AllThingsD » employee http://allthingsd.com Sat, 26 May 2012 02:18:50 +0000 en hourly 1 http://wordpress.org/?v=3.3.2 http://allthingsd.com/theme/images/logo-rss.jpg All Things Digital http://allthingsd.com/ 144 22 Former CEO Thompson Might Be Gone, But Internal Investigation Into ResuMess Still a Hot Potato at Yahoo http://allthingsd.com/20120522/former-ceo-thompson-might-be-gone-but-investigation-into-resumess-still-a-hot-potato-at-yahoo/ http://allthingsd.com/20120522/former-ceo-thompson-might-be-gone-but-investigation-into-resumess-still-a-hot-potato-at-yahoo/#comments Tue, 22 May 2012 16:03:16 +0000 Kara Swisher http://allthingsd.com/?p=210917

While former Yahoo CEO Scott Thompson fades from the tech scene — besides getting jacked from the top job at the Silicon Valley Internet giant, he’s also just come off two tech boards he had served on — the investigation over his hiring and how a fake computer science degree got into the company’s regulatory filings continues.

While the quick-fire controversy burned Thompson, as well as now former Yahoo director Patti Hart, the special committee of independent board members is still at work trying to figure out how such a mess was made in the first place.

And, more importantly, who knew what when and told whom.

At the time the committee was announced, Yahoo said it would “conduct a thorough review of CEO Scott Thompson’s academic credentials, as well as the facts and circumstances related to the review and disclosure of those credentials in connection with Thompson’s appointment as CEO.”

The special committee is chaired by Yahoo’s new Chairman Fred Amoroso and includes John Hayes and Thomas McInerney, two independent directors who joined the board in April.

Yahoo also hired independent counsel Terry Bird of the law firm Bird, Marella, Boxer, Wolpert, Nessim, Drooks and Licenberg in Los Angeles to handle the inquiry.

The company also noted at the time that “the special committee and the entire Board appreciate the urgency of the situation and the special committee will therefore conduct the review in an independent, thorough and expeditious manner. The Board intends to make the appropriate disclosures to shareholders promptly upon completion of the review.”

Gripped by urgency myself, I have grown weary waiting by the phone for some official answers, which sources said will not be forthcoming for some time.

But since I am the most curious of cats — uh-oh! — I started dialing around on my own to find out what’s what.

And, according to sources — especially since Thompson has settled with Yahoo and will not get severance due to the academic falsehood — the big focus is now centering on if the company’s staff screwed up the background check of his academic credentials, thus allowing it to get into its official filings with the Securities and Exchange Commission and also on Yahoo’s corporate Web site.

When Thompson was hired from eBay, where he was president of its PayPal payments division, the online commerce company had the correct bio information in its SEC filings, although not on its Web site or in its PR materials.

The question is: Did someone from Yahoo simply rely on Web bios and not check eBay filings and did anyone ever re-check Thompson’s college records? (Note: It took me 15 minutes flat to find out he did not have such a degree at Stonehill College in the Boston area.)

If lazy checking was the case, it spells rank incompetence on the part of staffers, as well as Hart, who headed the search after Yahoo fired its previous CEO Carol Bartz last fall.

A much more troubling line of inquiry taking place is aimed at the possibility that someone at Yahoo did discover the discrepancy in Thompson’s resume and either did not report it up the chain of command or did and it was either lost or ignored or, well, worse.

While this certainly ain’t Watergate, such a situation would be very hard for Yahoo to explain away as easily to shareholders, especially potentially litigious ones. As it is always said, the coverup can often be more damaging than the crime itself.

And, if it is determined by the special committee that certain employees knew of Thompson’s resume inaccuracy, it will most certainly result in dismissals of Yahoo employees.

The focus on the committee — which truly cannot sweep this under the rug, if it occurred in this much more serious scenario — is most obviously the legal department of Yahoo, which is responsible for making certain filings are accurate.

Also under scrutiny is the quickness of the hiring of Thompson.

Among the questions is how much vetting was done and whether adequate questions about him were asked among a variety of possible sources.

When he was picked in January, Thompson was a dark-horse candidate for many, including some Yahoo board members.

In fact, he was not on the initial headhunting lists prepared by outside talent search firm Heidrick & Struggles.

That’s because Heidrick had placed Thompson at eBay in mid-2000 and could not then recommend him to Yahoo. As it turned out, Thompson took it upon himself to cold email Yahoo board member and Intuit CEO Brad Smith about the job, who then passed Thompson’s interest to Hart.

Heidrick had no involvement in the checking of Thompson, although he later blamed the firm in a public meeting with Yahoo employees for putting the error in his bio in the first place from when he was hired at eBay. Heidrick quickly called the accusation “verifiably not true” in a memo to its own employees.

Sources said that meant that the firm had a resume that Thompson had submitted to it that also contained the error.

But the central mystery of how that mistake appeared on his bio will likely remain just that without further explanation from Thompson.

In a radio interview in 2009, he did not correct a specific question about the twin degrees he appeared to have held and seemed to even agree with the show’s host, Moira Gunn, about them.

Later, she told me in a video interview that Thompson had clearly indicated to her in the prep for that interview that he indeed had a computer science degree.

Still, it is still not clear — and may never be — who put the faux computer science credential on his resume in the first place.

So, with all apologies to Winston Churchill: It might remain a riddle wrapped in a mystery inside an enigma.

]]> http://allthingsd.com/20120522/former-ceo-thompson-might-be-gone-but-investigation-into-resumess-still-a-hot-potato-at-yahoo/feed/ 0 Leave the Gun. Take the Cannoli: It's Ring-Kissing Time for Ross at Yahoo's All-Hands Meeting. http://allthingsd.com/20120514/leave-the-gun-take-the-cannoli-its-ring-kissing-time-for-ross-at-yahoo/ http://allthingsd.com/20120514/leave-the-gun-take-the-cannoli-its-ring-kissing-time-for-ross-at-yahoo/#comments Tue, 15 May 2012 02:12:22 +0000 Kara Swisher http://allthingsd.com/?p=208122

At today’s all-hands meeting for Yahoo employees — in the wake of the dramatic ouster of its former CEO Scott Thompson — what pop culture icon did new interim CEO Ross Levinson use to loosen up the crowd?

Why, a little Al Pacino from the movie classic “The Godfather,” of course — the go-to guy solution menu for all troubles in the world.

Comparing the battered Silicon Valley Internet giant to Don Corleone after a gun ambush, Levinsohn said to the crowd gathered at URL’s Cafe on the Sunnyvale, Calif., HQ campus: “This weekend was like that scene from ‘The Godfather’ — ‘They hit ’im with five shots, and he’s still alive!’”

And also, trying to make Yahoos feel as if there were forward momentum: “There are things being negotiated now that are gonna solve all your problems and answer all your questions.”

Well, let’s hope so, and that it does not end for Yahoo — and Levinsohn — like it did for Luca Brasi (who sleeps with the fishes, in case you didn’t know).

So far, in his first impress-the-employees outing, the reviews for Levinsohn were largely positive on its internal message boards and from numerous sources I talked to.

What they liked: Acknowledgement of the tough past week, but not dwelling on the past, either; a theme of revival and spirit; no PowerPoint slides; and zero direct mention of Thompson.

What they really liked: The whole pile of compliments that Levinsohn doled out to the troops.

No tough-love dude he — unlike Thompson and his predecessor Carol Bartz, who liked to verbally smack around the troops a little more in a mobster kind of way.

Instead, said one person in attendance, “he was appealing to Yahoo pride, which is pretty much in the doldrums.”

Still, one questioner worried about the future and whether the company was going to still be stuck in a leadership vacuum, especially since Levinsohn was not named as the permanent CEO.

Fred Amoroso — who was just named Yahoo’s new chairman and was the only person who appeared with Levinsohn on the stage — tried to assuage that concern by saying he wanted Levinsohn to eventually become the head of the family for good.

While there will likely be a search for other CEO candidates, it is as close to a ring-kiss as Levinsohn is going to get for now.

That is, unless he does not produce some quick results on a variety of Yahoo’s thorniest issues, such as an Asian asset sale and a settlement of the patent lawsuit fight with social networking giant Facebook.

But the over/under on him and Amoroso together was good.

One person said it was important when Amoroso talked about coding and technology and products, which is not advertising- and media-focused Levinsohn’s expertise.

“It was nice to see a board member who cared about products and innovation,” said one person. “Or at least said he did.”

We’ll see how this pair works out together, but always remember this, Yahoos:

Just when you thought you were out, they pull you back in.

Until we know how the movie ends, here is a scary video of me talking about the last week’s events at Yahoo on a local ABC television news station — I look a fright since I’m so tired from covering it all:

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]]> http://allthingsd.com/20120514/leave-the-gun-take-the-cannoli-its-ring-kissing-time-for-ross-at-yahoo/feed/ 0 Yahoo's Parting With Thompson Will Be for "Cause" (aka CSLie) http://allthingsd.com/20120514/yahoos-parting-with-thompson-will-be-for-cause/ http://allthingsd.com/20120514/yahoos-parting-with-thompson-will-be-for-cause/#comments Mon, 14 May 2012 09:00:21 +0000 Kara Swisher http://allthingsd.com/?p=207552

According to numerous sources, Yahoo is claiming “cause” in its parting with former CEO Scott Thompson, related to the fake computer science degree on his resume.

Such a determination will mean the company is not obligated to pay him the large severance that would have been due to him otherwise.

In his offer letter on January 3, Yahoo spelled out the terms of the employment agreement, noting what would happen if he left the company under more positive “without cause” terms.

“If Mr. Thompson’s employment is terminated by the Company without cause or by Mr. Thompson for good reason, the Company will offer him severance benefits similar to the benefits it provides to other senior executives of the Company at the time of his termination,” reads the document, which was filed with the Securities and Exchange Commission. “In addition, if Mr. Thompson’s employment is terminated by the Company without cause, by Mr. Thompson for good reason, or due to Mr. Thompson’s death or disability, the Make-Whole RSUs that are then outstanding and unvested will fully vest upon his termination.”

The “Make-Whole” RSUs — or restricted stock units, related to his time as president of eBay’s PayPal payments division — were valued at $6.5 million in Yahoo’s SEC filings.

But sources said Yahoo has relied on another clause in Thompson’s offer letter, titled “Code of Ethics and Yahoo! Policies,” to make the case that it would not have to pay out such a large sum to him.

Reads the clause:

“Yahoo! is committed to creating a positive work environment and conducting business ethically. As an employee of Yahoo!, you will be expected to abide by the Company’s policies and procedures including, but not limited to, Yahoo!’s Guide2Working@Y!, Yahoo!’s Code of Ethics and Yahoo!’s Corporate Governance Guidelines,” reads the letter. “Yahoo! requests that you review, sign and bring with you on your Employment Start Date, the enclosed Code of Ethics Acknowledgment Form.”

Under the Silicon Valley Internet giant’s ethical terms, the borked bio and how it got that way — which was still under investigation when Thompson stepped down — was the major issue in his ouster, since he was responsible for making sure it was accurate when submitted for regulatory filings.

In addition, while Thompson publicly blamed a headhunting firm for making the error back in the mid-2000 timeframe, that company — Heidrick & Struggles — hit back, saying his claims were “verifiably not true.” According to sources, Heidrick apparently possesses an inaccurate resume submitted to them by Thompson.

Heidrick, which placed Thompson at eBay many years ago, was not involved in his hiring at Yahoo. It had to recuse itself from his vetting as part of its search for a new Yahoo CEO, because it had placed him previously.

In fact, Thompson had nominated himself for the job via cold emails with Yahoo board members and was examined and hired quickly.

Perhaps too quickly, given the poor background check that was discovered by activist shareholder Daniel Loeb of Third Point.

Sources close to the board said that investor pressure relate to these credibility lapses grew too loud, along with employee rancor at Thompson’s actions — forcing the issue this weekend.

What was definitely not a reason for Thompson’s departure from Yahoo — although it was unfortunate timing — was an unspecified “illness” I referenced in my initial story on the subject.

(Note to readers: I found out this weekend that illness was thyroid cancer. But I declined to name it specifically, since I felt it was Thompson’s right to publicly reveal such a personal health issue and not mine. While I recently suffered a stroke and the experience perhaps influenced this editorial decision, the cancer was only a side issue to the resume drama at Yahoo and not naming it specifically seemed, well, more responsible to me. Argue amongst yourselves about it, but that’s my take. And also, I wish Thompson a successful treatment and speedy recovery)

That said, The Wall Street Journal did an entire piece about the cancer today today, noting that “the decision to step down from Yahoo was in part influenced by Mr. Thompson’s cancer diagnosis.”

That might have been true for Thompson — a source close to him characterized the parting as “mutually agreed” — and perhaps his illness accelerated the resume controversy.

