LONDON (Reuters) - The best candidate to take over for Jerry Yang as chief executive at Yahoo Inc may be a dealmaker, or nobody at all.
Speculation has focused on well-known Internet and media figures -- Jon Miller, formerly of AOL, Peter Chernin, currently of News Corp, Dan Rosensweig, formerly of Yahoo, and Susan Decker, currently its president, among others.
Each has a logic in terms of ability to remake Yahoo.
The merit of nobody is that any other choice only delays what many investors see as the best alternative for struggling Yahoo -- to revive some form of a deal to sell all or part of the company to Microsoft Corp.
"What Yahoo may need is a dealmaker, not a CEO," says Jefferies & Co analyst Youssef Squali.
"A dealmaker will take everyone out of their misery and maybe that is what we need at this point."
On Monday, Yahoo announced that Yang would step aside as CEO and that the board had hired recruiting firm Heidrick & Struggles to look for a CEO both outside and inside the company.
Other options include Meg Whitman, the long time eBay Inc CEO, and Tim Armstrong, Google Inc's North American head of sales. Yahoo shares jumped 10.5 percent to $11.75 on Tuesday in anticipation that a new CEO, and perhaps a deal, are now in store.
Putting nobody in charge of Yahoo at a time when nothing seems to be working in the company's favor could buy Yahoo a few months. In that time the existing dealmakers inside Yahoo -- Decker, as president, and CFO Blake Jorgensen, and its board -- activist director Carl Icahn and Chairman Roy Bostock -- could try to hammer out a transaction once again with Microsoft.
NOBODY'S BEEN CEO FOR A LONG TIME
Arguably, nobody has been in charge as CEO for much of this decade. Following the dot-com crash veteran Hollywood studio mogul Terry Semel took over as chairman and CEO in early 2001 from the company's earlier leader Tim Koogle.
Semel charted a diversification strategy for Yahoo that led the Silicon Valley Web pioneer to expand on Madison Avenue and build up its leading presence in the market for brand ads.
But Semel's strategy failed to keep pace with the rise of Google and its search and advertising drive.
Yahoo under Semel failed to catch the social networking wave and in later years he functioned more as chairman than CEO, playing uncle or coach at the still youthful company.
Yang never had much chance to put his stamp on Yahoo during his 18-month tenure as CEO. He only became CEO after Yahoo was reeling from competitive missteps against Google and the steady exodus of Yahoo executives and middle managers from the company.
Instead, leadership at Yahoo was highly distributed among between Yang, Decker, Jorgensen, Chairman Bostock and a variety of second-level executives, many no longer at Yahoo, who ruled divisional fiefdoms at the Sunnyvale, California-based company.
"What Yahoo needs is not another avuncular figure or titular figurehead," Bernstein analyst Jeffrey Lindsay says.
"Yahoo needs an active, functioning executive, comfortable with technical operations who can also make hard decisions and restructure the company."
THE DANGER OF NOBODY
Wall Street analysts say Yahoo's search outside signals that Decker has little chance of becoming CEO, closely associated as she is with Yang and current strategy.
"Decker would likely not be considered a significant enough change by investors," UBS analyst Ben Schachter writes.
"Yahoo is too incestuous. It needs an infusion of new ideas," Lindsay says. The industry has many able executive candidates available at companies like Amazon.com, Google, or online video venture Hulu.com, he believes.
Colin Gillis, an analyst who has followed Yahoo and recently joined Click Capital Research, does not see delaying the search for a CEO as an option, countering that Microsoft appears in no mood to rush back to the table.
If and when Microsoft returns with an offer, it is likely to be far lower than the software giant's last pitch of $33 a share, Lindsay says. Trading just off $10 before Yang's departure, Microsoft is unlikely to offer more than the high teens or as much as $20, he says.
Were Microsoft to renew attempts to buy Yahoo outright, regulatory approval delays could keep a deal from closing until 2010. Yahoo can't afford to stagnate another three years before beginning to see a new strategy emerge in 2011, both agree.
-- At the time of publication Eric Auchard owned a token share of Yahoo purchased ahead of the company's 2008 annual meeting. He did not own direct investments in any other securities mentioned in this article. He may be an owner indirectly as an investor in various funds. --
(Editing by Alexander Smith)