"First on CNBC" Interview: CNBC's "Power Lunch" Speaks with Susan Decker, President of Yahoo (Transcript Included)

CNBC.com

Yahoo

When: Wednesday, June 4th at 12 PM ET
Where: CNBC's "Power Lunch"

The following is an unofficial transcript for a "First on CNBC" interview with Susan Decker, president of Yahoo, on CNBC's "Power Lunch," which aired June 4, at 12 PM ET.

All references must be sourced to CNBC.

HERERA:

YAHOO! PRESIDENT SUE DECKER TELLS MADISON AVENUE THAT THE ONLINE ADVERTISING WORLD IS ON THE CUSP OF A RENAISSANCE. AND IS DROPPING HINTS THAT THE COMPANY IS STILL ENGAGED IN CONVERSATIONS WITH MICROSOFT. OBVIOUSLY A LOT TO TALK TO HER ABOUT. SHE'S FRESH FROM HER KEYNOTE ADDRESS AT THE ADVERTISING 2.0 CONFERENCE IN NEW YORK AND "FIRST ON CNBC" SUSAN DECKER JOINS US ON "POWER LUNCH."

DECKER: NICE TO SEE YOU, SUE. THANKS FOR HAVING ME.

HERERA: YOU HAVE BASICALLY PINNED THROUGH DEALS FROM THE LIKES OF WAL-MART, HAVAS AND CBS. WHICH WILL ENHANCE YAHOO!'S PLATFORM. BECAUSE YOU SAY WE ARE IN THIS RENAISSANCE. TELL US MORE ABOUT THAT.

DECKER: YEAH, WE THINK THIS IS A REALLY EXCITING TIME FOR DISPLAY INVENTORY WHICH IS REALLY HOW THE INTERNET GOT STARTED WITH ADVERTISING. AND THEN AFTER ABOUT FIVE YEARS OF THAT, MOST OF THE INNOVATION WAS IN SEARCH AND WE NOW REALLY FEEL LIKE DISPLAY IS ABOUT TO HIT A RENAISSANCE IN WHICH IT TAKES THE FRICTION OUT OF THE BUYING AND THE SELLING OF ADVERTISING. IT'S VERY DIFFICULT DO THAT ONLINE TODAY. IT COULD TAKE TWO WEEKS TO PUT A CAMPAIGN UP AND FIND ALL OF THE RIGHT AUDIENCES. SO YAHOO!'S REALLY FOCUSED ON HOW DO WE MAKE THAT PROCESS LESS PAINFUL AND REALLY RELEASE THE CREATIVE RESOURCES THAT -- IN ENERGY IN BUILDING BRANDS AND DRIVING PRODUCTS.

KNEALE: HI, SUSAN. IT'S DENNIS KNEALE. YOU DID A DEAL WITH WAL-MART AND KIND OF THERE, AGENCY OF RECORD, IN ESSENCE, RIGHT, FOR THE ONLINE WORLD. THAT'S PRETTY BIG STUFF.

DECKER: YEAH, WE STARTED STRATEGY A COUP EVERYONE YEARS AGO STARTING WITH EBAY AND COMCAST AND A NUMBER OF VERY HIGH-QUALITY PUBLISHERS. WE'RE SO HAPPY TO ADD WAL-MART DOT COM TO THAT ROSTER. AND WE WILL BE REPRESENTING THEIR DISPLAY ADVERTISING ON THEIR SITE AND ALSO VIDEO ADVERTISING ON THEIR SITE. AND VERY, VERY EXCITING, AND IN COMBINATION WITH THE EBAY AUDIENCE AND YAHOO! SHOPPING WITH WAL-MART WILL OFFER ADVERTISERS 76% OF THE ONLINE AUDIENCE.

KNEALE: OKAY, AND SIGNED UP CLOSE TO 780 NEWSPAPERS FOR THIS BIG CONSORTIUM THAT YOU HAVE GOT. IT STARTED IN NOVEMBER '06 BUT ONLY NOW ARE WE GOING TO BEGIN TO SEE THE THING ACTUALLY ROLL OUT AND YOU'LL BE HANDLING ADS FOR THESE GUYS?

DECKER: YOU KNOW WE STARTED WITH HOT JOBS DEAL.WHERE THE NEWSPAPER CONSORTIUM DISTRIBUTES OUR HOT JOBS' LISTINGS AND IT HAS GROWN AND EXPANDED SINCE THEN.AS YOU POINTED OUT WHEN WE FIRST STARTED ACTUALLY WE HAD A QUARTER OF THE NUMBER OF NEWSPAPERS THAT WE HAVE TODAY. NOW CLOSE TO 800. WE ADDED -- OR ANNOUNCED THE ADDITION OF MORE THAN 90 TODAY. AND THE NEXT GENERATION OF WHAT WE'RE GOING TO OFFER THEM IS TO BE THEIR AD MANAGEMENT SYSTEM. FUNDAMENTALLY ALLOW THEIR SALES FORCES TO SELL ADVERTISING ON YAHOO! ALLOW OUR ADVERTISERS TO HAVE ACCESS TO THE BEST LOCAL INVENTORY IN THE WORLD IN AN EASY-TO-DO FASHION.

KNEALE: YOU CAN SAVE THEM.

DECKER: YEAH, WE'RE LAUNCHING THAT PLATFORM IN Q3.

HERERA: YOU KNOW SUSAN THE STOCK IS UP 2 2/3 PERCENT. AT 26.85 AND ALTHOUGH THOSE DEALS ARE SIGNIFICANT ONES AND VERY INTERESTING IN THIS TIME THE THING THAT HAS THE STOCK BUZZING IS YOUR COMMENTS THAT YOU WERE ON IN ONGOING DISCUSSIONS WITH MICROSOFT. CAN YOU BE A LITTLE BIT CLEARER ABOUT WHAT TYPES OF DISCUSSIONS THOSE ARE AND ARE THEY DESIGNED TO KEEP YAHOO! INDEPENDENT?

DECKER: YOU KNOW WHAT I SAID TODAY I THINK IS PRETTY CONSISTENT WITH WHAT STEVE BALLMER SAID LAST WEEK AT D-CONFERENCE AND WHAT JERRY YANG AND I REITERATED IN OUR INTERVIEW IS THAT MICROSOFT INDICATED IT'S IN DISCUSSIONS WITH US ABOUT VARIOUS PARTNERSHIPS AND THOSE HAVE BEEN ENGAGED CONVERSATIONS. WE'VE BEEN ENGAGED WITH THEM OVER THE LAST 4 1/2 MONTHS ON A NUMBER OF DIFFERENT IDEAS THEY'VE HAD AND AS LONG AS THEY ENHANCE SHAREHOLDER VALUE AND CAN MAXIMIZE THAT OUR BOARD WOULD BE VERY INTERESTED IN DIFFERENT WAYS TO DO THAT.

KNEALE: GIVEN HOW MUCH YOU'VE BEEN DOING ON THE ADVERTISING FRONT SEEMS LIKE YAHOO! WOULD BE CRAZY TO SIMPLY OUTSOURCE ITS AD TO EITHER A GOOGLE OR MICROSOFT. ARE THE TALKS IN PART REGARDING OUTSOURCING YOUR AD FUNCTIONS TO SOMEONE ELSE?

DECKER: I CAN'T COMMENT ON THE SPECIFICS OF ANY KIND OF PARTNERSHIP DISCUSSIONS, BUT THANK YOU FOR THE QUESTIONS.