But all that aside, he was given no choice in the matter by the Yahoo board, numerous sources said. The parting was almost entirely due to the mess about the botched bio and all its implications.

In fact, in all its public communications about his leaving, Yahoo and its execs offered no token thanks and barely even mentioned Thompson, such as in its official statement yesterday.

It read, referring to newly chosen interim CEO Ross Levinsohn: “Mr. Levinsohn replaces Scott Thompson, former Chief Executive Officer, who has left the Company.”

And left it he has, without a choice and with what will be a much smaller settlement, sources said. It is not clear when Yahoo has to unveil those terms in public documents.

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]]> http://allthingsd.com/20120514/yahoos-parting-with-thompson-will-be-for-cause/feed/ 0 Exclusive: Yahoo's Thompson Out; Levinsohn In; Board Settlement With Loeb Nears Completion http://allthingsd.com/20120513/exclusive-yahoos-thompson-out-levinsohn-in-board-settlement-with-loeb-nears-completion/ http://allthingsd.com/20120513/exclusive-yahoos-thompson-out-levinsohn-in-board-settlement-with-loeb-nears-completion/#comments Sun, 13 May 2012 15:59:24 +0000 Kara Swisher http://allthingsd.com/?p=207290

Yahoo’s embattled CEO Scott Thompson (pictured here) is set to step down from his job at the Silicon Valley Internet giant, in what will be dramatic end to a controversy over a fake computer science degree that he had on his bio, according to multiple sources close to the situation.

The pair will apparently say he is departing for “personal reasons.” Sources said that Thompson will be claiming to be leaving due to a serious illness that he recently discovered he had.

But the evolving crisis — which is just over a week old — centered on his botched resume and how he handled the thorny issue is the key reason for the abrupt end to his tenure as a CEO.

Thompson’s likely replacement on an interim basis will be Yahoo’s global media head Ross Levinsohn, who most recently also ran its Americas unit, including its advertising sales.

In addition to the management upheaval, Yahoo’s board is closing in on a settlement with the man who discovered Thompson’s misstep, activist shareholder Daniel Loeb of Third Point, said sources.

The situation could change, since Yahoo’s full board still has to meet this morning to officially approve the sweeping changes at the long-troubled company.

But, if it is, this development goes a long way toward fixing some of what has been ailing Yahoo recently.

And it’ll also be a stunning victory for Loeb (pictured here), since the pugnacious hedge fund investor is set to get three board seats from a slate proposed by him as part of a proxy fight aimed at Yahoo. The new Yahoo directors will be media exec Michael Wolf and turnaround specialist Harry Wilson. Loeb’s fourth selection — former NBC head Jeff Zucker — will withdraw.

The five current Yahoo directors — who were to step down at the company’s annual meeting this summer — will leave the board effective immediately, sources said, to make way for the Third Point selections.

Finally, Yahoo’s recently added director Fred Amoroso will be named chairman of the board.

Amoroso is the director who has been conducting the investigation into the issues raised by Loeb about how the fake academic credentials got in Thompson’s public bios, as well as in Yahoo’s regulatory filings, and also the hurried circumstances around his hiring in January.

Those mysteries — read, screw-ups — might never be solved now, although Thompson made a convoluted attempt to explain it all in two awkward employee meetings at the end of last week. In those gatherings, according to numerous sources, he blamed a headhunting firm for introducing the mistake when he was being hired for a job at eBay in the mid-2000 timeframe.

That company, Heidrick and Struggles, slapped back last week with an internal memo, noting that Thompson’s claim was “verifiably not true.” Sources said that Heidrick told Yahoo’s board that it was in possession of a resume that Thompson had apparently submitted showing the inaccurate CS degree on it.

That memo, impugning Thompson’s credibility, was one of many that piled on to create an impossible situation for the Yahoo board, related to his leadership ability going forward.

Thompson had also previously issued a Yahoo statement, in which he apologized for the “distraction” caused by the problematic resume, but not for the mistake itself.

And, initially, Yahoo — under his direction — had called the borked resume an “inadvertent error.”

Such fumbling to fix the situation was among the many other issues that the board has been considering relating the ability of Thompson to remain in his job. Also of importance was the sinking morale of Yahoo employees, who had largely rejected Thompson’s excuses in the ResuMess scandal.

Internal message boards at Yahoo lit up all last week, with staffers largely rejecting his explanations. In addition, a number of top execs and engineers approached the board calling for Thompson’s firing.

While that’s not precisely what happened here, it’s close enough to describe Thompson’s departure as inevitable.

All this change comes in the wake of a massive restructuring he was in the midst of at Yahoo, after 2,000 employee layoffs.

Thompson was pushing forward a vision of adding a much more significant data and commerce element to Yahoo’s largely ad-based business.

That is likely to be less stressed under media-focused Levinsohn, who will be essentially trying out to be the permanent CEO.

Well known in the media and advertising communities, he has worked at a number of big online efforts over many years.

According to his bio at Yahoo, where he arrived in 2010:

He previously served as the President of News Corporation’s Fox Interactive Media, where he was responsible for the day-to-day operations, strategy and acquisitions that helped transformed the company into a leader in digital media. He also held senior management positions with AltaVista, an early pioneer and leader in search, CBS Sportsline where he oversaw all content and development for the top rated sports site, and HBO where he launched and oversaw a unit developing new programming and revenue streams. Levinsohn also was the co-founder and managing director of Fuse Capital, an investment and strategic equity management firm focused on investing in and building digital media and communications companies.

Levinsohn sits on the board of Freedom Communications and the Bogart Pediatric Cancer Research Program. He holds a Bachelor of Arts in Communications from The American University.

So far in my checking, Levinsohn’s resume is accurate.

More to come, obviously.

I have emails and texts and calls into everyone for comment, but apparently they are all out at a Mother’s Day brunch (except me).

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]]> http://allthingsd.com/20120513/exclusive-yahoos-thompson-out-levinsohn-in-board-settlement-with-loeb-nears-completion/feed/ 0 Heidrick & Struggles Slaps Back at Thompson's Yahoo in Blame Game Over ResuMess http://allthingsd.com/20120511/heidrick-struggles-slaps-back-at-thompsons-yahoo-in-blame-game/ http://allthingsd.com/20120511/heidrick-struggles-slaps-back-at-thompsons-yahoo-in-blame-game/#comments Sat, 12 May 2012 01:39:30 +0000 Kara Swisher http://allthingsd.com/?p=207190

And it just gets worse in the controversy over Yahoo CEO Scott Thompson and the circumstances around how a fake computer science degree could get onto his bio.

Heidrick & Struggles is smacking back at him for insinuating that the well-known headhunting firm had messed up his resume.

In meetings with employees to attempt to explain the situation yesterday, multiple sources said that Thompson claimed that a mistake made by a headhunting firm in mid-2000, when he was moving to a job at eBay, was the way the inaccuracy got into his bio.

Thompson did not name the firm, but he was clearly referring to Heidrick & Struggles, which handled that placement. It was also working on the Yahoo CEO search, after the Silicon Valley Internet giant fired its former CEO Carol Bartz last fall.

But, because it had originally placed Thompson at eBay, the firm did not work on his hiring at Yahoo.

So, Heidrick was not going to take Thompson’s blame for the botched bio.

“While we were not involved in this placement, there have been both direct and indirect mentions of this relationship in several news articles. Furthermore, if recent media reports are accurate, the CEO of Yahoo! has made potentially damaging allegations about our firm that are simply not true and cannot be allowed to stand in the public record,” wrote CEO Kevin Kelly to staff. “The media articles in question have indicated that the Yahoo! CEO told members of his senior staff that, many years ago, a junior member of our firm invented an academic credential for him in the course of preparing standard profile materials. Based on information in our possession, this allegation is verifiably not true and we have notified Yahoo! to that effect.”

This letter is just another brick in what is looking like an insurmountable wall for Thompson to keep his job at Yahoo. Sources said that the board of Yahoo had been sent a letter from Heidrick on the matter earlier today.

And, let me just say, this latest eruption is simply not good for Thompson’s chances to remain CEO for much longer.

Yahoo declined to comment, but here is the full letter from Kelly to its staff:

Colleagues,

Heidrick & Struggles’ clients across the globe place their trust in our professionalism and discretion, as we assist them in their most significant leadership decisions. We regard that trust as one of our most valuable corporate assets. As such, we do not often comment on internal matters involving our clients. However, recent press accounts have reported statements that contain misstatements of fact and criticisms of our professional services that require a response from us.

As many of you have seen, there has been recent focus on the CEO appointment at one of our long-term clients, Yahoo!. While we were not involved in this placement, there have been both direct and indirect mentions of this relationship in several news articles. Furthermore, if recent media reports are accurate, the CEO of Yahoo! has made potentially damaging allegations about our firm that are simply not true and cannot be allowed to stand in the public record. The media articles in question have indicated that the Yahoo! CEO told members of his senior staff that, many years ago, a junior member of our firm invented an academic credential for him in the course of preparing standard profile materials. Based on information in our possession, this allegation is verifiably not true and we have notified Yahoo! to that effect.

This is why I am writing to you today. All of us at Heidrick & Struggles take our responsibility to our clients very seriously, and it is important for us to set the record straight when our good work and reputation are called into question.

The issue surrounding Yahoo! underscores the importance and impact of the work we do for all of our clients — helping them build the best leadership teams possible. Our clients place their trust in us each day, and we have developed strong policies and procedures over our nearly 60-year history to serve them.

On behalf of the management team and Board of Directors, thank you for your continued support and dedication to Heidrick & Struggles.

Best,
Kevin
L. Kevin Kelly
Chief Executive Officer
Heidrick & Struggles

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]]> http://allthingsd.com/20120511/heidrick-struggles-slaps-back-at-thompsons-yahoo-in-blame-game/feed/ 0 Is He In or Is He Out? Crunchtime for Scott Thompson at Yahoo. http://allthingsd.com/20120511/is-he-in-or-is-he-out-crunchtime-for-scott-thompson-at-yahoo/ http://allthingsd.com/20120511/is-he-in-or-is-he-out-crunchtime-for-scott-thompson-at-yahoo/#comments Fri, 11 May 2012 15:15:28 +0000 Kara Swisher http://allthingsd.com/?p=206889

While he has only been CEO of Yahoo for less than five months, in the next several days Yahoo CEO Scott Thompson is facing perhaps the most critical moment of his short tenure.

According to sources with knowledge of the situation, the board of Yahoo is not likely to take long in assessing whether he will stay or if he will be let go, due to a controversy around how a non-existent computer science degree got on his bio and also in Yahoo regulatory filings.

A special committee of independent directors is now investigating the matter, including trying to assess the damage has had on Thompson’s ability to lead the Silicon Valley Internet giant.

How quickly the board moves is likely to be a sign of their intent. If within the next days, it is likely to let the former president of eBay’s PayPal payments unit go and replace him with a current company exec; if it waits longer and shows some public support of him — which the board has not done since the scandal erupted — Thompson’s chances are better that he will only be given some sort of censure.

One important task is also closely considering the impact of possible legal problems related to Thompson and others signing documents with the Securities and Exchange Commission that were not accurate.

One thing is clear from interviews with multiple sources, many members of the board have not been happy with how Thompson has handled the matter since activist shareholder Daniel Loeb of Third Point uncovered the problem a week ago.

While first tossing the borked bio as an “inadvertent error,” Thompson was then largely silent about the issue with staff, despite being in close meetings with them, which caused stress among key execs.

Then, he made a public announcement in which he apologized for only the “distraction” caused by the incident and not the error itself as some had hoped he would.

Yesterday, apparently feeling it was time to try to explain things face-to-face, Thompson made another attempt to explain what happened in two separate meetings with his direct reports and then his senior staff, apparently trying to get through to employees that he did not fake his resume nor did he give an inaccurate bio to Yahoo when he was being hired for the job earlier this year.

Thompson thought it was time — now that the board investigation was underway — to answer questions directly, said a source.

Among other things, Thompson gave a somewhat convoluted explanation that it appeared in his bio due to a misunderstanding during an interview with a headhunting firm. And that he never noticed it once it proliferated And that when an NPR interviewer asked him directly about his CS degree, he did not want to correct her in mid-discussion — although others report he said he did not hear the question fully.

Sources said Thompson — who is on the midst of initiating changes across a large and troubled organization, after laying off 2,000 employees — thought the sessions went well, that he clearly communicated that he was taking blame for the problem and its repercussions. Those sources also noted that he received support for doing so after the talks.

But, more than a dozen others I interviewed who were listening remotely — some of whom I sought out and some who contacted me directly — thought Thompson’s complex explanation was deeply problematic and that he tried to foist the blame on others rather than on himself.

Every one of these people expressed the need for him to step down to allow Yahoo to move forward.

What the board thought about the performance is still not clear, said sources, but things are coming down to two distinct scenarios.

The first is a quick parting of the ways with Thompson, within days, either for cause or via a negotiated settlement. Others at Yahoo involved with perpetuating the mistake in the bio are also at risk.

This option is perhaps the more likely at this moment, unless the scandal dissipates and employees continued rancor over the situation can be assuaged soon.

In this case, sources said, Thompson will be replaced by a current board member or a member of the top staff. When directors fired Carol Bartz last fall, CFO Tim Morse became interim CEO and he is one of the likely candidates for the job again.

The second scenario centers on needing Thompson to complete a number of complex transactions related to the sale of Yahoo’s Chinese assets and its re-negotiations with Microsoft over its troubled search partnership, among other things.

In that case, Thompson will be censured in some manner by the board and will also probably have to endure some punishment for allowing false regulatory documents to be filed by Yahoo. Others at Yahoo will also be subject to the same treatment in such an outcome.

How will it turn out?

Only board member Patti Hart has so far paid for her faulty vetting of Thompson, stepping down from the board earlier this week.

But whether she will be the only shoe to drop in what has turned out to be a bizarre wildfire that as raged across Yahoo’s troubled landscape remains to be seen.

Thus, most definitely watch this space this weekend.

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]]> http://allthingsd.com/20120511/is-he-in-or-is-he-out-crunchtime-for-scott-thompson-at-yahoo/feed/ 0 Not So Scott Free? Yahoo's Other Big Shareholder -- Cap Re -- Leaning Toward Supporting Loeb Over Thompson ResuMess. http://allthingsd.com/20120510/not-so-scott-free-yahoos-other-big-shareholder-cap-re-leaning-toward-supporting-loeb-over-thompson-resumess/ http://allthingsd.com/20120510/not-so-scott-free-yahoos-other-big-shareholder-cap-re-leaning-toward-supporting-loeb-over-thompson-resumess/#comments Thu, 10 May 2012 22:56:57 +0000 Kara Swisher http://allthingsd.com/?p=206788

One of Yahoo’s biggest long-term investors, Capital Research and Management, which owns more than 10 percent of the company in two different funds, is leaning toward voting for the slate proposed by activist shareholder Daniel Loeb of Third Point, in the wake of the controversy around the botched bio of its new CEO Scott Thompson.

“Having a CEO with that hanging over his head is really a problem going forward,” said one person with knowledge of the situation. “It’s hard to pretend this is not a problem.”

While sources said Yahoo’s longtime institutional investor — which currently holds large stakes via its Capital Research Global Investors and Capital World Investors funds — is not likely to go public with their voting choice until close to the annual meeting, which will take place sometime this summer.

But its fund managers have told key Yahoo board members of their grave concerns over the situation.

Ironically, in the last proxy fight showdown with Carl Icahn, Capital removed its support of Yahoo’s slate too and was an important influence to many major changes at the company.

Such a move is problematic for Thompson, since the rejection of another big shareholder at its upcoming annual meeting will keep the unusual issue and right in the middle of a noisy proxy fight.

A special committee of the Yahoo board is investigating the situation — in which a fake computer science degree somehow got on the resume of the former president of eBay’s PayPal payments unit and later into official Yahoo regulatory filings.

The problem was uncovered last week — unfortunately for the Silicon Valley Internet giant — by Loeb, who has been banging away on Yahoo since.

A trio of independent Yahoo directors is looking into the mess, with a focus on how that happened, whether anyone at Yahoo knew of the inaccurate bio and how it got there in the first place.

Also of great concern, is how Thompson could have not seen the error in the many years it was on the Web site of eBay and also how he approved a bio that had the inaccuracy in it when he was hired by Yahoo in January.

Worse still, in a 2009 interview, he clearly did not say he did not have such a degree in with a radio show host when directly asked about it.

“It’s a little hard believe an executive of this level would have missed such a thing, when he had so many opportunities to fix it,” said one source. “And, if he did overlook it that many times, that’s a problem too.”

In fact, according to a report earlier today by Business Insider that I also confirmed, Thompson told employees today in two separate meetings that he did miss the error since it was placed there — inexplicably — in 2004. In the meeting, he blamed a low-level headhunting staffer who added it incorrectly, an error that then proliferated.

Thompson also said he did not provide a resume to the company in his hiring process — say whaaaat, but true — although this still does not absolve him from the original error.

As to the interview: Thompson said he did not want to be rude and correct the host of TechNation, Moira Gunn, after she clearly asserted to him he had a computer science degree as part of a question on his qualifications. Others present at the meetings said he said he did not hear the question.

But, in an video interview with me yesterday, though, Gunn said she and Thompson discussed a computer science education in a way that left the clear impression that he had obtained one.

While Thompson’s excuse may beggar the imagination of some, it’s his story and he’s sticking to it. In all seriousness, his complete lack of willingness to take responsibility for the error — even if it was not his fault — itself is a little startling.

Because what’s not clear is how the bio was miraculously correct in eBay’s official filings and also if it is plausible that he never saw the mistake.

Numerous communications execs at Internet companies told me that it was unusual for a high-level exec not to pay close attention to information that went out about them, especially in legal filings. In addition, just as many execs are made to check and swear on their bios that go into such documents.

In fact, it was Thompson’s job to make sure the things written about him were correct at all times. As CEO, as a major Silicon Valley player pointed out, he is required by federal law to personally certify Yahoo’s Securities and Exchange Commission filings. Violations of these rules carry financial and also potential criminal penalties.

Sources said the board is worried about that credibility issue too and it puts Thompson in an ever-dicier position. Noticeably, the board has yet to make a public statement of support for him on the issue.

Also a major worry for the directors is the mostly negative response to the situation from Yahoo employees, who are deeply upset that Thompson’s error was not caught and that he might not be treated in the same way as anyone else who turned in a false resume, whether it was by accident or not.

A Yahoo spokeswoman told me last week that there was also support internally for Thompson, but in many dozens of interviews I have done with Yahoo employees and a continued monitoring of internal bulletin board, the tone is not in his favor by any means.

Like I said, it’s a dicey time to be Scott Thompson right now.

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]]> http://allthingsd.com/20120510/not-so-scott-free-yahoos-other-big-shareholder-cap-re-leaning-toward-supporting-loeb-over-thompson-resumess/feed/ 0 Exclusive: Yahoo Director in Charge of Botched CEO Vetting to Step Down From Board http://allthingsd.com/20120508/exclusive-yahoo-director-in-charge-of-botched-ceo-vetting-to-step-down-from-board/ http://allthingsd.com/20120508/exclusive-yahoo-director-in-charge-of-botched-ceo-vetting-to-step-down-from-board/#comments Tue, 08 May 2012 15:50:13 +0000 Kara Swisher http://allthingsd.com/?p=205076

CSLie has claimed its first victim, although the mystery is still unsolved.

Patti Hart — the Yahoo director in charge of the search that resulted in the hiring of Scott Thompson as its CEO, making her directly responsible for a clearly botched vetting of his academic record — will not stand for re-election to the board at the next annual meeting, according to sources close to the situation.

Hart — who is CEO of International Game Technology, which makes electronic gaming equipment and systems products — is resigning. Apparently, said sources, her own board asked her to remove herself from the Yahoo mess to better focus on the company she actually runs.

But she is perhaps just a few steps ahead of being pushed, given her key role in the hiring of Thompson, who was president of eBay’s PayPal payments unit when he cold-emailed Yahoo director and Intuit CEO Brad Smith seeking the job.

A Yahoo spokesman declined to comment.

[UPDATE: Yahoo confirmed the inevitable departure later in the day and said the Yahoo board would have nine members going forward. Hart also released a statement, confirming the move.]
Hart, who came to the Yahoo board in 2010, has been head of its corporate governance and nominating committee.

The departure makes her the first casualty — but definitely not the last — of the controversy over how a fake college degree managed to get in Yahoo’s regulatory filings via Thompson’s inaccurate bio.

The issues around how Thompson was hired — including how background checks on him failed to discover that he never got a CS degree from the Boston area’s Stonehill College, as his longtime bio on eBay had claimed — are part of a new investigation by the board.

That will be officially announced later today, along with the hiring of an outside law firm to conduct the probe, which will be headed by independent director Fred Amoroso.

[UPDATE: Yahoo officially said it was forming a special committee to look at Thompson's bio snafu and the circumstances around his hiring. Along with Amoroso, the other members are John Hayes and Thomas McInerney, independent directors who joined the board in April.

"The special committee and the entire Board appreciate the urgency of the situation and the special committee will therefore conduct the review in an independent, thorough and expeditious manner," a statement from Yahoo said.

Interestingly, the statement did not include a show of support for Thompson, which often happens in such circumstances.]

They will have a lot to investigate. Such as this mystery: Thompson’s correct bio appeared in filings eBay made with the Securities and Exchange Commission, while Yahoo’s similar documents were inaccurate about his educational credentials.

Also under scrutiny: How the falsehood was added to Thompson’s public resume, and who put it there; why Thompson never noticed the error, there since at least 2004; why he declined to correct it when asked directly about it; and who at Yahoo might have known about the problem before the hiring.

It’s a basic case of who, what, where, when and how. And, most of all, why anyone would make such a dumb mistake.

Hart would seem to have all the answers to that, along with a forensic firm that worked on the vetting. Key Yahoo staffers were also involved, said sources, although its headhunting firm on the CEO search, Heidrick & Struggles, was not used in relation to Thompson.

Presumably, there is a paper trail of some sort, which was the subject of a legal demand by activist shareholder Daniel Loeb of Third Point yesterday. He uncovered the bio error last week, in the middle of pressing a proxy fight to garner board seats.

Loeb’s allegations also nailed Hart in much-less-egregious padding of her own college record, making it appear as if she had economics and marketing degrees. She has one in business administration, with “specialties” (Yahoo’s ridonkulous word, not mine) in economics and marketing.

While Hart’s leaving might assuage some, providing a convenient scapegoat to the bizarre situation, this is by no means over for Yahoo or Thompson.

Another increasingly potent issue is the ever-declining morale at the Silicon Valley Internet giant over the company’s odd response — it initially called the bio problem an “inadvertent error,” without further explanation — and also Thompson’s lack of transparency on the issue.

He released an email to employees last night, apologizing for the “distraction” of the resume issue, but not for the error itself.

That, and other of Thompson’s actions — he has been described to me, by many close to the situation, as defiant over the issue, and as blaming Loeb for conducting a personal vendetta — did not sit well with many, both inside and outside Yahoo.

A Yahoo spokeswoman told me earlier this week that there is much support for Thompson internally and externally, but declined to provide specifics.

But message boards I read were mostly negative about him, as are a plethora of direct emails to me on the situation. One clever commenter on this site bemoaned that Thompson might get off “Scott-free.”

Ouch! Nonetheless, the atmosphere at Yahoo is indeed unsettled.

“Sentiment from employees is unanimous that he must go,” said a Yahoo employee, who has no personal agenda that I can grok, in a common refrain. “He clearly knew and lied for years; and his handling since exposed has been unacceptable.”

Unacceptable or not, though, Hart is the only one going for now. But stay tuned.

Until then, here’s an appearance I made today on WSJ.com to talk about Hart’s departure:


[ See post to watch video ]

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]]> http://allthingsd.com/20120508/exclusive-yahoo-director-in-charge-of-botched-ceo-vetting-to-step-down-from-board/feed/ 0 CEO Says Sorry to Yahoos for Borked Bio "Distraction" -- But Will Mea Culpa Work Without an Apology for Error? (Memo) http://allthingsd.com/20120507/ceo-apologizes-to-yahoos-but-will-the-mea-culpa-work-without-an-explanation-for-the-borked-bio-memo/ http://allthingsd.com/20120507/ceo-apologizes-to-yahoos-but-will-the-mea-culpa-work-without-an-explanation-for-the-borked-bio-memo/#comments Mon, 07 May 2012 23:59:45 +0000 Kara Swisher http://allthingsd.com/?p=204971

He’s sorry. Deeply regrets. Apologizes. Takes full responsibility for the unfortunate distraction to the people.

No, it’s not a scandal-ridden politician caught in some compromising position, but Yahoo CEO Scott Thompson talking about the hubbub created by the addition of a fake computer science degree on his bio.

This kind of move is, of course, PR 101, but it still took Yahoo several days after activist shareholder Daniel Loeb uncovered the resume problem, which the Silicon Valley Internet giant said was an “inadvertent error.”

In his new memo, which comes after a terse one on Friday, Thompson said he was upset by how the controversy has impacted the company.

