Yahoo! Settles In for a Fight Over Its Future After Icahn Truce

SUNNYVALE, Calif. - With its annual meeting behind it and activist investor Carl Icahn settled onto its board, Yahoo! Inc. faces the question it has dodged all year: what, exactly, is its plan to catch Google — and can co-founder Jerry Yang sell it?

The truce with Icahn in July ended a proxy fight born of Microsoft's unsolicited $47.5 billion takeover offer, which Microsoft withdrew in May after Yang demanded more. Yahoo! shares now trade at less than half the offer's value.

Yang and President Sue Decker have bet instead on a controversial advertising partnership with Google — announced in June and now under antitrust review in Washington — that would let Google sell ads alongside Yahoo! search results.

Critics call the Google deal a slow-motion surrender of Yahoo!'s search business; the company says it could add hundreds of millions of dollars a year in cash flow while Yahoo! rebuilds around display advertising and its open-platform strategy.

"Yahoo! remains one of the great brands of the internet age, with a half-billion users," a shareholder said. "The frustration is that everyone can see the assets and nobody can see the strategy."

Yahoo!'s next test comes with the fall advertising season, where the weakening economy is expected to squeeze display-ad budgets across the industry.

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