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Why It’s Suddenly Exciting to Be a Yahoo Shareholder Again

Yahoo!'s headquarters in California.
Paul Sakuma
Yahoo!'s headquarters in California.

Yesterday I tweeted that I think Ross Levinsohn is doing a great job as interim CEO at Yahoo.

I quickly got a response from tech blogger Om Malik wondering whether Ross had really done that much: “[A]nd what exactly is he doing except got the Asian equity selloff. Let’s judge him in a year, not in days.”

When I responded I thought that was a fair point, but the leaked strategy to Business Insider looked like the best I’d seen from Yahoo since 2006, Om countered: “[L]eaked strategy is a plan to appease angry investors. Now let’s see how well it is executed. Talk is cheap, inaction expensive.”

Now, I’ll be the first to agree with Om that being a Yahoo shareholder over about three of those last six years has been extremely frustrating for me. So, I’m very sympathetic to the notion that we’ll only be able to truly judge Ross at least after a few quarters are under his belt.

However, I stand by my assertion that I haven’t been this excited about the direction Yahoo is taking in — well — never.

So, first let’s review the things that have happened since Ross took over that he likely had nothing to do with:

The Alibaba deal. There’s no way that Ross could be hired on a Sunday, get himself involved in negotiating the deal and have it agreed to a week later. Kara Swisher of AllThingsD has already reported that Ross wasn’t really in the discussions. I’ve also talked to someone familiar with the talks who said the deal agreed to by both sides was essentially the deal that Tim Morse and Mike Callahan had been working on for Yahoo when Scott Thompson was still in the picture. Ross credited them on the conference call announcing the deal.

Yahoo Axis. It’s Yahoo’s new iOS browser released last week — and it looks good. But it’s been in the works for a while.

Cutting Livestand. Yahoo quietly announced it was killing its competitor for Flipboard after six months. This was probably on the schedule to be cut, but Ross might have had the final say.

Yet, what has Ross accomplished in his short tenure in charge of Yahoo?

There’s clearly improved morale at the company. Partly this is because Thompson and his resume-cloud are gone. But it’s also unquestionably because people like Ross. Ross is someone who is great at schmoozing without making you feel like he’s insincere. He’s great at connecting with people. He’s likeable and trustworthy.

There are clearly some people outside the company who are finally saying some positive things about Yahoo — both people in the industry as well sell-side analysts. With the number of people saying Ross was an obvious choice to take over as CEO, it makes you wonder why he wasn’t considered more seriously for the job last December.

The last “accomplishment” you can point to in his short time on the job is a leaked strategy to Business Insider. This might not have even come from Ross, but from someone near Ross who’s chatty. This is the plan in brief:

Short term: Quiet the Thompson noise, talk to Facebook about patents, talk to Microsoft about search, and stay close to Third Point’s Dan Loeb.

Medium term: Be the world’s premier digital media company, figure out what to do with its ad technology, sell its stake in Yahoo Japan.

Long term: Make Yahoo relevant by getting into mobile, double down on finance and sports content, more original video for premium ads, and do acquisitions.

Jeff Weiner, LinkedIn’s CEO and a former Yahoo exec, tweeted after he read the strategy: “One of best articles on Yahoo’s strategy I’ve read in a long time.”

Is it perfect and did Business Insider’s Nicholas Carlson capture it 100 percent accurately? Probably not. But you get the gist, and it’s completely in line with Ross’ comments that he’s made over at least the past year, so it certainly sounds credible. I disagree with Om that this plan was leaked to appease investors. At this point, with Loeb getting representation on the board, investors have been satisfied.

What will further satisfy investors from here will be announcements (like the Alibaba deal) and not a leaked plan from Ross — so why do it?

Should we wait a few more weeks and months before crowning Ross a success? Of course. However, it’s important to realize that things finally seem to be moving in the right direction at the company.

The old crusty members of the board have left the building. Ross has good internal and external support, and certainly low expectations. This plan seems on target, mostly because it helps to define a path for Yahoo that’s differentiated from Google or Facebook that seems to have a reasonably high chance of success.

If I worked at Yahoo and I was going to go out and try to recruit the best sales stars or technical talent to the team, I’d say: “We’re doing great things here. Advertisers like us and want us to succeed. We’ve shot ourselves in the foot repeatedly in the last seven years, and yet our users keep coming back. So imagine if we actually get our act together? Finally, which company has a reasonable chance to double its stock in the next couple of years? Yahoo, Google, or Facebook?”

Good things are cooking in Sunnyvale and Santa Monica, Calif.

—By Eric Jackson, Contributor, TheStreet.com

Additional News: Yahoo Shareholders Face Long Facebook Battle

Additional Views: Yahoo a Must Own Stock: Najarian

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Disclosures:

TheStreet’s editorial policy prohibits staff editors, reporters, and analysts from holding positions in any individual stocks. At the time of publication, Eric Jackson was long Yahoo.

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