“As I told you on Friday, the board is reviewing the issue and I will provide whatever they need from me. In the meantime, I want you to know how deeply I regret how this issue has affected the company and all of you,” he wrote. “We have all been working very hard to move the company forward, and this has had the opposite effect. For that, I take full responsibility, and I want to apologize to you.”

It is interesting to note that he said nothing in the new email about being actually sorry for the still-mysterious inaccuracy in his bio.

It was present since 2004 when he worked at eBay and also somehow got into the Yahoo regulatory filings after he was hired earlier this year.

Presumably, that information is to come after an investigation by Yahoo’s board, headed by independent director Fred Amoroso, which is proceeding now.

It will be announced officially tomorrow, but it is already in the works, as Thompson noted.

Earlier today, Loeb demanded all books and records about the circumstances of Thompson’s hiring and has made hay out of the issue.

To calm the story, said Thompson to his new troops: “I am hopeful that this matter will be concluded promptly.”

Unfortunately for him, that hope is probably also going to turn out to be inaccurate.

But read it for yourself. Here’s the internal memo that just went out to all Yahoo employees from beleaguered Thompson, which I obtained from the company.

Yahoos:

I wanted to share some additional thoughts with you related to the disclosure of my academic credentials.

As I told you on Friday, the board is reviewing the issue and I will provide whatever they need from me. In the meantime, I want you to know how deeply I regret how this issue has affected the company and all of you. We have all been working very hard to move the company forward, and this has had the opposite effect. For that, I take full responsibility, and I want to apologize to you.

In my note Friday, I said I would be focused on continuing to do what needs to get done. That’s because I feel I owe it to all of you to make sure that nothing disrupts the progress we’ve made in just a few short months due to all of your focus, commitment, and hard work. As you’ve heard me say many times, we have a tremendous business with incredible assets, and we can win by putting our customers first. The progress I shared with you in the first quarter should make clear that we intend to move fast and deliver on the potential of the business for our customers, shareholders, and all of you.

I know the board plans to conduct the review thoroughly and independently, and I respect that process. I am hopeful that this matter will be concluded promptly. But, in the meantime, we have a lot of work to do. We need to continue to act as one team to fulfill the potential of this great company and keep moving forward. You have my word that all my energy and attention will be on that mission.

Scott

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]]> http://allthingsd.com/20120507/ceo-apologizes-to-yahoos-but-will-the-mea-culpa-work-without-an-explanation-for-the-borked-bio-memo/feed/ 0 As Yahoo CEO Reaches Out to Top Staff, Board Meets to Weigh "Options" (I.E., Deciding Who Gets to Take the Borked Bio Blame) http://allthingsd.com/20120506/as-yahoo-ceo-reaches-out-to-top-staff-board-meets-to-weigh-options-i-e-figuring-out-who-gets-to-take-the-borked-bio-blame/ http://allthingsd.com/20120506/as-yahoo-ceo-reaches-out-to-top-staff-board-meets-to-weigh-options-i-e-figuring-out-who-gets-to-take-the-borked-bio-blame/#comments Mon, 07 May 2012 03:27:43 +0000 Kara Swisher http://allthingsd.com/?p=204185

Even as Yahoo’s board was kibitzing all weekend about how to handle the continuing resume-padding controversy around its recently hired CEO Scott Thompson — including hiring its own outside crisis communications firm to represent it — he was working the phones to keep top staff apprised of the evolving situation.

While Thompson told those he spoke to that he was limited in what he could say and blamed a “personal vendetta” by an activist shareholder for his troubles, being proactive in this regard is probably a good idea.

That’s because multiple sources said he said exactly nothing in various strategy meetings with top employees last week about allegations leveled by Dan Loeb of Third Point, which proved correct, that Thompson had not gotten a computer science degree in college, as his longtime bio had claimed.

“It was the gorilla in the room and it was awkward in the extreme,” said one exec present at the meetings. “He never brought it up, which was even worse.”

At this point, it seems unlikely that Thompson can regain the confidence of many at Yahoo — even though a company spokeswoman said he received a lot of incoming support too, both externally and internally — until he can render some cogent explanation about how the borked bio got into both Yahoo’s public site and also its more critical regulatory filings.

Even more mysteriously, how the error was never present in filings with the Securities and Exchange Commission made by eBay, where Thompson led its PayPal payments unit, although his public eBay bio has also been wrong for close to a decade.

And, most of all, how was it that Thompson never caught the mistake himself — even when directly asked about it — despite the likelihood of reviewing it multiple times over those many years and ultimately certifying it for Yahoo’s own SEC filings.

Calling Encyclopedia Brown to solve the Case of the Computer Science Degree That Wasn’t!

Thompson has given no explanation about the debacle to the bulk of the Yahoo staff at all levels, save for an information-free and terse note to employees on Friday afternoon that essentially asked them to focus on their work instead of his bizarre crisis.

Unfortunately for him, many Yahoos are focusing a lot on Thompson, with message boards at the Silicon Valley Internet chastising their CEO and giving him support that is tepid at best. From interviews I have had with two dozen employees this weekend, to say morale is at an all-time low is perhaps understating the situation.

Here is a short selection of comments that were read to me, for example:

“Resume padding is one thing, but lying about something that is so easy to check is puzzling.”

“There is no reason to let it slide by … This isn’t some guy who’s trying to impress a date … It’s sad that we just accept this kind of stuff from corporate heads and politicians.”

“Having some document to prove you can do a job is not all that important, lying about it is.”

What appears to trouble employees the most in the threads I was read was the nonchalance of the initial Yahoo statement about the issue, which called the addition of a fake degree on Thompson’s bio an “inadvertent error.”

“From a pure employee perspective, it feels like it is a violation of their principles,” said one person, reflecting a dozen or more conversations I had this weekend up and down the organization. “And anyone else would probably be immediately fired for this, even with an explanation.”

Said another: “He clearly knew and lied for years; and his handling since exposed has been unacceptable.”

As I noted above, a company spokeswoman said there was also much support for Thompson (pictured here) within the company, but declined to provide any quotes or details.

Presumably, some answers will be coming from a board investigation aimed at getting to the bottom of the situation, including trying to grok who put the error in the bio in the first place.

My bet: They’ll try to pin it on a lower-level minion, although that will not fly with a lot of people.

Including me, because whoever typed in the faux degree, its presence there has been too long for Thompson not to be responsible for it.

Flunky error or not, there are important questions about whether Thompson himself provided a bio that contained the inaccuracy to the board when he put himself forth for the job via direct emails to Yahoo director and Intuit CEO Brad Smith.

That line of thought basically boils down to: Can Thompson not read?

More problematic is the fact that the placement did not come via Yahoo’s headhunter on the CEO search, Heidrick & Struggles, which apparently was not charged with doing a background check on Thompson.

Instead, the director in charge of the search, Patti Hart, sources said, hired another forensic firm, which appears to have missed Thompson’s erroneous academic record.

The only thing completely clear amidst all the confusion: Hart screwed up by botching an extremely simple part of a vetting she was charged with. That makes her vulnerable, of course, along with other Yahoo board members or staffers closely involved in the talent search.

While Hart (pictured here) is in a much dicier position, Thompson still appears to have initial board backing — at least for today — as it’d be a very tough call to fire yet another CEO so quickly in the middle of several key deals for Yahoo, as well as a proxy fight.

Said one person close to the situation, the board is still considering its “options,” in an effort that is being led by independent board member Fred Amoroso.

So, it will be instructive to see how the board will proceed tomorrow — especially since it is likely that Loeb will lob a lawsuit to try to get more information on the Thompson hiring process.

But it’s started by hiring its own outside communications firm, Sard Verbinnen, which has handled other crises for Yahoo in the past.

Sard’s Charles Sipkins — welcome back, Charlie! — had no comment about the board’s next move, except to reiterate its statement from last week that it is looking into the Thompson bio mess and will make appropriate disclosures at some point.

We can’t hardly wait.

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]]> http://allthingsd.com/20120506/as-yahoo-ceo-reaches-out-to-top-staff-board-meets-to-weigh-options-i-e-figuring-out-who-gets-to-take-the-borked-bio-blame/feed/ 0 They Shoot Yahoo CEOs, Don't They? But Not Without a Really Smoking Gun and a Much Stronger Board. http://allthingsd.com/20120505/they-shoot-yahoo-ceos-dont-they-but-not-without-a-really-smoking-gun-and-a-much-stronger-board/ http://allthingsd.com/20120505/they-shoot-yahoo-ceos-dont-they-but-not-without-a-really-smoking-gun-and-a-much-stronger-board/#comments Sat, 05 May 2012 16:33:02 +0000 Kara Swisher http://allthingsd.com/?p=203924

Earlier today, Yahoo’s persistent thorn, activist shareholder Dan Loeb of Third Point poison-penned another letter to the board of the Silicon Valley Internet company, demanding that Yahoo fire its new CEO Scott Thompson, as well as director Patti Hart, over bizarre inaccuracies related to their academic achievements.

“Permitting Mr. Thompson and Ms. Hart to stay with the Company after apparently violating the Code of Ethics sends a message to all Yahoo! employees that a different set of rules applies at the top,” Loeb wrote.”[Yahoo must] terminate Mr. Thompson for cause immediately given his demonstrable unsuitability to remain Chief Executive Officer and a director of Yahoo! and accept the resignation of Ms. Hart for similar reasons.”

And while many across the blogosphere — including some very clever tweets — called for his head tout de suite, that’s just not going to happen.

At least for now, at this early point in a controversy over Yahoo filing legal documents that misrepresented Thompson’s long-ago degree from Stonehill College.

In a nutshell: Thompson does not have a computer science degree, as he had maintained he did in public bios for almost a decade, a falsehood that mysteriously seeped into documents Yahoo filed with the Securities and Exchange Commission.

That’s bad news for Yahoo, for sure, on many levels, but moving against Thompson at this moment is not likely to be the answer — for the short term, at least.

That’s due to many reasons, that I like to think of it as three hopelessly complex puzzles that need solving pronto.

The What-Did-Yahoo-Know-and-When-Did-It-Know-It Question

There is no question the first thing Yahoo’s board needs to do is a thorough investigation to determine how a borked bio could proliferate so widely and for so long.

Most importantly, Yahoo will have to reveal if Thompson actually gave them this incorrect information, as he aggressively lobbied for the then-open CEO job.

As I had previously reported several times, Thompson cold-emailed a Yahoo director — Intuit CEO Brad Smith, as it turns out — despite not being on the list of potential candidates. Thompson was then shuttled over to Hart, who was running the vetting process with the help of headhunting firm Heidrick & Struggles, and hired within weeks.

Oddly, sources said Thompson never filled out the required informational papers for the job, nor did Heidrick conduct the normal background check on him. Instead, another forensic firm Yahoo hired did the work.

If it turns out Thompson gave any of them the bad bio info, it would be quick curtains for him.

But if Yahoo’s board members obtained his info on their own, the next key query would be how no one at Yahoo — especially its legal and compliance staffers, as well as outside help — managed to catch the problem during the vetting of Thompson.

Here are some good questions to start with:

Who put a faux computer science degree on Thompson’s bio in the first place, why and when did it happen?

Where did Yahoo get the inaccurate information?

Who was in charge of checking Thompson’s academic record for Yahoo?

And, who checked the work of the checkers?

The problem is made more complicated, because correct information was easily available in the SEC filings of eBay for years, since Thompson was head of its PayPal payments unit.

While the resume information was indeed wrong on eBay’s Web site and on numerous bios of Thompson for years, how did eBay legally get it right while Yahoo did not?

That calls into question the expertise of the company, its directors and those they hired to make sure execs were completely on the up and up, a task they clearly failed at.

If rank incompetence is the reason, which it looks like it might be, expect certain board members and other Yahoo staffers to go, along with anyone who helped in the Thompson vetting, or lack thereof.

Unless, of course, the gang-that-couldn’t-shoot-straight actually did shoot straight and some one at Yahoo found out about the educational discrepancy before the new CEO was announced, but declined to fix it.

While sinister, such a scenario is not entirely implausible, given how much pressure Yahoo was under at the time to hire a CEO quickly, due to Loeb and his looming proxy fight.

If any evidence were to surface that this was so, it is curtains all around, which would rain the kind of disaster down on Yahoo’s Sunnyvale HQ that would make Loeb’s attacks look like a Nerf battle. Instead, it would be “The Hunger Games” — except that no one survives.

The Chaos-in-Sunnyvale Conundrum

Which brings us to the profound implications of Yahoo jacking its second CEO within six months.

While it’s easy to yell “Fire the CEO” on a crowded Twitter, it’s simply not so easy in practice.

How long did it take Yahoo’s lugubrious board to figure out Carol Bartz needed to go? A … long … time. (And, she had a CS degree!)

