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Ten signs Jerry Yang made the right move

Forbes.com

Burlingame, Calif. — Jerry Yang has a lot to prove. Turning down Microsoft's $33-a-share bid and jumping in bed with Google means that he's betting the future of his company—and his career—that doing a deal with his Silicon Valley "frenemy" will pay off.

Jittery investors, of course, will be looking for Yang's deal with Google — to run ads supplied by the Internet giant that will be placed alongside Yahoo search results—to generate a ton of money.

Here are 10 signs that the Yahoo co-founder and chief executive's gamble is panning out—or not.

1. Stock Soars
Before Microsoft launched its initial $31-per-share offer for Yahoo on Jan. 31, the Web portal's stock had been in freefall since late October, dropping from $33.63 to $19.18. The software giant's bid gave it an immediate boost to $28.38—but it has yet to top Microsoft's last offer of $33 a share. In the next six months, Yahoo's stock needs to show a lot of upward direction. The goal: getting above that $33 water mark.

2. Yahoo Piles Up $2.47-Billion In New Revenues
Yahoo needs to make like Whole Foods and start showing us the organic green stuff. It's called sales growth, and for Yahoo to succeed it will have to show that, excluding the effect of any acquisitions, it can do this. The magic number: $2.47-billion. That's how much Microsoft's online services business made for the fiscal year ended June 2007. Asking Yahoo to hit that number isn't fair. It means Yahoo would have to boost its annual run rate by roughly a third. Then again, that's the kind of sales growth Google posts, and proving Yahoo can keep up with Google—and add new online business comparable to that of the company that tried to acquire it—would silence it critics.

3. Deal Makes Yahoo Faster And Tougher
With Microsoft breathing down its throat for months, Yahoo started picking up the pace and launched many more products and services than usual. Now, it will surely benefit from Google's killer instincts and crafty strategies. Google Chief Eric Schmidt is said to have mentored Yang on the Microsoft deal. Now Yang and Schmidt can be open about their talks. Riiiight.

4. Monetizes Its 500 Million Visitors ... Finally
Yahoo has been sitting on an unexploited goldmine for far too long. The company's combined sites get the most traffic of any portal around the world, yet Yahoo earns so little from it. But it can't look to Google for help on this one: the Internet giant is so far a one-trick pony, making all its money from search advertising. Yang really should ask Microsoft chief and salesman extraordinaire Steve Ballmer for guidance here, but that would be a tad awkward now.

5. Becomes A Magnet For Techies Again
Remember when Yahoo was the "it girl" of the tech world a decade ago? Everyone and their mother wanted to work there. Great holiday parties and pricey Christmas gifts, such as MP3 players, for every employee. If revenues soar and the stock jumps appreciably, the world's best engineers will be knocking on its doors again.

6. Yang Buys A Zeppelin
People need leaders they can believe in, and Silicon Valley's greatest do their best to acquire symbols of excess. Nvidia Chief Executive Jen Hsen Huang parks his hand-built Swedish road rocket in the company parking lot between his employees' Honda Accords and Toyota Camrys. Google's Sergey Brin and Larry Page ride in a 767 emblazoned with the company logo. Apple Chief Executive Steve Jobs cares for 413 cats. If Yang is to succeed, he'll need to show he's the new big tabby in town. Our suggestion: a gigantic grey and purple zeppelin. Hey, Hangar One at nearby Moffett Field is just a short drive from Yahoo's Sunnyvale headquarters. And yes, we lied about the cats.

7. Yahoo Buys Facebook
Would such a deal be safe? Is it even sane? Hell no! But the ability to make a crazy, game-changing move, such as buying Facebook, would seal Yang's status as one of the greatest CEOs of all time. In contrast, passing up on the opportunity to buy Google, and then losing DoubleClick to Google are two of the reason's Yang's predecessor, Terry Semel, has been nominated for a spot in the Chief Executive Hall of Lame. A bold deal shows that Yang isn't afraid of losing Yahoo's independence, rather, he's eager to use it.

8. Larry Ellison Comes To Yang For Advice
Oracle Chief Executive Larry Ellison is the Sith Master of Silicon Valley: cool, calculating and quite stylish. Yang, by contrast, seems to be the very opposite. But what if it's all a trick? What if getting the 218-pound monkey who runs Microsoft known as Steve Ballmer off his back was just the first phase in some kind of darkly brilliant master plan? If so, Ellison will sniff it out, first, and pay his respects.

9. Steve Ballmer Loses His Job
The Yahoo-Microsoft negotiation was a mess. Someone's head needs to roll, and if you are Jerry Yang, you're first in line for a little of the old high-level chop-chop. However, if Yahoo starts to perform (see items 1 and 2), then it will prove that, despite all his bluster, Ballmer didn't have the nerve to pay what Yahoo was worth, after all. One way or another, this story won't end until we have a loser.

10. Poach Someone, Anyone , From Google
All we need is one, Jerry, just one. It doesn't have to be a star, such as Google Vice President of Search Product and User Experience Marissa Meyer. Convince one promising Google employee to step away from the all-you-can-eat-buffet at the Googleplex and maybe we'll start to believe in you, too.

Slideshow: What's a Tech Titan Worth

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