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Yahoo announced Wednesday that Chief Executive Tim Koogle--known affectionately inside Santa Clara, Calif.-based Yahoo as 'TK'--will step aside.
The leading Web portal also announced that revenue for the first quarter, which will be announced April 11, will be between $170 million and $180 million--as much as 27 percent below previous revenue estimates of $232 million.
The company has hired Spencer Stuart & Associates to conduct an external search for a replacement for Koogle, a race car and guitar aficionado who will remain chairman of the leading Web destination.
Analysts say it will be tough to replace the 49-year-old executive. His unflappable character and steady gaze--not to mention his self-declared 'gift of serendipity'--have always been in sharp contrast with other executives in the Silicon Valley, a place known for its caffeinated rush and chest-thumping braggadocio.
'At the end of the day, he brought the company from relative obscurity and a tiny revenue base to a global prominence, and last year generated over a billion dollars in revenue,' said Derek Brown, equity analyst at San Francisco-based investment bank WR Hambrecht.
'From a macro perspective, he did a tremendous job,' Brown said. 'He's always had a very visionary-like aura and sense to him in how he views the world, the direction he was attempting to move the company. He was always trying to push the envelope in terms of looking at the future and where Yahoo was headed.'
The Alexandria, Va., native, whose father was a mechanic with the U.S. Navy, was fascinated with engines as a young boy and aspired to be an engineer.
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Always known for his industriousness, Koogle pounded on neighbors' doors and sold his gardening services before he was 10 years old. As a teenager, Koogle inspected and fixed burger equipment for McDonald's.
A breed apart
He graduated first in his class at the University of Virginia with a mechanical engineering degree in 1973. He left to get more engineering degrees at Stanford. While working toward his master's degree in 1975 and doctorate in 1977, Koogle paid for his tuition by fixing engines of other students' cars.
He graduated first in his class at the University of Virginia with a mechanical engineering degree in 1973. He left to get more engineering degrees at Stanford. While working toward his master's degree in 1975 and doctorate in 1977, Koogle paid for his tuition by fixing engines of other students' cars.
He joined Chicago-based Motorola in 1983, and in 1992 became president of InterMec, the Seattle and initially resisted the ad-revenue model, according to a profile in the Financial Times.
Wall Street embraced the model, and Yahoo became one of the most widely recognized brands in the world--and the poster child for Internet companies not attached to a brick-and-mortar presence.
When Yahoo had an initial public offering in April 1996, it sold for about a split-adjusted $3.50. In January 2000, the company's shares peaked around $250. BusinessWeek named Koogle one of 'The Top 25 Executives of the Year' for 1999.
The walls come down
But Koogle's unflappability and serene aura were tested in recent months, as the company's stock plunged and cash-strapped e-commerce companies slashed their advertising budgets.
But Koogle's unflappability and serene aura were tested in recent months, as the company's stock plunged and cash-strapped e-commerce companies slashed their advertising budgets.
The stock is roughly one-tenth of its price a year ago and its market capitalization has plunged to $10 billion from more than $100 billion.
In late January during an international economic conference in Davos, Switzerland, Koogle lamented that Internet companies had erred by giving away too much content to consumers in the dash to gain market share and notoriety. Consumers have been loathe to pay for any Internet content, from news bulletins to stock tips to downloadable music and software.
During a conference call with analysts in early January, Koogle said 2001 would be a 'transition year'--a time for the company to shift its advertising base away from volatile dot-coms to more stable groups. The proportion of non-Internet advertising on Yahoo had increased from 53 percent in June to 67 percent in December and should reach 85 percent by the end of this year.
But that didn't placate Koogle's growing number of detractors.
In addition to dealing with stubborn consumers and a deteriorating advertising market, Koogle has been hounded by increasingly negative reports in the media. When the company announced in mid-January that it had slashed revenue estimates, the New York Post quipped, 'Boo-hoo for the Yahoo CEO.'
Koogle isn't the only Yahoo executive to shed business titles. In the past month, a number of high-profile executives have defected.
The head of Yahoo's Canadian operations, Mark Rubinstein, resigned last Friday after spending just over one year at the company. Fabiola Arredondo, head of Yahoo's European operations, and Savio Chow, head of Asian operations, also resigned in the past month. Jin Youm, chief executive of Yahoo South Korea, resigned as well, but he told co-workers he was leaving because of a family illness.
Some analysts have speculated that Arredondo resigned because she was frustrated by differences of opinion between Yang, President Jeff Mallett and Koogle. According to speculation in European newspapers, the four executives feuded over potential acquisitions.
