Jerry Yang: Here is how you can get $47 per share for Yahoo! (YHOO)

What should Jerry Yang do about Yahoo! (YHOO) ? The prediction is that he will eventually sell to Microsoft, perhaps getting one or two dollar extra per share for Yahoo! shareholders. That is a reasonable outcome.

There is a better way though. The one that Jerry Yang will never do. Here is my proposal: break up Yahoo! three ways to maximizing shareholder values:

• Search, onSearch, advertising: Sell this to Microsoft (MSFT). As lame as Yahoo!'s search platform, Microsoft is even worse. Microsoft can benefit from some technology and market share from all of Yahoo!'s search traffics including vertical search services such as Yahoo! Image, Yahoo! Video, Yahoo! Local, Yahoo! News, and Yahoo! Shopping Search.
  
• Communication: This part includes Yahoo! Mail, Yahoo! Messenger, Yahoo! Personals, Yahoo! 360, Flickr and Yahoo! Buzz. A merger with a big social network player, such as Facebook or News Corp will fetch good return. Microsoft, Google or AOL won't be interested in these properties; there are simply too many overlap. On the other hand, Facebook lacks the functions, expertise and users in these areas. They may buy instead of build themselves.
• Content, commerce, small business, Yahoo! Next: These pieces are perfect fit for Google. They don't need better search or advertising, or Mail. But Google need more content, services, and more talent from Yahoo! Next.
• International: Most properties are independent. The shares should be distributed to Yahoo! shareholders.
  

Overall, Microsoft may pay $25-27 per share for the search and advertising. Communication will get $5-10 per share, and other $5-10 for the pieces that go to Google. So the deal will get shareholders $35 - $47 per share instead of $31 offer from Microsoft.

What will Jerry Yang do?