KNEALE: THAT WOULD BE WRONG, OKAY. AND ALSO QUICK, I REALIZE YOU'RE NOT ON THE YAHOO! BOARD AND YOU HAD NOTHING TO DO WITH THE BOARD'S APPROVAL OF THIS SEVERANCE PACKAGE, RETENTION AGREEMENT, WHEREAS IF SOMEONE COMES IN AND A CHANGE OF CONTROL, YAHOO! COULD PAY OUT ANYWHERE FROM $470 TO $2 BILLION TO ITS EMPLOYEES. NOW YOUR BIGGEST SHAREHOLDERS WERE UPSET WHEN MICROSOFT WALKED AWAY AND THEY FELT LIKE YAHOO! HAD BEEN A LITTLE RESISTANT AND NOW MAYBE MORE UPSET ABOUT THE SEVERANCE AGREEMENT AND SINCE YOU NATURALLY HAD NOTHING TO DO WITH IT AND LET ME GRILL YOU ON IT ANYWAY. AND TELL US WHY THE BOARD FELT LIKE THIS WAS A NECESSARY THING. I KNOW THAT IN A TAKEOVER RUMOR THING, A LOT OF EMPLOYEES START LOOK FOR JOBS ELSEWHERE.

DECKER: I THINK YOU JUST HIT ON THE CORE POINT. MANY COMPANIES HAVE CHANGE-UP CONTROL AGREEMENTS WITH ACCELERATION OF THEM, OR SOME WAY TO KEEP EMPLOYEES UPON A CHANGE OF CONTROL. IN THIS KIND OF SITUATION IT IS THE ASSET, THE ASSET THAT MICROSOFT WAS INTERESTED IN. THE ASSET THAT OUR BOARD BELIEVES THAT WE HAVE THAT IS SO VALUABLE IS OUR TALENT THAT IS CREATING NEXT GENERATION PRODUCTS AND SERVICES. IT WOULD BE VERY DIFFICULT FOR AN ACQUIRER IF THE ASSETS LEFT AND SO THIS WAS DESIGNED TO KEEP THE TALENT UNTIL THE DATE OF THE CLOSE OF A DEAL.

HERERA: YOU KNOW THOUGH AND I KNOW THAT YOU CAN'T COMMENT AND WON'T COMMENT ON CARL ICAHN'S STATEMENTS AND HIS PROXY BATTLE BUT HE DID HAVE A VERY INTERESTED QUOTE IN "THE WALL STREET JOURNAL" ABOUT THE FACT THAT THIS WAS PUT IN AT THE TIME THAT THE MICROSOFT DISCUSSIONS WERE ONGOING. HOW CAN -- AND HE SAYS "HOW CAN YAHOO! KEEP SAYING THEY'RE WILLING TO NEGOTIATE AND SELL THE COMPANY ON ONE HAND, WHILE AT SAME TIME THEY'RE COMPLETELY SABOTAGING THE PROCESS WITHOUT TELLING ANYONE." INDICATING THAT THE NET COST OF THAT SEVERANCE PACKAGE WOULD BE A DETERRENT TO ALMOST ANY COMPANY EVEN THE SIZE OF ONE OF MICROSOFT.

DECKER: YOU KNOW ON THE CONTRARY I WOULD SAY THAT THE $45 BILLION ACQUISITION PRICE WAS ABOUT KEEPING THE TALENT AND SINCE YAHOO! DIDN'T HAVE ANY WAY TO KEEP THE TALENT IN A SITUATION THAT WAS FAIRLY DESTABILIZING, I BELIEVE THE BOARD WAS APPROPRIATELY TRYING TO MAKE SURE THAT THE VALUE THAT MICROSOFT WAS AFTER WAS INTACT IF THERE WERE A DEAL.

KNEALE: AND THE WAY THAT THIS WORK IT'S.

