"There are definitely no 'Ding-dong, the witch is dead' refrains," he said. "There are no happy campers here. Those who did not want Microsoft to buy Yahoo are in the vocal minority."
Yahoo's stock didn't fall as much as it might have because the company is in advanced talks with Google about a partnership revolving around search advertising. Such a deal, though, would be likely to encounter intense regulatory scrutiny.
Yahoo is also in talks with Time Warner Inc. about its AOL unit. The proposed arrangement would give Time Warner an 18% stake in the combined company. Yahoo management would not address speculation about either possibility.
Analysts say Yang and his executive team have a lot to prove in the coming weeks: that Yahoo is worth $37 a share, the price it demanded from Microsoft on Saturday. They must do so under the Wall Street microscope and despite a weakening economy that is taking a toll on the online advertising market. Already impatient with management's problems with focus and execution, investors are openly skeptical about the 2009 and 2010 financial targets the company has released.
Scott Kessler, an analyst with Standard & Poor's, said Yahoo had made "mistake after mistake after mistake," adding: "Over the last number of years, Yahoo has failed to make the right strategic and tactical decisions to deliver a higher stock price."
Patrick McGurn, special counsel to RiskMetrics Group, a corporate watchdog that advises investors on voting on proxy issues, said Yahoo would have to justify its asking price and restore the stock's value to placate investors.
"You're going to see extreme pressure on Yahoo's board and management to prove that they were justified in turning away what might be the best offer available," McGurn said. "Shareholders are not going to tolerate a return to business as usual."
Yahoo is facing threats to unseat the board at its next annual meeting, which on Monday was scheduled for July 3. Dissident shareholder Eric Jackson, who has organized a group of about 140 investors who own roughly 2 million shares, is leading the effort. He has spoken with 12 more shareholders since Microsoft canceled its offer, he said.
Some are interested in putting together an alternate slate of directors.
"People are in shock and are livid at the Yahoo board," Jackson said. "I think the 'withhold' vote will be a slam dunk."
Yahoo is also facing a barrage of shareholder lawsuits. Stanford law professor Michael Klausner said the board had no legal exposure. "It's more smoke than fire," Klausner said.
But he added, "Yahoo will have to revive its stand-alone value. If that works, shareholders will be happy. If it doesn't, Microsoft will be back."
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jessica.guynn@latimes.com