The resignations cast doubt on the credibility of the company's international strategy. Yahoo generates 40 percent of its page views outside the United States but receives just 16 percent of revenue from abroad.
But analysts say that Koogle, to some extent, doesn't deserve to shoulder all the blame. In fact, his willingness to step down from the CEO position is a shrewd move, they say.
'My belief is that Yahoo's kind of like Humpty Dumpy--needs to put the pieces back together, reinvigorate their employee base, cap new sales channels, expand their product line, needs to transition their client base from largely dot-com oriented to more traditional mainstream advertising client and continue to expand internationally,' WR Hambrecht's Brown said.
'You wrap all those things together and that becomes a Herculean task. From that perspective I can understand wanting to expand the management team. I can also imagine that having already done something similar to this over the past five years, the company could benefit from new blood.'
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Search-engine firms foresee links to old media
By , CBS MarketWatch 5/7/98 7:54:13 AM
Top executives from prominent Internet search engine companies said Thursday they can foresee the day -- not very far away -- when they embark on affiliations and even mergers with the major television networks. 'Over the next three years, you?ll see major partnerships between our sector and major media companies,' Infoseek Corp. (SEEK) SEEK, +9,900.00% CEO Harry Motro said in a panel discussion on CNBC. Lycos Inc. (LCOS) lcos CEO Bob Davis agreed. 'Traditional media,' he said, 'is on the sideline trying to understand how to capitalize' (on the Net).'
As for making money for their companies, the executives said the real gold lies in electronic commerce, where they can get commissions on sales made through their sites. Motro explained he tells advertisers the Web can put their messages in front of prime customers. In light of America Online's (AOL) AOL, -4.74% announcement that it will purchase assets of Internet-on-TV company NetChannel Inc., the CEOs said they see that sort of technology as a key to the Internet's expansion.
Fool goes off Web for fun and profit
This week's announcement the Motley Fool's cofounders will launch a talk radio show this summer is part of a company strategy to exploit its Web presence in the world of traditional media. The selection of Cox Radio, an unknown in the radio syndication business, surprised some industry observers. But Fool business development director Bernie Dietz said the choice was appropriate. 'After many months of thought, and talks with lots of suitors, we found Cox to be a very 'Foolish' company, where we felt comfortable,' Dietz told CBS.MarketWatch.com. 'They run very good radio stations, and have lots of interests, through the parent company, in other traditional media.'
The Fool executive conceded there have been inquiries about the Fools doing a television show. But radio was chosen 'because it's more like the Web. It's a close thing to online interactivity, with the calls from listeners, and of course we'll take e-mail questions, too,' he said.
Off-Web ventures have been a given at the Motley Fool ever since Tom and Dave Gardner wrote their first book, 'The Motley Fool Investment Guide.' Another book, their fourth, will be published in time for Christmas. Other off-Web revenue generators include syndication of a daily newspaper column, and a weekly newsletter containing reprints of Web-published material.
Dietz said the Fool will consider ventures which encourage the teaching of basic personal finance in a way that's fun. 'A comic strip would be interesting,' he agreed. 'We have a jester character, and he could make fun of the finance and investing world while educating. I could see it happening,' Dietz said.
L.A.'s mayor to join in launch of Digital City
An upgrade of Digital City Los Angeles went live on the Web Thursday. Actually an upgrade of the service, it includes new technology which enables it to add a Web presence (www.la.digitalcity.com) in addition to nits area on the proprietary America Online (AOL) AOL, -4.74% service. Mayor Richard J. Riordan will contribute online columns to the service. He encouraged Web users to visit the site and 'take a virtual tour of Los Angeles to find out why we will be the world's capital city of the 21st century.'
Net video store adds to 'Godzilla' hype
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Online video store Reel.com (www.reel.com) has unveiled a 'Godzilla' sweepstakes to fly two devoted sci-fi monster fans to the re-make's exclusive premiere in New York on May 18. Registration for the contest closes at midnight, May 10. Reel.com is also offering movie buffs the opportunity to fill their libraries with any of the 22 original Godzilla films, including the hard-to-find collectable box set of five films recently re-released by Simitar Entertainment.
P&G PG, -0.19% boosts new media advertising
Procter & Gamble (PG) PG, -0.19% executive Denis Beausejour encouraged attendees at the @d:tech conference in Chicago to 'step out of the box' and realize the full potential of interactive advertising. In a keynote address, the advertising vice president said, 'The Web has the potential to be a dramatically more effective way for us to communicate with the people who buy and use our products.'
