To: Jerry Yang, C.E.O., Yahoo
From: Jack Flack
Subject: Becoming the $33 Candidate

I know you didn't get much of a chance to consider the Rescue Memo I sent you just before Microsoft first withdrew. The sudden Icahn intervention and the oscillations in Redmond radically changed the situation.

But I knew it was time for some new advice when I read your cringe-inducing quote in today's Wall Street Journal story:

"I think that I can bring stability back to Yahoo, and I want to get on with building [the] company," Mr. Yang said. "I think that the destabilizing by Microsoft has become more and more intentional. I am not happy about it."

Those words reveal four dangerous assumptions:

Dangerous Assumption No. 1: All of this will blow over.

Ballmer and Icahn will go away. Your shareholders will forget they could have had $33, if not $40. You'll pick up the pieces, and get the old magic back.

Unfortunately, that would qualify as a minor miracle. Even if the rest of the world—particularly Mountain View—stood still for three years, you wouldn't stand much of a chance. Yahoo had been languishing for years, and the trauma of the past few months has been devastating. The lawsuits will pile up, and demands that you sell the company will continue, if not escalate. You'll be faced with trying to lead a slim-chance turnaround while operating as a marked man.

Dangerous Assumption No. 2: You still hold the cards.

The day your stock dropped back into the teens, it revealed what life will be like for Yahoo if the company is not acquired in full by Microsoft. That specter puts you in a position of extreme weakness.

Dangerous Assumption No. 3: You are uniquely suited to stabilize Yahoo.

Unfortunately, at this point, you are personally toting the symbolic baggage that most destabilizes your company.

Your shareholders don't trust that you have their best interests at heart. A big percentage of your key leaders have bolted. Most of your remaining Yahoos question the latest round of internal egg-scrambling. And all fingers are pointing at you, not Bostock, Decker, or even Semel.

You should understand that Microsoft is no longer trying to destabilize Yahoo; it is trying to destabilize Jerry Yang.

Dangerous Assumption No. 4: Your happiness matters.

Actually, you are widely perceived as having acted out of emotion instead of rationality. Thus, your personal feelings are probably not the biggest concern of your shareholders at this point.