Yahapocalypse Now? Q4 Results, Proxy Fight, Board Hijinks and Asia Solution Combine for Busy Month for Yahoo.
If you thought things were going to quiet down with Yahoo now that it has installed new CEO Scott Thompson in place, think again!
That’s because of a very unusual — well, to be fair, unusual for most companies, but not for perpetually storm-tossed Yahoo — confluence of important events about to take place all at once over the next six weeks.
And, like a very dicey game of corporate Jenga, each has the ability to upend and impact the other significantly, either for the good or, well, for the bad.
Here are the four horsemen of the possible Yahapocalypse, all riding into town very soon:
Q4 Results: Yahoo will report its fourth quarter earnings on January 24th, after the markets close. While sources said the company has managed to turn around what was looking like a first-class disaster, it’s still not going to be a pretty picture when it comes to advertising growth, consumer engagement and other key metrics.
Simply put, Yahoo needs to show investors a fast-growing business. Instead, sources said the Q4 results will likely come in at the bottom of the expected range, which should be unimpressive, even though this has been business as usual at Yahoo for some time.
If Google and others have strong reports, of course, it will make the situation worse.
Along with goosing its ad business again, Yahoo needs to spur innovation and intro some cool new products in new arenas to make Silicon Valley and others perk up.
Proxy Fight?: Weak results will give a nice lift to potential efforts by activist investor Daniel Loeb of Third Point — a major Yahoo shareholder — to wage a proxy fight for control of the company. He’s already here in Silicon Valley this week searching for possible board members for an alternate slate of directors.
As I wrote earlier today, the earliest nominations for directors can be submitted is February 24. Loeb then has a month after that to submit a competing roster.
Worse for Yahoo, many of Yahoo’s major investors are mulling backing Loeb if he initiates a battle for control of the company.
There’s no doubt that Loeb is and means to be a thorn in Yahoo’s side — he already made a lot of noise about its consideration of partial investments from private equity firms, due to low share prices — until major changes take place at the company.
And by major, Loeb’s intent seems to be along these baseball lines: Throw the bums out!
Board in Flux: Speaking of the board, it’s not the pretty picture of solidarity as you might think.
Actually, no one in their right mind thinks that. This board is about as dysfunctional as they come. (It’s like that group on “American Horror Story,” minus the bald dwarf in the basement.)
Right now, several sources report, various factions are jockeying over which board members go and which stay. The Wall Street Journal reported last week on a formal search for new board members to replace outgoing ones, but it’s much more complex than just that.
While some departures seem most obvious — longtime board members Vyomesh Joshi, Arthur Kern and Gary Wilson — the really interesting part will be the possible exit of Chairman Roy Bostock.
While it now is more of a when rather than an if, many sources report, how it goes down is the key part of the move. And who will be the chairman then will be the big conundrum — either an internal candidate, such as David Kenny, or a fresh-eyed outsider.
Another question mark: Whether co-founder Jerry Yang could also move along off the board with Bostock. While Internet company founders usually stick on boards, it’s not a given, especially with all the turmoil at Yahoo, some of which is related to Yang.
For now, make no mistake, Bostock is still in charge of the board and Yang is the only real power behind that power, despite the recent influence of director Brad Smith.
But, with all the pressure by shareholders, some sources suggest that it might finally be time for some significant change at the board level, starting with the pair most associated with all its troubles.
Or, um, not.
If there is going to be any action at all, expect it before February 24th — when Loeb can start making real trouble.
Asian Solution: A lot of the above hinges on whether Bostock and Yang can deliver the promise of a deal with its long disgruntled Asian partners, Alibaba Group and SoftBank.
The trio is now engaged on negotiations about a tax-free deal, in which Yahoo would sell back some of its stakes in its Asian properties and get money and other operating assets in return.
While it’s good news that the talks are finally proceeding with some level of normal functionality, it’s still a complex situation and one with a lot of outstanding questions.
Most important: Which operating assets will be bought in the deal to hand over to Yahoo? And also, what will the valuations be?
Sources close to the situation said that the talks remain slow-going and frustrating — “The stop-and-go of all time,” joked one person involved. But they are moving forward, which is no small thing when it comes to these three.
That’s critical for Yahoo, which can ill afford to disappoint shareholders if no lucrative, cash-rich deal happens in Asia. And, it needs to happen before Loeb can act on a proxy fight too, since a successful end to its Asian issues will negate his momentum dramatically.
Oh Yeah, Running the Core Business Stuff: As usual, a full and fraught month for Yahoo and its directors, who have other things to do, I assume.
But not me and not new CEO Thompson. By the way, the former eBay exec will presumably be very busy doing some significant rejiggering of the core Yahoo business in the meantime.
Could that mean a new product direction for Yahoo, for example, around data? Could it mean a passel of new execs? Could it mean layoffs?
Or, could it mean Thompson will finally solve the ultimate sword-in-the-stone question: What is Yahoo?
And that, in the end, will be the real victory.