Yahoo May Not Need a “Loebotomy,” But It Definitely Can’t Endure a Brain-Sapping Proxy Fight
Let’s put this in the simplest terms: Yahoo cannot spend the next half year in any kind of testy proxy battle with activist shareholder Daniel Loeb.
Not shouldn’t. Can’t.
Having closely covered the last goat rodeo in 2008 with corporate troublemaker Carl Icahn — which ended in big shareholders dinging the board badly and the controversial activist joining it — I can say definitively that the experience damaged the Silicon Valley Internet company in ways that are still resonating.
Angry shareholders (whose anti-Yahoo votes were initially miscounted in a stunning bumble), distracted management, media story after story about the fight, it eventually led to the departure of then CEO Jerry Yang by the holidays of that year, a rejiggered board and a new CEO, Carol Bartz, and fervent promises of change and turnaround.
Fast forward to today: Bartz was ousted in the fall of last year, a newish board is coming in, there’s another new CEO and, of course, more fervent promises of change and turnaround.
This is like the movie “Groundhog Day,” except not nearly as funny.
Speaking of funny, a Heard on the Street in The Wall Street Journal yesterday actually went fabulously snarktastic with its headline on Yahoo’s current tussle with Loeb of Third Point: “Is Yahoo Ready for a Loebotomy?”
Opening with the line, “How many activists does it take to screw in Yahoo’s light bulb?,” the piece went on to ponder back and forth the impact of Loeb on the already dicey situation at Yahoo.
It concluded: “Yahoo investors shouldn’t expect a quick fix whoever the directors are. But, given how long Yahoo has been struggling to gain traction on its own, having a champion of shareholder value on the board can’t hurt.”
Nope, it can’t, as long as said investor wants to help find the successful fix previous Yahoo leaders have been heretofore unable to.
Another commentary in the Journal, “Dealpolitik: The Yahoo Paradox” took an opposite tack.
“Even giving Mr. Loeb a single seat could further weaken Yahoo. As a gadfly Mr. Loeb could challenge each board decision,” it read.
Actually, given this board changes direction more often than Republican presidential candidate Mitt Romney — witness the now non-talks with its Asian partners this past week and, before that, with private equity investors — I am not sure Loeb would change the status quo all that much if he threw one tantrum per meeting.
So, which is it? Will a settlement with Loeb lead to more trouble or will it create the kind of change that Yahoo has long needed and never gotten?
At this point, I have no idea — but I do know that a fight between Loeb and Yahoo is good for no one, except lawyers and perhaps page views on this site and others.
And, frankly, I don’t want them.
That’s because — even as the rest of Silicon Valley reinvents and innovates more aggressively than ever these days — Yahoo and its still deeply committed employees will be caught up in more fraught financial mishegas and machinations and will be unable to do anything to attract new talent and begin to truly fix itself and its products in the profound ways it needs to.
And new CEO Scott Thompson — who seems intent on setting a new course for Yahoo in a non-advertising arena — will be inevitably distracted, no matter the also inevitable protestations that he will not be.
And, it won’t just be Loeb who is hovering — there is no doubt a panoply of other interested outside investors still waiting in the wings to see what tasty bits of Yahoo might come available if the crisis deepens.
It’s certainly not come to roadkill yet by any measure. But it’s not a recipe for hitting the ground running, either.
Here is a video of me talking about the problematic situation on WSJ.com’s “Digits” online show: