amazon. Yahoo’s focus is on providing a hosted environment for applications and web services, embracing the cloud infrastructure model. The company recognizes the increasing capital intensiveness of display advertising due to factors like optimization and algorithms.

Yahoo’s Long-Term Focus in a Challenging Environment:
Yang acknowledged the challenges of maintaining a long-term vision in a short-term-oriented market. He emphasized the importance of preserving and protecting the company to execute long-term strategies. Shareholders’ short-term perspectives pose a hurdle in navigating tumultuous times.

Yahoo’s Perspective on Location-Based Services:
Yang expressed Yahoo’s ambition to lead and innovate in the location-based services space, rather than being a follower. The company believes in leveraging its scale and platform advantages to change the game in this area. Yahoo aims to capitalize on its transformation into a platform company to drive competitive advantage.

Concluding Remarks:
The moderator wished Yahoo well and expressed hope for improvement in the company’s fortunes. Yang thanked the audience for their questions and acknowledged the scrutiny faced by Yahoo during challenging times.