More to the point, Thompson — and his not-so-merry band of consultants from Boston Consulting Group and, this week, McKinsey & Company — has only just completed a massive layoff of 2,000 employees and a jarring restructuring of management.

He’s also in the early stages of rolling out a new and decidedly still-squishy strategic plan to top execs (also just this week), along with working on some other key initiatives.

That includes renegotiating its search partnership with Microsoft; noodling around on a possible deal with Google; contemplating the sale of a variety of assets; and — oh, yes — trying to take on social networking Godzilla Facebook over patent infringement.

Busy much?

But, most importantly, Thompson is now the umpteenth Yahoo CEO to be working on the never-ending talks with its Asian partners over selling back a piece of the company’s lucrative stake to them.

While Yahoo CFO Tim Morse and head lawyer Mike Callahan are the point men on the deal, the lack of CEO would be an issue in the now-proceeding again talks.

This is a sale that must — and I underscore must — get done and soon, giving Yahoo much-needed breathing room and a whole lot of cash to fork over to increasingly disgruntled shareholders.

So, expect Yahoo to try to milk that deal for all it’s worth in the coming week, in order to give the appearance, at least, of positive forward momentum.

And, like it or not, Thompson has to play a key role in it getting done.

Thus, the likelihood of wait-and-see over point-and-shoot on Thompson is higher than you might think.

That’s especially true given four members of the board are leaving within six weeks and have either or are in the process of being replaced by new members.

Then, Thompson will be their problem to solve.

Again, no small thing, since the old crew — led by feckless Chairman Roy Bostock — is not likely to want to end its appalling tenure with yet another disaster.

Such a move would further tarnish the legacy of its outgoing directors, although I am not sure how it could be any more sullied, given their consistent record of one bad decision after the next.

What do I really think? I think this cursed board will maintain its 100 percent score of doing the wrong thing at the right time.

It could be a different case with the new directors, of course, who all seem pretty sharp and not as easily impressed by a record of failure.

They will surely be monitoring Thompson carefully, as will employees, who have taken to internal message boards with a rage not seen in a while over the resume debacle.

Their morale might be one uncertainty impacting Thompson’s fate. If a lot of key employees continue to bolt Yahoo or those remaining more loudly express their disdain for the bio antics, the new directors might listen.

The Whatever-Loeb-Says-We-Won’t-Do-Till-Later Head-Scratcher

Which brings us back to Loeb, whose noisy campaign to grab seats on the Yahoo board has certainly hit home this week.

And, though Yahoo likes to ding him a lot, since he started his campaign of terribly entertaining investor terror, a lot of what he’s been calling for has happened.

That includes a major flushing of the board — with five longtime members, including co-founder Jerry Yang, going, going and gone.

In addition, Loeb brought pressure to slow down some questionable deals, from Yahoo’s PIPE dream to a tax-free spinoff in Asia in a deal only an accountant could love.

He’s also — though they try to deny it — got the Yahoo directors in the dangerous habit of reacting to him, rather than playing their own game.

While the Yahoo board has resisted any deal with Loeb (pictured here), blaming him for rejecting their kind offers of settlement, it is he who is setting the tone more than Yahoo.

And that tone is of alarm and trouble and chaos at Yahoo.

That’s not going to work to convince other Yahoo investors to back his cause — in fact, Loeb has a decidedly uphill battle to win his proxy challenge — he has still scored a direct win with the bio relevations.

So far, though, Loeb has not sunk Yahoo’s battleship, so it is unlikely the board will acquiesce to his latest demand of Thompson being fired by noon on Monday.

Maybe it will eventually, or maybe it will just scold Thompson or maybe it will do nothing at all.

All that is an unknown — a riddle, wrapped in a mystery, inside an enigma, with a lot of managerial incompetence thrown in. And that, most of all, is the sad definition of today’s Yahoo.

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]]> http://allthingsd.com/20120505/they-shoot-yahoo-ceos-dont-they-but-not-without-a-really-smoking-gun-and-a-much-stronger-board/feed/ 0 Yahoo's Thompson Asks Employees to "Stay Focused" -- Except Not on Him http://allthingsd.com/20120504/yahoos-thompson-speaks-asks-employees-to-stay-focused-except-not-on-him-memo/ http://allthingsd.com/20120504/yahoos-thompson-speaks-asks-employees-to-stay-focused-except-not-on-him-memo/#comments Sat, 05 May 2012 01:04:30 +0000 Kara Swisher http://allthingsd.com/?p=203962

Of course, the Yahoo internal memo for the Yahoo internal crisis of the week!

Here is CEO Scott Thompson’s email today to employees about the controversy around the fact that he does not have a computer science degree, as described in his bio in Yahoo’s regulatory filings.

Oh, just read it:

From: Scott Thompson
Sent: Friday, May 04, 2012 4:03 PM
To: all-worldwide@yahoo-inc.com
Subject: Staying Focused

Yahoos –

I am sure you have seen the reports of questions raised regarding my undergraduate degree. As we said yesterday, the board is reviewing the matter and, upon completion of its review, will make an appropriate disclosure to shareholders. In the meantime, I’m doing what I hope all of you are doing — staying focused on our customers, our shareholders, our team and moving Yahoo! forward, fast.

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]]> http://allthingsd.com/20120504/yahoos-thompson-speaks-asks-employees-to-stay-focused-except-not-on-him-memo/feed/ 0 How Did a Phantom CS Degree Get on CEO's Bio in SEC Filings? Yahoo's Not Saying. http://allthingsd.com/20120503/how-did-phantom-cs-degree-get-on-ceos-bio-in-sec-filings-yahoos-not-saying/ http://allthingsd.com/20120503/how-did-phantom-cs-degree-get-on-ceos-bio-in-sec-filings-yahoos-not-saying/#comments Thu, 03 May 2012 23:08:24 +0000 Kara Swisher http://allthingsd.com/?p=203523

Back in early 2008 when Scott Thompson got the job as president of eBay’s PayPal, the regulatory filing accurately listed his educational pedigree:

“Mr. Thompson holds a B.S. degree in Accounting from Stonehill College.”

The eBay filings over the next several years — until he left the online commerce giant for a much bigger job as CEO of Yahoo in January of this year — remained consistent.

But, curiously, Thompson’s bio on eBay’s Web site added an additional degree to his curriculum vitae for more than a half-dozen years, different from its Securities and Exchange Commission documents:

“Scott received a bachelor’s in accounting and computer science from Stonehill College.”

As it turned out, according to the Boston-area school, he had not gotten a computer science degree at all and graduated with the Bachelor’s of Science in Business Administration (Accounting).

An eBay spokesman I called today had no explanation for the discrepancy, except to note that its legal filings were correct and that it was an error due to the lack of cross-checking the Web bio, which was apparently posted by Thompson’s staff at the time.

Also without explanation — and perhaps more seriously — is that the false computer science degree claim somehow then made it into Yahoo’s SEC filings, as well as his Web site bio, when Thompson took the helm. (The inaccurate line about his schooling is in its latest filing and all others.)

Without providing further explanation of how it got there, Yahoo today called the mistake an “inadvertent error” and said it had no bearing on his ability to lead the Silicon Valley Internet giant.

But the long troubled company might be speaking too soon, given that the revelation was uncovered this morning by activist shareholder Dan Loeb of Third Point. Loeb has called into question the vetting process that Yahoo’s directors did to hire Thompson, as part of a proxy fight he is waging to gain several board seats.

And, while such an allegation is normal for an increasingly nasty battle, Loeb has hit his mark with deadly accuracy this time, putting into question both Thompson’s credibility and Yahoo’s obvious botching in its vetting of him.

“If there is a good explanation for the apparent discrepancies regarding the academic records of Mr. Thompson and Ms. Hart, we are confident that it will be provided promptly,” wrote Loeb in a letter to Yahoo’s board today. “However, in the event that there is no good explanation, we expect the Board to take immediate action.”

The Ms. Hart that Loeb was referring to is Patti Hart, the board member who ran Yahoo’s process for hiring a new CEO after it fired Carol Bartz — who does have a CS degree — last year. (In his letter today, Loeb also correctly called into question how she portrayed her own college degree in a more impressive fashion than was accurate.)

The search for a new Yahoo CEO was conducted by headhunter Heidrick & Struggles, which did not have Thompson on its list of candidates, since it had placed him at eBay many years before.

In fact, according to numerous sources, without involvement by Heidrick, it was Thompson who cold-emailed key Yahoo board members, nominating himself for the CEO job. He was quickly brought in for interviews and, presumably, a thorough vetting.

Despite that and despite the fact that eBay’s SEC filings did not list a computer science degree, Hart or others seem to have totally missed the discrepancies and it was added to Thompson’s official Yahoo bio and legal filings.

It’s not clear what happens next or if there are any legal implications, beyond a needed correction by Yahoo with the SEC — which already took the entire line about Thompson’s education off his Web bio today.

Yahoo’s not talking either, with its spokesperson declining to provide any explanation for its lapse or who had maintained that Thompson had that degree when he did not.

It’s essentially a mistakes-were-made-let’s-move-on defense.

I think not, for my part, and a number of prominent Silicon Valley people I spoke to today agreed that these issues tend to spin out of control.

“This is going to get very messy, very quickly,” said one person in a common sentiment I heard.

Maybe, and it’s not clear if the company has to release any details of how this occurred or if its board needs to investigate the situation.

In addition, Thompson himself is probably not at risk unless it can be definitely proved he was the one who misrepresented having the degree in the first place. He can simply say he had no idea who added it to the eBay Web site and that he did not notice it there on on the Yahoo Web site and SEC filings.

While that makes him look careless, how big a deal it becomes with shareholders, as well as Yahoo employees, is also an unknown. While a computer science degree is not a requirement for a CEO of a tech company — both Facebook’s Mark Zuckerberg and Microsoft’s Bill Gates dropped out of college and did pretty well in computer science anyway — tech resume padding, even inadvertent, is not a characteristic that is going endear Thompson to anyone.

Plus, it just handed Loeb a very potent weapon in his fight against Yahoo, the very day after the company said the hedge fund manager’s expertise was not “relevant” to gaining a board seat.

One thing’s for sure: Loeb is most certainly very good at vetting.

RELATED POSTS:

]]> http://allthingsd.com/20120503/how-did-phantom-cs-degree-get-on-ceos-bio-in-sec-filings-yahoos-not-saying/feed/ 0 Confirmed: Schultz and Efrusy to Leave Groupon Board; "Accounting Types" Joining http://allthingsd.com/20120430/exclusive-schultz-and-efrusy-to-leave-groupon-board-accounting-types-joining/ http://allthingsd.com/20120430/exclusive-schultz-and-efrusy-to-leave-groupon-board-accounting-types-joining/#comments Mon, 30 Apr 2012 19:40:37 +0000 Kara Swisher http://allthingsd.com/?p=201483
Spencer Platt | Getty Images News

According to sources close to the situation, Starbucks Chairman and CEO Howard Schultz and Accel Partners’ Kevin Efrusy will be stepping down from the board of Groupon.

Schultz’s departure will be effective today, but Efrusy — who was critical to the initial funding around the Chicago-based daily deals site — will not be standing for re-election at the company’s annual meeting in June.

The departures are voluntary, but sources said the pair will be replaced by two new directors with significantly more fiscal oversight experience, whom one source characterized as “accounting types.”

(Update: Groupon just posted a press release noting the board departures, with the names of the new board pencil pushers: Daniel Henry, CFO of American Express, and Deloitte Vice Chairman Robert Bass. Henry joins immediately in Schultz’s place. Full press release below.)

It is a move that is critical, given Groupon’s recent series of missteps around its financial reporting that have hurt both its reputation and, more importantly, its stock.

Interestingly, several sources noted that Schultz almost left the board right before Groupon’s public offering last fall, after several ongoing disputes with its management, but stayed on so as not to scuttle its IPO.

The board of the company has not involved itself as prominently in the accounting messes at the company, but it appears as if they will begin to now.

It must, given Groupon shares have been trading at a low of $11. Its stock has dipped to $10.98 today.

As Tricia Duryee wrote recently about the fall:

At that price, it is now worth just over $7 billion, down 57 percent since the company went public last November and well off the more than $10 billion it was valued at as tech’s hottest start-up of 2011.

Ironically, Groupon’s current market valuation is actually not much more than the $6 billion offered for it by search giant Google in late 2010.

The fall of Groupon has been swift, from the honorific of being the fastest-growing company ever to one that cannot keep control of that runaway growth.

That’s perhaps no surprise.

Perhaps most significantly, Groupon went public in just four years, delivering the biggest tech IPO since Google.

The quicksilver move was typical for it. In just two years’ time, the company ballooned from 37 employees to 9,625 and from serving five markets in the U.S. to 175 in North America alone. And that’s leaving out massive expansion abroad. In the past year, Groupon has acquired roughly 17 companies, including many international copycats.

