Steve Ballmer Agreed To Sell MSN To Yahoo; Marissa Mayer Killed The Deal

You may remember almost two years ago then president of PayPal, Scott Thompson, agreed to become CEO of Yahoo.  It turns out he had some factual inaccuracies on his resume, including not actually having obtained a degree in computer science.  This controversy led to him resigning and Ross Levinsohn was named interim CEO.  Levinson truly believed he would be named permanent CEO, and as it turns out he would have been if not for Marissa Mayer.

However, in the time Levinson was CEO of Yahoo, he put together a radical plan for the company and started to implement it at full speed.  BI reports:

Levinsohn walked into the room; all of his top executives followed.

There was Jim Heckman, Levinsohn’s top dealmaker, who’d spent months negotiating a huge deal with Microsoft

Levinsohn told the board that, under his direction, Heckman had begun negotiating a deal with Microsoft to exchange Yahoo’s search business for Microsoft’s portal, MSN.com, and large payments in cash. Levinsohn and Heckman had also been talking with Google executive Henrique De Castro about turning over some of Yahoo’s advertising inventory. There was also talk of unloading some of Yahoo’s enterprise-facing advertising-technology businesses into a joint venture involving New York-based ad tech startup AppNexus.

He told Mayer that he’d negotiated a deal with Microsoft CEO Steve Ballmer, wherein Yahoo would turn over its entire search business — patents and all — in exchange for Microsoft’s large online media property, MSN.com, and long-term, guaranteed cash payments.

Heckman said his plan would allow Yahoo to run with just 4,000 full-time employees, far fewer than the 15,000 full-timers and thousands more contractors Yahoo employed then. He said Yahoo EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) would increase by 50 percent if Mayer closed his deals.

Mayer heard him out, taking notes the whole time.

Within 24 hours, Mayer let Heckman know that she’d canceled all his deals and that his services were no longer needed by Yahoo.

Heckman flew to Ibiza, Spain for a 30-day vacation.

BI has a comprehensive overview of Marrisa Mayer’s career, highly recommended reading: The Truth About Marissa Mayer: An Unauthorized Biography

Om Malik also tears Yahoo apart, the reason Yahoo’s stock  is doing well has more to do with Alibaba than most people think: No Henry, you need to get real about Yahoo. Here are the facts/