The Philippine Online Chronicles

A major shareholder of Yahoo wants co-founder Jerry Yang out of the internet company's Board of Directors.

Hedgefund investor Daniel Loeb who owns a 5.2 percent stake in the company asked Yahoo's board to dump Yang, whom he said has many conflict of interests. Yang, on the other hand, holds a 3.6 percent stake in Yahoo. Loeb joined the company in September after the ouster of former CEO Carol Bartz.Yang, who co-founded Yahoo with David Filo, is a member of the board since 1995.

In a letter, Loeb said Yang has been talking to several buyout firms about joining forces to buy a controlling stake in the company. Among the firms Loeb cited were Texas Pacific Group, Providence Equity Partners, Silver Lake, KKR & Co. and the Blackstone Group.

He said Yang is more interested in selling Yahoo to the highest bidder or negotiating a deal that keeps the company in “friendly hands.” He also referred to "Yang’s “ineptitude” in 2008 when he squandered an opportunity to sell Yahoo to Microsoft Corp. for US$47.5 billion, or US$33 per share — more than twice the company’s current market value."

But the Yahoo Board of Directors brushed off Loeb's accusation as "rumor and speculation." “Mr. Yang is one of nine directors with the exact same fiduciary duties and motivation as all of his fellow directors — to serve the best interests of all the company’s shareholders,” Yahoo said.

In 2008, Yang stepped down as Yahoo's CEO following strong criticisms from shareholders and investors, including billionaire investor Carl Icahn who said then he will also work to oust Yang as Yahoo's co-founder. Icahn accused Yang of sabotaging the failed Microsoft-Yahoo merger. Microsoft was willing to pay US$45 billion for Yahoo then but turned down the offer.

Leadership issue is just one of Yahoo’s problems. Its revenues have been dropping for the past years. Social networking giant, Facebook, has overtaken Yahoo to be the leader in online display advertising. At the end of the year, Facebook is expected to get US$2.2 billion in display ads compared to $1.6 billion for Yahoo. Last year, Yahoo also held the number two spot with US$1.4 billion in display ads, according to The Economist.

Yang is one of the most successful entrepreneurs in Silicon Valley's history. He helped build Yahoo into a sprawling Internet giant that serves more than 680 million people. Yahoo is the fourth-largest site; next to Google, Microsoft and Facebook. Yang's wealth is estimated to top US$2 billion.

As described by The Wall Street Journal, Yang's rescue plan for Yahoo calls for a big investor to take a 20 percent stake in the company in exchange for “an infusion of equity and bank debt, which would recapitalize Yahoo’s balance sheet.”