HERERA: IF I CAN ASK -- FOLLOW WITH ONE QUESTION, DENNIS, AND I'M SORRY. SUE, ONE OF THE ISSUES EYE MEAN YOU CAME FROM WALL STREET. I FIRST MET YOU WHEN YOU WERE WORKING ON WALL STREET AND YOU KNOW HOW THE STREET WORKS, OBVIOUSLY, PROBABLY BETTER THAN ANY OTHER PRESIDENT THAT'S IN THE OFFICE. WE PUT TOGETHER A TIME LINE AND WHEN YOU LOOK AT WHAT HAPPENED BEFORE THE MICROSOFT BID DURING THE MICROSOFT BID AND POST THE BREAKDOWN IN THOSE TALKS, REGARDLESS OF WHAT TYPE OF TALKS YOU'RE HAVING NOW, THERE WAS SIGNIFICANT LOSS IN THE STOCK. AND THERE ARE THOSE ON THE STREET WHO ARE SAYING, IF YOU DON'T DO A DEAL WITH MICROSOFT, YOU KNOW YOU'RE DOING SHAREHOLDERS A DISSERVICE. THE STREET REACTED TO THE IDEA OF THE MICROSOFT BID BY RUNNING SHARES UP CONSIDERABLY. AND IT HAS LOST CONSIDERABLE STRENGTH SINCE THEN. DON'T YOU HAVE TO DO DID A DEAL, IF NOT WITH MICROSOFT, WITH SOMEBODY?

DECKER: YOU KNOW THE GOAL HERE OF THE COMPANY OF OUR BOARD IS TO MAXIMIZE SHAREHOLDER VALUE AND OF COURSE WHEN THERE'S --

HERERA: BUT ISN'T THAT WHAT A DEAL WOULD DO? THAT'S WHAT THE STREET IS INDICATING.

DECKER: ABSOLUTELY. AND AS WE'VE SAID BEFORE, MICROSOFT WALKED AWAY FROM THE DEAL. THERE WAS A DISCUSSION ABOUT WHAT VALUE WAS ACHIEVABLE AND OTHER TERMS THAT WERE NEVER REALLY DISCUSSED IN TERMS OF CERTAINTY OF VALUE AND REGULATORY CERTAINTY UPON CLOSE AND WE NEVER GOT TO THOSE BECAUSE THERE WAS A DISCONNECT BETWEEN WHAT THE COMPANY'S WORTH AND FROM OUR BOARD'S PERSPECTIVE AND WHAT MICROSOFT IS WILLING TO PAY.

HERERA: I IF IT DOESN'T WORK OUT WITH MICROSOFT REGARDLESS OF WHAT TYPES OF TALKS YOU'RE HAVING NOW DOESN'T THAT SHARE PRICE PERFORMANCE MEAN THAT YOU HAVE TO DO A DEAL WITH SOMEONE ELSE THEN?

DECKER: OUR BOARD REMAINS ABSOLUTELY OPEN TO ANY CONVERSATION WITH ANY COMPANY WOULD THAT MAXIMIZE SHAREHOLDER VALUE.

KNEALE: HEY, SUE, JUST ONE MORE THING ON THE SEVERANCE AGREEMENT THING. SO THAT BABY'S IN PLACE NO MATTER WHAT? A CONTROL, EVEN A I FRIENDLY CHANGE OF CONTROL, THOSE EXPENSES KICK, AND THAT 470 TO TWO BILLION DOLLAR HAPPENS IS THAT RIGHT?

DECKER: THE WAY THAT THE SEVERANCE AGREEMENT WORKS IS IT RETAINS EMPLOYEES THROUGH A CLOSURE OF AGREEMENT. SO THE EXPENSES ONLY KICK IN POST THE CLOSURE OF THE AGREEMENT. AND AS MICROSOFT SAID PUBLICLY THEY WERE WILLING TO PAY QUITE A LOT TO MAKE SURE THAT THE EMPLOYEES STAY WITH THE COMPANY.

KNEALE: OKAY. THANKS SO MUCH. WE APPRECIATE YOU BEING HERE.

HERERA: YOU'RE A GOOD SPORT.

DECKER: THANK YOU.

HERERA: THANKS A LOT.

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