May 6 (Bloomberg) -- Yahoo! Inc. Chief Executive Officer Jerry Yang, criticized by some investors for rejecting Microsoft Corp.'s $47.5 billion takeover bid, said he'll consider selling to the software company or another bidder for the right price.

Yang will continue a strategy to boost Internet advertising sales and is speaking with other companies about ways to increase Yahoo's value. While Yahoo isn't for sale, the company would listen ``should somebody else come back someday and want to buy the company,'' he said in an interview with Bloomberg News yesterday after the stock sank 15 percent.

``We've always felt the Yahoo platform has been undervalued or underappreciated by the marketplace,'' Yang said. ``Our most important goal is to make sure we have a long-term competitive position.''

Yang may find his job in jeopardy if his strategy fails or he can't boost the stock in a few months. Investor Larry Haverty of Gamco Investors Inc. wants progress by October. Analyst Ross Sandler of RBC Capital Markets said Yang will face scrutiny during the July annual meeting. An idea to outsource more search advertising to Google Inc. is already drawing criticism for risking customer defections to the competition.

``They'll be calling for his head then if by the end of the year there haven't been some substantial improvements,'' said analyst Brian Bolan of Jackson Securities LLC in Chicago, who recommends selling Yahoo shares. ``Certainly he should be concerned about his job, and the shareholders are going to revolt at some point.''

Yahoo, in Sunnyvale, California, passed up an offer of $33 a share, saying the company is worth no less than $37, Microsoft CEO Steve Ballmer said May 3. Yahoo fell $4.30 to $24.37 yesterday in Nasdaq Stock Market trading, the most in almost two years.

`On The Line'

``His job is clearly on the line,'' Peter Falvey, managing director at Revolution Partners, a Boston-based technology merger adviser, said in an interview with Bloomberg Television. ``Yahoo's going to be under a tremendous amount of pressure -- the board, the CEO, the major shareholders.''

Yahoo, owner of the most visited U.S. Web site, said yesterday that its annual meeting will be on July 3.

``There will be very significant pressure on the board and management from shareholders, plus employees who have seen their options turn into worthless pieces of paper,'' said Haverty, associate portfolio manager at Gamco in Rye, New York. He still wants an acquisition to happen.

Even large shareholders who said they support Yang's leadership acknowledged the investor unrest. Bill Miller at Legg Mason Inc., Yahoo's second-biggest holder, said in an interview that some investors ``feel burned.''

Jumping

``There's probably a lot of people jumping up and down today,'' said Miller, who expects Microsoft to return with a new bid later. Yahoo managers ``will be under a lot of scrutiny to see if they can deliver the results they indicated in 2009 and 2010.''

Yahoo built its own search engine with more than $2 billion in acquisitions and last year released Project Panama, its program designed to make search advertisements more relevant so more users will click on them. While the program has closed the gap, Google still made as much as 70 percent more than Yahoo per search query late last year, Yahoo said in April.

Yahoo is discussing an arrangement with Mountain View, California-based Google, which holds the largest share of the market for advertising on search engine results, two people familiar with the matter said. An agreement could come as soon as this week, one said.

Google Partnership

A partnership with Google could boost sales and profit. Handing over a small percentage of search results to Google may add up to $200 million a year in earnings before interest, tax, depreciation and amortization, Stifel Nicolaus & Co. analyst George Askew said yesterday in a research note.

By giving up control of some of its search advertising, Yang would put one of the most valuable parts of the company at risk, Haverty said.

``He will have essentially surrendered the crown jewel of the company to Google, which is beating his brains in anyway,'' Haverty said. ``They get short-term gain for long-term punishment.''

Time Warner

Yahoo also is in discussions with Time Warner Inc. over a merger with its AOL unit. Under the proposed deal, Time Warner would keep a stake of less than 20 percent of the combined company, people familiar with the matter said yesterday. The tie-up probably would occur after the Google deal, and wouldn't be precluded by it, they said.

While Yang doesn't need to close either deal to convince investors his plan will work, an agreement could buy him time for his strategy to bear out, said Danny Sullivan, editor-in- chief of the Web site Search Engine Land, which follows the industry.

``If they got a deal that could produce billions for Yahoo, and the stock market reacts positively to it, that might give him more breathing room,'' said Sullivan, based in Chitterne, England. ``The real pressure doesn't happen till the shareholder meeting.''

In addition to improving search advertising sales, Yang is trying to use Yahoo's leadership in the market for graphical- display ads to expand in online video and services for mobile phones, said Andrew Frank, a New York-based analyst with research firm Gartner Inc. Yang must show some progress in the next two quarters, he said.

``It's a tall order to do that much in that short an amount of time,'' Frank said. ``It certainly won't be for lack of motivation if they fail.''

Yahoo led the industry with 18.8 percent of U.S. display-ad views in November, beating News Corp., Microsoft and Time Warner, according to a February report from ComScore Inc. in Reston, Virginia.

To contact the reporter on this story: Crayton Harrison in Dallas at tharrison5@bloomberg.net; Amy Thomson in New York at athomson6@bloomberg.net

Last Updated: May 6, 2008 00:01 EDT