The company also has entered many new segments, expanding from selling lower-priced and simpler deals on restaurants and spas to more complex and pricey arenas, including travel, physical goods and luxury items.

But Groupon is now learning that its original business does not work across just any segment, especially to more discerning customers of its higher-level and more expensive offerings.

In fact, it was those newer and potentially more lucrative markets that forced the company recently to revise the company’s fourth-quarter report after returns skyrocketed on luxury items, such as Lasik eye surgery.

The problems forced Groupon to lower revenue in the period by $14.3 million and net income by $22.6 million. It is now reporting a wider net loss of $64.9 million on revenue of $492 million, pushing it further away from its goal of profitability.

The company also disclosed at the time that independent auditors had noted “material weakness” in its financial controls. In addition, The Wall Street Journal reported that the Securities and Exchange Commission was examining Groupon’s revision. 

With many companies, investors might have shrugged off such accounting issues, but the impact on the stock has been greater since they are only the latest in a string of similar mistakes at Groupon.

In its pre-IPO period, for example, Groupon was forced to restate revenues after counting both its portion of the revenue and the revenue that goes to the merchant together. It also had to dump a controversial accounting metric that made the company look more profitable than it was, because it did not include important costs, such as critical online marketing expenses to attract new customers.

Those came after the company retracted a statement by Eric Lefkofsky, Groupon’s co-founder and executive chairman, who told Bloomberg in an interview that Groupon would be “wildly profitable.”

At least the wild part was accurate.

Much of the blame for these missteps by Wall Street is being aimed at CEO and co-founder Andrew Mason, the iconoclastic 31-year-old entrepreneur who is largely responsible for defining the company’s culture, as well as Jason Child and Joe Del Preto, the chief financial and accounting officers, respectively.

Child joined the company in December 2010, coming from Amazon, where he held several roles over a 10-year period — including VP of finance, international, and director of investors relations. Prior to joining Amazon, he worked at Arthur Andersen as a certified public accountant.

Del Preto has been Groupon’s chief accounting officer for the past year and, before that, he was the company’s global controller for three months. Before Groupon, he was controller and VP of finance at Echo Global Logistics and also served as controller at InnerWorkings, the same company where Mason was a computer programmer in his early career.

Mason, of course, is the best known and the person most responsible for establishing the company’s whimsical culture and managing — or mismanaging, depending on how you look at it — Groupon’s hard-charging growth.

It will also be up to him to turn it all around, as the company sinks in both value and investor regard. Since the restatement, Mason has said little about how he intends to do that. In February, when Mason concluded Groupon’s first-ever earnings call, he said: “Thanks, guys, this was a lot of fun, and I look forward to many more of these.”

It’s not clear fun will be on the agenda at his next outing on Groupon’s first-quarter call in mid-May.

Here is the official press release from Groupon on the board changes:

Groupon Appoints Two Directors to Board Daniel Henry, CFO of American Express, and Robert Bass, Vice Chair of Deloitte

CHICAGO — (BUSINESS WIRE) — Groupon, Inc (http://www.groupon.com) (NASDAQ:GRPN) today announced that Daniel Henry, the chief financial officer of American Express Company and Robert Bass, a vice chairman of Deloitte LLP will join its Board of Directors. Both will serve on the Audit Committee with Audit Chair, Ted Leonsis. Daniel Henry was appointed to the Board on April 26, replacing Howard Schultz, who has stepped down from the Board. Robert Bass will stand for election at the annual stockholder meeting to be held on June 19 following his retirement from Deloitte, replacing Kevin Efrusy, who will not stand for reelection at that time. “With their deep financial, accounting and operational experience, Dan and Bob will provide invaluable expertise to the Board going forward,” said Eric Lefkofsky, Groupon Chairman.

Daniel Henry, 62, has been the Chief Financial Officer of American Express Company since October 2007. Henry is responsible for leading American Express Company’s finance organization and representing American Express to investors, lenders and rating agencies. He has also served as Executive Vice President and Chief Financial Officer of U.S. Consumer, Small Business and Merchant Services and joined American Express as Comptroller in 1990. Prior to joining American Express, Henry was a partner with Ernst & Young.

Robert Bass, 62, has been a vice chairman of Deloitte LLP since 2006, and a partner in Deloitte since 1982. He will retire from Deloitte on June 2, 2012. Bass has specialized in e-commerce, mergers and acquisitions and SEC filings. At Deloitte, Bass is responsible for all services provided to Forstmann Little and its portfolio companies and is the advisory partner for Blackstone, DIRECTV, McKesson, IMG and CSC. He has also previously been the advisory partner for priceline.com, RR Donnelley, Automatic Data Processing, Community Health Systems and Avis Budget. He is a member of the American Institute of Certified Public Accountants and the New York and Connecticut State Societies of Certified Public Accountants.

“I’m thrilled to have been a part of Groupon’s development,” said Kevin Efrusy. “The Company is well on its way to becoming the operating system for all local commerce.”

“Howard and Kevin helped guide us on our journey to becoming a public company and I want to thank them and acknowledge their contributions,” said Groupon CEO Andrew Mason.

“During my tenure on the Board, I was impressed by the game-changing opportunities that Groupon has delivered for both merchants and customers on a global scale,” said Howard Schultz. “Groupon has a strong sense of mission and purpose, and as I move on to focus on my other time commitments, I wish them the very best.”

]]> http://allthingsd.com/20120430/exclusive-schultz-and-efrusy-to-leave-groupon-board-accounting-types-joining/feed/ 0 Updated S-1: Facebook's Yearly Revenue Growth Up 45 Percent, But Down Six Percent From Last Quarter http://allthingsd.com/20120423/new-s-1-facebooks-yearly-growth-up-45-percent-but-down-six-percent-from-last-quarter/ http://allthingsd.com/20120423/new-s-1-facebooks-yearly-growth-up-45-percent-but-down-six-percent-from-last-quarter/#comments Mon, 23 Apr 2012 19:13:53 +0000 Kara Swisher http://allthingsd.com/?p=199091

Facebook filed an updated version of its S-1 public offering document today, which included somewhat disappointing first-quarter financials.

In the new filing with the Securities and Exchange Commission, its fourth update for its upcoming public offering, the social networking giant’s revenue was $1.058 billion, up 46 percent for the year, but down six percent from the previous quarter.

In the first quarter of 2012, Facebook’s net income was $205 million, which was down from $233 million a year ago. The company attributed the decline to rising costs, including in marketing and in research.

Facebook also said its current share price was $30.89 each, which values the entire company at about $77 billion.

Some investors might worry about the latest results, which show a slowing in Facebook’s torrid growth. But Facebook said the quarterly decline was due to seasonality — it was flat in the same period a year ago.

As it noted in the document:

“We believe that our rates of user and revenue growth will decline over time. For example, our revenue grew 154% from 2009 to 2010, 88% from 2010 to 2011, and 45% from the first quarter of 2011 to the same period in 2012. Historically, our user growth has been a primary driver of growth in our revenue. We expect that our user growth and revenue growth rates will decline as the size of our active user base increases and as we achieve higher market penetration rates.”

Its audience, though, was still growing strongly: Facebook also said it had 532 million daily active users, up from 372 million a year ago and 483 million in December. Its monthly active users were up from 680 million last year to just over 900 million and up from 845 million from December.

Facebook also added an explicit figure for average revenue per user, which was $1.21, up six percent year over year. It also said the number of full-time employees grew 46 percent from last year to 3,539 at the end of March.

The last update to Facebook’s regulatory filing for its mid-May IPO was in late March. That one gave investors more information about a patent infringement lawsuit waged by Yahoo — Facebook noted its counter claim in the newest filing — and also its motion to dismiss Paul Ceglia’s legal attempt to garner half of the company. It then included more information about growing engagement by users of the social networking site.

Along with some other minor changes in the new document, Facebook noted, in news that was already known, that it would trade its stock on the Nasdaq market under the ticker symbol “FB.” It also said it had bought photo-sharing start-up Instagram, another piece of old news, and noted its just-struck patent deal with Microsoft.

One new detail about Instagram: Facebook forked over “approximately 23 million shares of our common stock and $300 million in cash” to buy it.

Also, said Facebook, in an interesting new section on its global business:

“In the first quarter of 2012, 50% of our revenue was generated by users in the United States and Canada, a decrease from 54% of our revenue for the first quarter of 2011, and in 2011, 52% of our revenue was generated by users in the United States and Canada, as compared to 58% in 2010, as we experienced more rapid revenue growth in markets such as Germany, Brazil, Australia, and India.”

Here is the whole updated file, if you want to peruse yourself:

4thfbs1update

]]> http://allthingsd.com/20120423/new-s-1-facebooks-yearly-growth-up-45-percent-but-down-six-percent-from-last-quarter/feed/ 0 Yahoo Beats Q1 Expectations (as Expected) -- Now, Will New CEO Outline More Strategery on Investor Call? http://allthingsd.com/20120417/yahoo-beats-expectations-as-expected-now-will-new-ceo-outline-strategery-in-investor-call/ http://allthingsd.com/20120417/yahoo-beats-expectations-as-expected-now-will-new-ceo-outline-strategery-in-investor-call/#comments Tue, 17 Apr 2012 20:15:24 +0000 Kara Swisher http://allthingsd.com/?p=197379

Yahoo beat Wall Street estimates in its first-quarter earnings report today, with revenue of $1.08 billion and earnings of 23 cents. That’s a gain of 28 percent from a year ago in net earnings and 38 percent per diluted share.

Analysts had been expecting Yahoo to report revenue of $1.06 billion and earnings of 17 cents a share. But, as I reported earlier today, sources had indicated that the results would be on the upside.

Still, revenue was only up year over year by 1 percent — not exactly a great achievement, given exploding growth across the Internet industry. The real drag was the Europe, Middle East and Africa regions, whose revenue was down 9 percent — which Yahoo attributed to the weak economy there — with its “contribution” down 27 percent. That region has been run by Rich Riley, who is now Yahoo’s sales lead in the U.S.

One interesting note: While display revenue was down, search revenue was up. And unique visitors to Yahoo were up 7 percent, which was lower growth than in previous quarters. The reason was declines in search and communications, with media up strongly.

Now, investors are hoping to get more clarity from new CEO Scott Thompson in a call at 2 pm PT about the overall strategy for the troubled Silicon Valley Internet giant, which just restructured its management again and also had layoffs of 2,000 employees.

Thompson has yet to articulate a specific plan beyond the broad strokes of media, commerce and data/platforms as Yahoo’s aim.

But there is a lot more to deal with and in detail, including figuring out its troubled advertising search partnership with Microsoft, the talks around selling off parts of the company’s lucrative Asian assets, Yahoo’s patent lawsuit against Facebook, how Yahoo is going to deal with activist shareholder Third Point’s possible proxy challenge and whether more layoffs beyond recent firings will be needed.

“In the first quarter, Yahoo!’s results came in at the high end of our guidance range and beat consensus on revenue and profits,” Thompson said in a statement. “We also made changes to resize the organization and establish a new leadership structure to quickly deliver the best user and advertiser experiences at scale.”

Until Thompson gives more deets on the earnings call, which I will be liveblogging, here’s Yahoo’s official press release and cool charts on the subject:

YHOO News 2012-4-17 General

YHOO_Q112EarningsPresentation

]]> http://allthingsd.com/20120417/yahoo-beats-expectations-as-expected-now-will-new-ceo-outline-strategery-in-investor-call/feed/ 0 It's Official: Yahoo Reorgs Itself Just Like We Said (Memo Time!) http://allthingsd.com/20120410/its-official-yahoo-reorgs-itself-just-like-we-said-memo-time/ http://allthingsd.com/20120410/its-official-yahoo-reorgs-itself-just-like-we-said-memo-time/#comments Tue, 10 Apr 2012 15:11:03 +0000 Kara Swisher http://allthingsd.com/?p=194913

Yahoo CEO Scott Thompson just sent this email to Yahoo employees, about a new leadership organization for the company.

“It’s time for Yahoo! to move forward, and fast,” wrote Thompson (using punctuation I really like, with nice comma deployment). “And as we do, I want every one of us to keep one thing top of mind: what we do is about our customers, not about us.”

The core groups will essentially be media, connections and commerce, led by Ross Levinsohn, Shashi Seth and person to be determined (but I hear it is newly departed PayPal exec Sam Shraugher).

And, as previously reported here: Sales is off by itself, split into regions; ad technology is off to the side, pending sale; corporate and operations remain the same; and the central product organization is blown up and moves back into the units.

I’d go into more deets, but it is all below and tracks on numerous reports I have done, including this morning.

