Slouched in a chair in the Holy Cannoli conference room at Yahoo!’s (YHOO) Silicon Valley headquarters one recent September day, a taciturn Jerry Yang looks every bit the embattled chief executive he is. With profits falling and sales growth slowing, the Internet portal’s stock price has sunk below 19—a five-year

low and 40% less than what Microsoft (MSFT) offered before walking away from its $47.5 billion buyout bid in May.

Angry shareholders are still calling for his head. Then Yang starts talking about the imminent debut of an ambitious online advertising system. He leans forward, and the words pour out. “This is a big bet,” he says, his voice rising. “It is truly the next generation of advertising.” Read More