Yahoo under pressure to deliver change

Six weeks on from a momentous annual meeting that shook up Yahoo's underperforming board, investors and analysts are asking what happened to the expected aftershocks of change.

The single most noteworthy event since the August 1 meeting has been Yahoo's stock hitting a five-year low last week of $17.75. This will put recent investors, such as new board member Carl Icahn, in an even deeper hole.

Senior Yahoo executives will deliver an autumn update tomorrow on the company's strategy, but they are expected to give more details of the technical development of Yahoo's platform rather than address any financial concerns.

Analysts say that, at these levels, Yahoo should be at least buying back its stock to help boost the share price.

"It has been more than a month and we've yet to see more aggressive activity such as an an accelerated buyback, including a Dutch tender offer [within a given price range], which is now a more plausible possibility," says Scott Kessler, IT analyst at Standard & Poor's equity research.

Mr Icahn, the billionaire activist investor, has yet to make any visible impact as a board member, but Wall Street would welcome restructuring to reduce Yahoo's cost base and the divesting of its Asian assets to generate cash.

Yahoo is keen to emphasise its software initiatives such as its Amp advertising platform and the Yahoo Open Strategy (Yos), both announced in April.

Amp will begin to help Yahoo's newspaper partners field ads more efficiently from this quarter and Yos will help Yahoo combat the threat from social networks. But neither will have an impact on the bottom line in the near future.

The company does appear to have stemmed the exodus of key executives. Although it announced the expected departure yesterday of David Karnstedt, a seven-year veteran and senior vice-president of US sales, it also introduced Joanne Bradford, a former Microsoft executive, as senior vice-president, US Revenue and Market Development.

For Jerry Yang, chief executive, the pressure on his position has been temporarily relieved following the annual meeting, but he could come under fire again next month if Yahoo announces lacklustre third-quarter earnings.

"People are getting very tired of the same old refrain of Yahoo saying they are focused on shareholder value," says Mr Kessler.

By Chris Nuttall

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