But please enjoy the memo, which Yahoos will be chewing over at an all-hands meeting later this morning:

Yahoos –

It’s time for Yahoo! to move forward, and fast. And as we do, I want every one of us to keep one thing top of mind: what we do is about our customers, not about us. For Yahoo! to win in our core business, every one of us must put our customers first. Specifically, we must focus all we do on the users who trust us to give them personalized content and communications, and the advertisers who want to connect with our users. To be very clear, our highest priority is winning in our core business and that will earn us the right to pursue new growth opportunities.

To accomplish that we’re establishing a new leadership structure, organizing all of our activities around Yahoo!’s customers. Effective May 1, Yahoo! will operate in three groups — Consumer, Regions and Technology — all supported by our established Corporate teams. Each of the three groups will be charged with delivering the best customer experiences and have very clear accountability for getting results.

Our new Consumer group will be all about creating great, engaging user experiences. Our geographic Regions will serve our advertisers and agencies and be accountable for all Yahoo! revenue. Our Technology teams will provide the advanced infrastructure, technology and science to enable our Consumer group and the Regions to deliver our best products and experiences into market, at scale, and fast.

Consumer

Our success is determined by how well we engage consumers and give them fun and informative experiences that they feel were designed just for them, on all screens. Our Consumer group will include three units — Media, Connections, and Commerce — and each will provide users the uniquely relevant and personalized content and services they expect and deserve, leveraging Yahoo!’s vast consumer interest data. We will redouble our focus on Yahoo!’s competitive advantage — our core, owned and operated (O&O) consumer properties. And importantly, we are bringing dedicated product engineering resources into each unit, much closer to our users.

• Media Our online media presence has long been our company’s clearest competitive advantage. Our Media group, led by Ross Levinsohn, will include all our media businesses globally with our marquee properties at the forefront: Homepage, News, Finance, Sports, and Entertainment. We will bring top design and engineering talent and differentiated technology — like Yahoo!’s Publishing Platform (YPP) — into close partnership with content producers and editors. Ross and his team will continue to drive real differentiation into our leading media experiences, including everything from our original coverage of breaking news events to tentpole events like the Royal Wedding and the upcoming Olympics and US Elections.

• Connections will be led by Shashi Seth, and include consumer businesses that connect and inform our users including Search, Communications and Social properties such as Mail, Messenger, Flickr, Answers, and more. The highest priority for Shashi and his team will be to think well beyond how users search, communicate and share online today. The Connections team is charged with fundamentally re-imagining how we design and deliver the next generation of these foundational Yahoo! experiences.

• Commerce We will renew our focus on commerce, and I expect this newly created team to play a critical role in Yahoo!’s future growth. Our Commerce teams will build on Yahoo!’s massive reach and strong consumer relationships, but their charter will go beyond traditional ecommerce. The focus of this team will be driving higher ROI for advertisers and agencies that reach users on Yahoo! by closing the loop for them between user interests, advertiser spend, consumer intent, and purchase behavior. The foundation of the new Commerce group will be Autos, Shopping, Travel, Jobs, Personals and Real Estate. We expect to name the leadership of this business unit shortly.

Regions

Advertisers and agencies are the primary customers and focus for each of our three regions. Our regional sales teams will be the advocate and voice for our advertising customers: listening to them and driving their needs into the products we develop. Regional sales must bring urgency and tenacious sales execution to all we do for advertisers. In addition, these teams will leverage our unique and vast data resources to position Yahoo! as the place to connect with users and generate the best, measurable ROI on their ad spend.

• Americas will be led by Rich Riley, who led the team responsible for extraordinary strides in EMEA in recent years putting the region on a path of consistent engagement and revenue growth, as well as meaningful market share and profit gains. Rich will be moving from Europe to our New York office soon.

• APAC, which includes many of our fastest-growing countries and strongest consumer products, will continue under the exceptional leadership of Rose Tsou.
• EMEA will be led on an interim basis by Christophe Parcot, EMEA’s regional sales leader, as we commence the search for a new leader for the region.

Americas, EMEA, and APAC will be fully accountable for Yahoo!’s revenue in their respective regions. I expect our Regional leaders and teams to work in very close collaboration with Ross and our other Consumer group leaders to fully align their goals for revenue and engagement as well as their execution, keeping our users and advertisers top of mind.

Technology

Our Consumer group and the Regions will continue to be supported by some of the most talented technology professionals in the industry, providing the advanced platforms and technology that allow Yahoo! to deliver great customer products.

• Core Platforms, led by Mark Morrissey, will provide the foundational platforms, technology, and research to enable great customer products and leverage Yahoo!’s vast data stores to enable deep personalization and optimized monetization. Mark’s teams will lead Apt, RMX, User Data & Analytics, our content optimization relevance engine (CORE), Yahoo! Labs and other key technology functions.

• Central Technology will continue to be led by David Dibble and include our data center and service engineering efforts, as well as our cloud infrastructure teams.

Yahoo! has made real progress in building modern, scalable platforms and infrastructure, but to move at the rapid pace our customers and our industry require we need more than scalable technology. This is among the most important changes we’re making: we must bring some of our best product designers and engineers much, much closer to consumer needs and demands. Many of our top engineers will continue building on our foundation platforms and technology to continue to drive speed and scale. But to ensure we really know and can serve our customers, we’ll also deploy top design and engineering talent into our Consumer business units, directly supporting our users’ favorite Yahoo! products to ensure we move much faster and meet customer needs with every product we deliver.

Corporate

Our major corporate functions will continue to support these new groups. Finance, Legal, and HR will remain under the strong leadership of CFO Tim Morse, General Counsel Mike Callahan, and Chief HR Officer David Windley, respectively. As we search for a Chief Marketing Officer, Penny Baldwin will serve as interim leader for the Corporate Marketing and Communications teams. John Kremer will lead a newly-created Transformation team that will ensure full implementation of and accountability for our restructuring and related organizational changes.

Chief Product Officer Blake Irving has decided to leave Yahoo! and will work closely with the new leaders over the next several weeks to ensure a smooth transition. He has made a tremendous contribution to the advancement of Yahoo!’s product strategy and execution over the last two years and I know you will join me in wishing him all the best in the future.

You will hear more from our business leaders about their plans to move each of these groups forward in the coming days and weeks. As we look to Yahoo!’s future, all of us must remember to always keep our customers first in everything we do. Ultimately, only our customers will decide whether we win or lose in the market.

I look forward to speaking with you at our All Hands Tuesday. If you have questions before we meet, please check Backyard for information and answers. If you don’t see the answers you need, please post questions on Backyard, or you may email questions directly to the leadership team.

Scott

]]> http://allthingsd.com/20120410/its-official-yahoo-reorgs-itself-just-like-we-said-memo-time/feed/ 0 Clicking on a Fortune: Facebook to Acquire Photo-Sharing Start-Up Instagram for $1 Billion http://allthingsd.com/20120409/breaking-facebook-to-acquire-instagram-for-1-billion/ http://allthingsd.com/20120409/breaking-facebook-to-acquire-instagram-for-1-billion/#comments Mon, 09 Apr 2012 17:03:43 +0000 Kara Swisher http://allthingsd.com/?p=194424

Facebook has just announced that it will acquire Instagram, the popular mobile photo-sharing service, for $1 billion in cash and shares.

The social networking giant posted on the acquisition, its biggest yet, on its site, as well as on CEO and co-founder Mark Zuckerberg’s Timeline on Facebook.

Photos are critically important for Facebook, which has been slow to innovate in the fast-growing mobile arena in the important consumer space. By contrast, Instagram has taken the arena by storm, with its delightful and elegant app and the motto, “Fast beautiful photo sharing.”

Consumers have responded (including me — it is the only non-communications app I use many times a day). The San Francisco-based company — with only 13 employees — had 30 million Apple iPhone users before it came to Google’s Android last week, where it got more than a million new users in just 12 hours.

Still, despite all the usage, Instagram had not articulated a plan for, you know, making money. Now, that will presumably be Facebook’s problem to solve.

The Facebook acquisition has been kept very quiet, with its CEO Kevin Systrom working on it in conjunction with new fundraising efforts that would have valued the company at $500 million. Liz Gannes reported on this effort last week, which was poised to close, in fact, before the Facebook deal was struck over the weekend.

Until now, Instagram has received Series A funding of $7 million led by Benchmark Capital just over a year ago, when it only had 1.75 million registered users.

Seed investors include Andreessen Horowitz — which did not follow on later — and Baseline Ventures. Also in the Benchmark round: Twitter creator Jack Dorsey, former Facebooker Adam D’Angelo and Chris Sacca.

In a blog post titled “Instagram + Facebook,” Systrom promised no change, except for the $1 billion mountain of cash:

“It’s important to be clear that Instagram is not going away. We’ll be working with Facebook to evolve Instagram and build the network … The Instagram app will still be the same one you know and love.”

Zuckerberg also promised that Facebook would keep Instagram independent, and that such a large purchase would be rare for the company, which is set to go public soon.

“This is an important milestone for Facebook because it’s the first time we’ve ever acquired a product and company with so many users,” he wrote. “We don’t plan on doing many more of these, if any at all.”

Here is the full press release from Facebook:

Facebook to Acquire Instagram

MENLO PARK, CALIF. — April 9, 2012 — Facebook announced today that it has reached an agreement to acquire Instagram, a fun, popular photo-sharing app for mobile devices.

The total consideration for San Francisco-based Instagram is approximately $1 billion in a combination of cash and shares of Facebook. The transaction, which is subject to customary closing conditions, is expected to close later this quarter.

Mark Zuckerberg, founder and CEO of Facebook, posted about the transaction on his Timeline:

I’m excited to share the news that we’ve agreed to acquire Instagram and that their talented team will be joining Facebook.

For years, we’ve focused on building the best experience for sharing photos with your friends and family. Now, we’ll be able to work even more closely with the Instagram team to also offer the best experiences for sharing beautiful mobile photos with people based on your interests.

We believe these are different experiences that complement each other. But in order to do this well, we need to be mindful about keeping and building on Instagram’s strengths and features rather than just trying to integrate everything into Facebook.

That’s why we’re committed to building and growing Instagram independently. Millions of people around the world love the Instagram app and the brand associated with it, and our goal is to help spread this app and brand to even more people.

We think the fact that Instagram is connected to other services beyond Facebook is an important part of the experience. We plan on keeping features like the ability to post to other social networks, the ability to not share your Instagrams on Facebook if you want, and the ability to have followers and follow people separately from your friends on Facebook.

These and many other features are important parts of the Instagram experience and we understand that. We will try to learn from Instagram’s experience to build similar features into our other products. At the same time, we will try to help Instagram continue to grow by using Facebook’s strong engineering team and infrastructure.

This is an important milestone for Facebook because it’s the first time we’ve ever acquired a product and company with so many users. We don’t plan on doing many more of these, if any at all. But providing the best photo sharing experience is one reason why so many people love Facebook and we knew it would be worth bringing these two companies together.

We’re looking forward to working with the Instagram team and to all of the great new experiences we’re going to be able to build together.

]]> http://allthingsd.com/20120409/breaking-facebook-to-acquire-instagram-for-1-billion/feed/ 0 Amid Worries About Strategery, Yahoo CEO Scott Thompson Tries to Soothe the Savaged Troops (Memo Time!) http://allthingsd.com/20120405/amid-worries-about-strategery-yahoo-ceo-scott-thompson-tries-to-soothe-the-savaged-troops-memo-time/ http://allthingsd.com/20120405/amid-worries-about-strategery-yahoo-ceo-scott-thompson-tries-to-soothe-the-savaged-troops-memo-time/#comments Thu, 05 Apr 2012 22:13:40 +0000 Kara Swisher http://allthingsd.com/?p=193710

Yahoo CEO Scott Thompson, who has developed a tough-talk reputation within Yahoo of late, went all sweet — well, less crabby, I guess — the day after the layoffs in which 2,000 employees were fired.

After dressing down top execs the night before the cuts by telling them the bad situation was due to their poor performance as leaders, his internal letter to the troops was also a bit cut-and-dried, with the not-very-sympathetic admonishment, “change is never easy.”

Not exactly what someone who just got their pink slip — or saw a close colleague get axed — likes to hear!

Today, Thompson opted to go with the softer side of Scott, in an internal memo I obtained titled “time to move forward.” It includes a promise to deliver a real strategic plan next week at an “All Hands” meeting. (I have previously reported that he was rolling out a new structure next week.)

Yahoo’s activist shareholder Third Point admonished Thompson yesterday for not having such a plan in place before making such widespread layoffs, which shed 14 percent of the workforce from the Silicon Valley Internet giant.

“While this action was unfortunately necessary and widely expected, Third Point, Yahoo!’s largest outside shareholder, is disappointed that this round of cuts occurred before CEO Scott Thompson has articulated his strategic plan for the Company,” it wrote in a letter (embedded below). “Shareholders deserve a management team and board who have a vision and strategic plan.”