Beausejour told the audience his company has put its money where his enthusiasm is: three million dollars spent in interactive media this quarter. 'But even more significant than the spending level is what we're spending on,' Beausejour stated. 'Eighty percent of the ads we're placing on the web this quarter are units that reach beyond the traditional banner.' These new units include daughter windows, sideframes, push-advertisements, and interstitials. New technologies being utilized as part of these units and P&G's standard banner units include animated gifs, Enliven, Java, JavaScript, and Unicast.
Netscape Communications Corp . (NSCP) nscp announced a federal judge has dismissed all patent claims raised by Wang Global (WANG) WANG against Netscape and America Online Inc. (AOL) AOL, -4.74% . U.S. District Judge Leonie Brinkema ruled Wang's patent on the early-1980s Videotex system was 'generically and fundamentally different' from Internet Web browsers and related technologies. The suit was filed in Federal court in Virginia. Roberta Katz, senior vice president and general counsel at Netscape, said 'The court rejected Wang's attempt to extend its patent to cover Web pages.' Brinkema held Videotex was a closed and proprietary system that relied on a central database supplier, unlike the many information suppliers on the Web. The judge concluded that Netscape's browser and AOL's client software did not infringe Wang's patent.
Power talk at AOL AOL, -4.74%
The top executives at America Online (AOL) AOL, -4.74% and Yahoo! (YHOO) yhoo recently got together at the Dulles, Va.-based online service's headquarters. People familiar with the meeting say it was the first sit-down for AOL's Steve Case and Bob Pittman and Yahoo!'s Tim Koogle and Jeff Mallett, The Wall Street Journal reported. The talk included mutual concerns about online privacy policy and boosting Web advertising, the report added. 'It was to get a good look at each other,' a source told the paper. Several years ago, AOL offered to buy Yahoo! for $2 million.
Knight Ridder KRI, +2.00% joins ad coop
Knight Ridder (KRI) KRI, +2.00% has become a part of Classified Ventures, a Chicago-based, cooperative online advertising effort of major newspaper publishers. Knight Ridder joins in the venture with The Times Mirror Company (TMC) TMC, -1.54% , Tribune Company (TRB) TRB, +0.00% and The Washington Post Company (WPO) wpo . Knight Ridder will contribute classified advertising listings from its 31 daily newspapers. 'Classified Ventures now has truly national coverage in localized online classified advertising,' said Tim Landon, chief executive officer. Classified Ventures currently operates the national Apartments.com Web site and is developing the cars.com automotive site. A prototype is available at www.cars.com.
EarthLink elnk pacts with Discover
EarthLink Network Inc. (ELNK) elnk and Discover Card Thursday announced an alliance to market EarthLink's Internet services to Discover card members. The $19.95 monthly unlimited Internet service will be promoted to card members through billing inserts and on the Discover Card Web site. 'The partnership with Discover Card is one of the company's largest,' said Julie Mantis, vice president of sales at EarthLink.
Where the domains are
The top ten cities in the United States account for 42 percent of Web domains registered in the U.S. Network Solutions Inc. (NSOL) nsol , the Internet's primary domain registrar, reported it counts 1.86 million registered domains as of the end of March. Seventy-seven percent are based in U.S.
The leading metro areas for domain registration are: New York, 9.5 percent; Washington, D.C., 7.2 percent; Los Angeles, 6.9 percent; San Francisco, 3.6 percent; and Boston, 3.4 percent.
Twenty-two percent of U.S. registrations fall outside of metro areas, said Network Solutions vice president Chuck Gomes. 'This may indicate that the Internet is an effective way for people away from metropolitan areas to conduct communications and commerce.'
Two Chicago sites make local top 25
Localized ratings for Web sites visited by Chicagoans are little different from the most popular national sites. With one exception, the top 10 sites are identical. The only difference is that in the Jan.-Mar. 1998 survey conducted by Media Metrix, Altavista search service ranks tenth most popular among Chicago users, while nationally that spot goes to community-based site Tripod.com. Top 25 sites that are unique to Chicago, and which do not appear in the top 25 nationally, include Tribune.com, which ranks in 11th place locally, Compuserve.com in 16th place, Hotbot.com in 19th place, Prodigy.com in 22nd place and Ameritech.net in 23rd place.
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Media Metrix released its first quarterly local market report, and the Chicago results, this week at a marketing conference, @dTech.Chicago. The report covers 14 of the largest local markets including Atlanta, Boston, Chicago, Cleveland, Dallas-Ft. Worth, Detroit, Los Angeles, New York, Philadelphia, Phoenix, San Francisco, Seattle, Tampa and Washington.
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