posted April 17, 2001 09:06 AM
Terry Semel the head of Yahoo? That came out of nowhere.
Yahoo Names Ex-Warner Bros Executive Semel as CEO
Santa Clara, California, April 17 (Bloomberg) -- Yahoo! Inc., owner of the most-used Internet search site, said former movie executive Terry Semel will replace Tim Koogle as chairman and chief executive on May 1.
Semel, 58 years old, was named to both posts after he and Koogle decided ``it was best to have one operational leader,'' spokeswoman Nicki Dugan said. Koogle, 49, last month said he would quit as chief executive and keep the title of chairman. Koogle will be vice chairman until August, when he'll leave the company.
Semel served as co-chief executive of AOL Time Warner Inc.'s Warner Bros. unit from 1994 until he left in 1999 after a string of box office flops. It will be up to him to reverse a decline that has cut more than $100 billion from Yahoo's market value since 1999 as advertising sales fell.
What is ``surprising is the choice of somebody who is ingrained in old media for so long,'' said Wit SoundView analyst Jordan Rohan, who has a ``hold'' rating on Yahoo shares. ``It does suggest a different direction for Yahoo, one where they create content.''
Dugan declined to comment on whether Semel asked for both the CEO and chairman titles as a condition for joining the Santa Clara, California-based company. ``It was a unanimous decision'' by Koogle and the board, she said.
Semel bought one million shares of Yahoo in a private placement yesterday at $17.62 each, Dugan said. The company didn't lend him money to buy the stock, she said.
Yahoo shares fell 11 cents to $17.51, in late-morning trading. They had dropped 85 percent in the last 12 months.
Semel, along with Robert Daly, ran Warner Bros. for two decades. The pair was known for heading Hollywood's most consistently profitable studio in the late 1980s and early '90s, with high-budget, action-adventure blockbusters such as ``Lethal Weapon'' and the ``Batman'' series.
The studio's fortunes began to stumble after the two were given control of Warner Music in 1996, a move that some critics said spread them too thin and contributed to expensive disappointments such as ``Wild Wild West'' and ``The Avengers.''
The studio ranked first or second in domestic box-office market share in more years than any other in the 1980s and '90s.
It also had a lucrative TV production division that turned out hits such as ``Friends'' and ``ER.'' During Semel and Daly's 20-year tenure, film and TV revenue rose to $6 billion from $1 billion. Music added another $4 billion of revenue.
Loss, Sales Decline
Semel joins Yahoo as many of the Internet companies that once bought a majority of its ads are now short on cash or out of business, analysts say. Consumer-products companies and other so- called traditional advertisers that buy the most ads in broadcast and print media haven't picked up the slack.
``They need a business model that gives them multiple sources of revenue,'' said Marc Klee, co-manager of the John Hancock Technology Fund. ``They have to bring costs down.''
Advertising sales account for about 85 percent of Yahoo's revenue, analysts say.
Koogle had been trying to sell more ads to traditional advertisers and to develop new sources of revenue other than advertising. Those included an agreement with business-management software maker SAP AG to develop and run internal Web sites for businesses and a joint venture with Sony Corp. and Vivendi Universal SA to sell music on line.
Last week, Yahoo reported a first-quarter loss of $11.5 million, or 2 cents a share, compared to net income of $67.6 million, or 11 cents, in the year-earlier quarter. Sales declined 22 percent to $180.2 million.
The company said it would fire 12 percent of its staff, or 421 workers, to cut costs.