Yahoo exec backs Microsoft deal… then quits

Yahoo has announced the departure of its financial chief just two days after he backed a sale of the firm’s search business. The upheaval comes as Microsoft’s own financial chief warns that a deal with Yahoo wouldn’t be a magic solution for its online woes.

Microsoft noted on Tuesday in a conference call with investors that it was still interested in a partnership with Yahoo, but not a buyout. The following day, Yahoo’s chief financial officer Blake Jorgensen said the firm could sell its search division if it found the right deal (though noted splitting Yahoo’s business into search and other activities wouldn’t be all that neat.)

But yesterday Yahoo filed a notice with the Securities and Exchange Commission to say Jorgensen is to leave the firm and it’s already hunting for a replacement. It’s not known when the decision for Jorgensen to leave was made (it’s being presented as Jorgensen resigning), but normally such filings must be made to the SEC relatively quickly after the decision is confirmed.

Also speaking yesterday, Microsoft’s chief financial officer Chris Liddell said a deal with Yahoo would not be a “silver bullet”, noting, “No one should think it will transform the industry.” He stressed that Microsoft is working on the assumption that there won’t be any deal.

That’s a different approach to many analysts who believe some form of partnership is inevitable and its just a matter of time. It’s one of those situations where, no matter what the detail and evidence, the over-arching logic is compelling: Yahoo is struggling financially while Microsoft has money to spend but can’t find the technology to compete successfully in the search market.

But there’s an equally strong argument that Microsoft should simply cut its losses in the search market and that its determination to compete shows a stubborn attitude and a refusal to accept it can’t be number one in every aspect of computing.

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