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Do we still have to pity Yahoo cofounder Jerry Yang? Or is it, at long last, acceptable to simply hold him in contempt? With Microsoft backing corporate raider Carl Icahn's replacement board of directors, and major investor Gordon Crawford also lining up to support Icahn, Yang's time at the company is coming to an end, and he seems to know it. Yet he's trying to stay on anyway. Like any leader facing certain failure, Yang has begun to indulge in pure make-believe. Here's a short list of Yang's Yahoo fantasies.

Microsoft never wanted to buy Yahoo in the first place and that's why the merger negotiations broke down. In a presentation to Yahoo shareholders, the current Yahoo board argued for its own survival, suggesting that "the record casts doubt on whether Microsoft was ever committed to a whole company acquisition." Except that it was Yang who took five weeks to respond to Microsoft's February 1 bid for the company, cooling Microsoft CEO Steve Ballmer's interest in paying Yahoo shareholders a 62 percent premium for their stakes.

  • Yahoo's latest reorganization puts the company in a position to independently succeed. Yang fed this line to Capital Research fund manager Gordon Crawford at a meeting last Tuesday in Los Angeles, according to BoomTown. Crawford didn't buy it — likely because he's heard that Yahoos hate the uninspiring, inept and lazy Ash Patel, the man whom Yang put in charge of a new Global Products group, despite internal rancor and protest. Crawford's now backing corporate raider Carl Icahn in his quest to unseat the Yahoo board.
  • Yahoo's recently departed execs were mere "MBA types."At the Tuesday meeting, Crawford — who controls 6.5 percent of the company's shares — also asked Yang about a recent rash of departures from the company's top ranks. Yang told Crawford the defectors were just "MBA types," which would be nice to believe, but isn't true. Yes, Yahoo lost a pair of suits in content chief Jeff Weiner and Brad Garlinghouse. But in the last month its also lost geeks such as Flickr founders Caterina Fake and Stewart Butterfield, Del.icio.us founder Joshua Schachter, search scientist Qi Lu, and data-mining rocket scientist Usama Fayyad.
  • Yang believes an AOL-Yahoo merger better serves shareholders than an acquisition by Microsoft. Yahoo shareholders disagree that tying up with an aging brand would help. As one major Yahoo shareholder told us, "Two wrongs don't make a right."
  • Yahoo needs to keep brand and search advertising together. Crawford asked Yahoo about this one at the meeting too. Probably because, like us, he's heard from Madison Avenue ad buyers who say that clients don't usually buy their brand and search advertising from the same place. Yang believes otherwise — because its a reason to keep Yahoo independent. Back in our logic class, they called that one a tautology.
  • Carl Icahn's board of directors will not be able to negotiate as well with once-more merger-ready Microsoft as the current board. Says our shareholder source: "The big fight you'll get from the Yahoo board now will be: We can get a better price from Microsoft than Carl. He's too cozy with them." Except Yahoo's board and Yang didn't prove themselves worthy negotiators the first time around, did they? Here's why: Instead of reacting to facts, Yang and company preferred to adhere to beliefs. If Yahoo were a religion rather than a business, they'd be set.

(Photo by Yodel Anecdotal)