Do You Yahoo (Anymore)?

Has the bleeding stopped at one of the world’s largest Internet search engines?

There was a time – just ask Dennis Quaid’s character in the movie "Frequency" – when Yahoo was a magic word that made your dreams come true. All you needed to do was hop in a time machine, go back to the mid-’90s and invest in the online company.

But with the exit of chairman Terry Semel June 18th, Yahoo indirectly acknowledged it had become overextended. The Yahoo! Launch music initiative was just one component of a company that has tried to make itself the one-stop shop for all things Internet, from shopping to news to dating.

Meanwhile, the more linear-thinking Google makes more money in a single quarter than Yahoo does in a year. Yahoo was the larger company when Google went public in 2004 but, since then, Google has created nearly $140 billion in shareholder wealth. Its stock has increased by more than six-fold.

The rise of Google has decreased morale at Yahoo. It is up to Semel’s successor, cofounder Jerry Yang, to raise it. Susan Decker, who was touted as Semel’s heir apparent, is now president.

Semel, 64, will remain on as chairman in a non-executive role and did not take a severance package. He doesn’t have to. The executive realized nearly $450 million in gains by exercising some of the stock options he received during his six-year tenure.

Semel told shareholders attending Yahoo’s annual meeting that he had the fortitude to lead a comeback. The company suffered an 11 percent drop in its first-quarter earnings.

One company is rumored to be considering stepping into the void created by Yahoo’s downturn: News Corp. The Rupert Murdoch-owned company, which spent $580 million to buy MySpace, is reportedly in discussions to swap the social networking Web site for a 25 percent stake in Yahoo.

The downturn has also created speculation that Yahoo might consider combining with eBay or MySpace.

Yahoo’s stock climbed from about $27 to $29 within 48 hours of Semel’s resignation and closed at $27.63 on June 19th.