This Loss Will Make Yahoo! Yelp

Executive defections have been a common sight at Yahoo! (Nasdaq: YHOO  ) , but some of the departures will hurt more than others.

BoomTown's Kara Swisher reports that Andrew Siegel will leave the company. As the head of corporate development, Siegel orchestrated Yahoo!'s acquisitions.

Sure, he lost out on a few of the big fish. Rumors of Foursquare and Groupon buyouts failed to materialize. He's also parted with some of his own company's holdings. Siegel was there when Yahoo! decided to sell HotJobs to Monster Worldwide (NYSE: MWW  ) earlier this year.

However, in his brief tenure -- he came over from General Electric (NYSE: GE  ) just last year -- he sealed the acquisitions of Dapper, Associated Content, and other bite-sized deals.

Yahoo! never broke the bank, and it was able to resist the urge to unload its valuable Asian investments.

Despite the revolving door of executives, there's no reason to doubt that Yahoo! can find a capable replacement. My concern here is that Siegel's departure comes at the worst possible time. Google (Nasdaq: GOOG  ) is on the verge of completing its largest acquisition ever. Outsourcing its search operations to Microsoft's (Nasdaq: MSFT  ) Bing all but forces Yahoo! to acquire more user-enticing websites to offset its slowdown in organic growth.

The pace of consolidation among dot-com properties is brisk, and Yahoo! can't afford to miss out on the frenzy.

Cynics may argue that Siegel is leaving so quickly because he sees the writing on the wall. The inevitable pairing of Yahoo! with AOL (NYSE: AOL  ) as the Internet's two traffic-rich, monetization-poor giants will likely lead to further executive defections. Siegel may as well get out ahead of the pack.

However, I would argue that Yahoo! would sooner cash out its Asian investments and use the proceeds to go on the mother of all shopping sprees, if that's what it needs to avoid becoming second banana in a merger with AOL.

Now more than ever, Yahoo! needs to make a defining acquisition. Too bad it'll first have to waste time filling a newly empty chair.

What do you think Yahoo! should buy next? Share your thoughts in the comment box below.

Google and Microsoft are Motley Fool Inside Value selections. Google is a Motley Fool Rule Breakers pick. Motley Fool Options has recommended a diagonal call position on Microsoft. The Fool owns shares of Google, and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Longtime Fool contributor Rick Munarriz wonders if Yahoo! CEO Carol Bartz regrets her decision to lead Yahoo!. He does not own shares in any of the companies in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy, and it's got mail.


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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 02, 2010, at 3:05 PM, licurgo66 wrote:

    Carol Bartz was a wrong bet for Yahoo. Its management has been a disaster, to the point you start to lose their best employees. The top executive of Siegel's ex-yahoo, because he knows the future of the company passes by Microsoft or News Corp.. The best that Bartz has done so far was the recent acquisition of the largest Arabic Web portal, which is great for Yahoo. Facebook is not a good deal for Yahoo and it will cost much less Groupon 2 billion, not 4 or 5. Facebook is not a good business for Microsoft. Its value is too high. For 33 billion, Microsoft will launch its bid for Yahoo.

  • Report this Comment On December 03, 2010, at 1:21 PM, MegaEurope wrote:

    "if that's what it needs to avoid becoming second banana in a merger with AOL."

    Considering Yahoo's market cap is 8x AOL's (and not only that, Yahoo has better growth prospects), this possibility seems doubtful.

  • Report this Comment On December 03, 2010, at 2:00 PM, langco1 wrote:

    yahoo is to close to failing at this point for anything to bother it....

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