Internally, there was also a lot of grumbling over the lack of a vision before the layoffs and worries that Thompson does not have a clear path for Yahoo.

“It’s like going into war and killing a big chunk of troops right before, without a plan in place about how to win,” said one person, in a common sentiment I heard from employees. “Everyone left feels shell-shocked and with no direction.”

In recent meetings about various options, including selling off a variety of Yahoo’s businesses, the former president of eBay’s PayPal payments unit has focused on a range of ideas, especially adding more commerce and data to the mix.

Apparently, all will be revealed next week, in what Thompson called “comprehensive plans for Yahoo!’s future.”

Thompson also did a little cheerleading:

“We can do this. We will do this! One thing I’ve heard repeatedly since I got here is that everyone wants to win again…I have seen big turnarounds before, and this company has the foundation, the spirit, the backbone, and the creativity to get it done,” he wrote. “Personally, I can’t wait to get moving.”

That’s good, because shareholders and employees have been waiting a long time for any forward momentum at Yahoo.

Here’s the memo below in its entirety:

From: Scott Thompson
Sent: Thursday, April 05, 2012 1:15 PM
To:
Subject: time to move forward…

Yahoos –

This was a tough week. Thank you all for supporting each other through a difficult time.

As hard as big changes like this can be, I was encouraged to hear support from so many of you who really understand our need to operate differently. That said, I also know many of you still have a lot of questions about where we’re headed and how fast we can get there. I shared a few thoughts in my note earlier this week and you’ll hear more at our All Hands next week.

We deliberately separated this week’s employee action from next week’s discussion of our strategy. The reason was simple: we felt it was only fair and respectful to those who are leaving and transitioning to take care of each of them before turning to our future.

Starting next week we will begin looking forward and our All Hands is just the beginning. You’ll be hearing a lot more from me and other leaders about our comprehensive plans for Yahoo!’s future. The immediate next step for all of us is to get clear on our goals, and then take action and move.

There’s a lot to do and that’s why I can’t stress enough that we all need to focus on getting stuff done. Getting stuff done is short hand for eliminating bureaucracy and barriers so we can all innovate as fast as our customers and the industry require. That’s pretty fast.

Our users want fun, informative, engaging experiences on all screens that they feel were designed just for them. Advertisers want it to be much easier to work with us and they want measurable ROI on their spending. We can do all that. But we won’t win by talking about the opportunity. We’ll win by putting our customers first, creating high-quality experiences, and iterating on them quickly. Great user and advertiser experiences are what will ignite excitement around our brand and get us growing again.

You’ll receive the official invite to our All Hands shortly and we want to know what’s on your mind in advance. If you have questions before we meet next week, please check Backyard for information and answers to your questions. If you don’t see the answers, please post questions on Backyard, or you can email questions directly to the leadership team.

We can do this. We will do this! One thing I’ve heard repeatedly since I got here is that everyone wants to win again. There is so much passion for Yahoo! — for what it was and for what we all believe it can be. Even after all you’ve been through, there’s a hard core crew of Yahoos who believe in this company and in its ability to thrive. I have seen big turnarounds before, and this company has the foundation, the spirit, the backbone, and the creativity to get it done.

Personally, I can’t wait to get moving.

Scott

And here’s the Third Point letter from yesterday:

TP April 4 Statement

Finally, here is a video of a “Reporters’ Roundtable” I did last week on CNET:

]]> http://allthingsd.com/20120405/amid-worries-about-strategery-yahoo-ceo-scott-thompson-tries-to-soothe-the-savaged-troops-memo-time/feed/ 0 It's Official: Yahoo Lays Off 2,000 Employees -- 14 Percent of Workforce http://allthingsd.com/20120404/its-official-yahoo-lays-off-2000-employees/ http://allthingsd.com/20120404/its-official-yahoo-lays-off-2000-employees/#comments Wed, 04 Apr 2012 13:22:13 +0000 Kara Swisher http://allthingsd.com/?p=192985

In a move that AllThingsD had previously reported was coming, Yahoo said it had laid off 2,000 employees, or 14 percent of the workforce.

“Today’s actions are an important next step toward a bold, new Yahoo! — smaller, nimbler, more profitable and better equipped to innovate as fast as our customers and our industry require,” said Yahoo CEO Scott Thompson in a statement. “Unfortunately, reaching that goal requires the tough decision to eliminate positions.”

While Yahoo has had periodic layoffs over the years, this one is its most significant in its history, and will also result in another large-scale restructuring of the management organization. More cuts are also likely to follow in the months ahead, due to the reshaping of Yahoo.

The latest employee action is being pushed by Thompson, who joined the Silicon Valley Internet giant in January from eBay’s PayPal unit.

“Change is never easy,” he wrote in an internal email to Yahoo employees (it is below in its entirety), in a well-worn cliché I am dead certain few appreciated hearing today from the top leader.

At an internal meeting with top staff last night, Thompson — who has gotten what seems to be a well-deserved reputation for chewing folks out at Yahoo — was more direct with the execs gathered, berating them extensively for not delivering and getting the company to this sorry point.

Ouch, Scott! It’s Easter, so it might be time for some forgiveness. (And no more ranting about my reporting to those inside Yahoo, since I have been 100 percent accurate so far. FYI, will aim for 110 percent next week!)

Yahoo said it will save about $375 million with the cuts, incurring a $125 to $145 million pretax cash charge for employee severance in its second quarter. Before the cuts, Yahoo had 14,000 staffers and has many thousands more hired as contractors.

The layoffs touch all units of the company, but the hardest hit is the product division, which is headed by Blake Irving, as well as its marketing, research and international units. Yahoo gave no details on the layoffs other than the number.

But the fate of two key parts of the soon-to-be-blown-apart unit — Yahoo’s advertising technology businesses, Right Media and APT, and its search business — is still being contemplated, as I have previously reported. Possible scenarios include a sale or a joint venture transaction for both, which employ thousands of Yahoo staffers.

The layoffs tomorrow are not the end of the road in cutting costs. Along with the likely shedding of its ad tech and search businesses, Yahoo leadership is also looking at future cuts as it evaluates current businesses, which could lop even more employees off its roster.

That said, Yahoo will be doubling down in some older and new arenas, so there would also be simultaneous hiring in the months ahead.

As wrenching as they will be today at Yahoo, the layoffs come as no surprise. Thompson had told employees in memos and also in recent meetings that “real change” was coming to the company.

Along with the trauma of the layoffs, Yahoo is also facing two other tense face-offs externally. In one, activist shareholder Third Point is waging a proxy fight for board seats and stepped up the public pressure this week; and Facebook struck back hard at Yahoo’s patent lawsuit with a counterclaim of its own.

After the layoffs tomorrow, sources say Yahoo will be announcing a new organization by next week. Thompson, along with outside consultants he has hired from the Boston Consulting Group, are making what appear to be profound changes.

Sources said that Yahoo will most likely be comprised of a global media division, one that encompasses Yahoo’s consumer products businesses and one focused on global and regional sales. There could also be a small organization of about 50 employees aimed at future innovation.

Americas head Ross Levinsohn is pegged to run the media arm, which will also include its leads/commerce businesses, such as autos; Shashi Seth — who now heads search and marketplaces — is likely to run consumer products, which will include Yahoo’s communications and search businesses.

Yahoo has already been conducting a search for a new worldwide sales head, who will also be boss of the U.S., Asia and Europe, Middle East and Africa sales regions. Rich Riley, who was recently running EMEA, is reportedly the pick for U.S. sales; Rose Tsou, who is running Asia, would presumably stay put; Yahoo is looking for an EMEA sales lead.

Some current operational execs — such as service engineering and ops head David Dibble, CFO Tim Morse, and top lawyer Mike Callahan — are likely to continue to operate as before.

One big question mark is how Chief Product Officer Irving fits in the possible new org, in which the new units get control of their product development. Irving has reportedly had several incoming job offers, although it is not clear if he has responded to that interest.

But today, the focus is on the layoffs and letting go all those employees, many of whom have worked at Yahoo for years. Even if it will result in a stronger Yahoo, as Thompson promises, it is still a very sad day in Sunnyvale.

Here is a video on the topic that I did with the WSJ.com “Digits” show today, after the cuts were announced early this morning:

Here’s the entire terse statement from Yahoo:

Yahoo! Statement

SUNNYVALE, Calif. — (BUSINESS WIRE) — Yahoo! today confirmed that it is taking important next steps to reshape the company for the future.

“Today’s actions are an important next step toward a bold, new Yahoo! — smaller, nimbler, more profitable and better equipped to innovate as fast as our customers and our industry require. We are intensifying our efforts on our core businesses and redeploying resources to our most urgent priorities. Our goal is to get back to our core purpose — putting our users and advertisers first — and we are moving aggressively to achieve that goal,” said Scott Thompson, CEO of Yahoo!. “Unfortunately, reaching that goal requires the tough decision to eliminate positions. We deeply value our people and all they’ve contributed to Yahoo!.”

Yahoo! has a solid foundation — nearly 700 million users and thousands of advertisers that engage with Yahoo! properties regularly and trust the company with their data and their business. Through its restructuring efforts, Yahoo! intends to grow by responding more quickly to customer needs and competing more effectively in areas where it can win. Yahoo! has identified key parts of the business — a select group of core businesses, the platforms that support those core businesses, and the data that drives deep personalization for users and ROI for advertisers — where the company will intensify efforts and redeploy resources globally, all focused on increasing shareholder value. With a clear focus on profitability and growth, the company will be disciplined in its investments and radically simplify how it builds, launches and maintains many of its properties and products.

Today, the company will begin the process of informing employees about these changes. As part of that effort, approximately 2,000 people will be notified of job elimination or phased transition.

Yahoo! expects to realize approximately $375 million of annualized savings upon completion of all employee transitions. The company currently expects to recognize the majority of an estimated $125 to $145 million pretax cash charge relating to employee severance in its second quarter financial results. The company may incur additional charges in connection with this action. More information will be provided about Yahoo!’s future direction in conjunction with the release of its first quarter financial results on April 17, 2012.

And here is Thompson’s memo to employees, stating the obvious and with nothing new from previous statements and internal memos:

Yahoos –-

Today we are restructuring Yahoo! to give ourselves the opportunity to compete and win in our core business. The changes we’re announcing today will put our customers first, allow us to move fast, and to get stuff done. The outcome of these changes will be a smaller, nimbler, more profitable Yahoo! better equipped to innovate as fast as our customers and our industry require.

Over the last 60 days, we’ve fundamentally re-thought every part of our business and we will continue to actively consider all options that allow Yahoo! to put maximum effort where we can succeed. As part of this process, I believe we have to focus to win in a select group of core businesses globally:

Core Media and Communications: Our content, media, and communications experiences must be best in class. That includes getting today’s core properties right and innovating on a next generation of great product experiences across all screens.∙

Platforms: We must make our core platforms and systems a genuine strength for Yahoo! — platforms that we can really leverage to support our massive scale, drive the deepest personalization, and boost speed to market.∙

Data: Our massive data sets must become a genuine competitive advantage for Yahoo!. We have to unlock the value in our data to allow us to really understand our 700 million users, encourage and win their engagement and trust, leverage everything they do with us to more fully personalize their experiences, and to give our advertisers the immediate insights they are rightfully demanding.

We are intensifying our efforts on our core businesses and redeploying resources to our most urgent priorities. Our goal is to get back to our core purpose — putting our users and advertisers first -– and we are moving aggressively to achieve that goal.

Unfortunately, reaching that goal requires the tough decision to eliminate jobs, which means losing colleagues and parting with friends. Today, we will begin the process of informing employees about these changes. As part of that effort, approximately 2,000 people will be notified of job elimination or a phased transition. We value our people and for those who will be leaving, we thank you for all you have contributed to Yahoo!. We will treat all of our people with dignity and respect, providing resources to help manage through their transition.

Change is never easy. But the time has come to move Yahoo! forward aggressively with increased focus and accountability. Our values have always been about treating all Yahoos with dignity and respect, and today is a day to embrace those values. This is an amazing company with exceptionally talented people and I know we will all do our best to encourage each other through this difficult period of transition.

Scott

]]> http://allthingsd.com/20120404/its-official-yahoo-lays-off-2000-employees/feed/ 0 Yahoo's Layoffs Tomorrow Morning of up to 2,000 Will Only Be the First Move of a Larger Purge to Come http://allthingsd.com/20120403/yahoos-layoffs-tomorrow-morning-of-up-to-2000-will-only-be-the-first-move-of-a-larger-purge-to-come/ http://allthingsd.com/20120403/yahoos-layoffs-tomorrow-morning-of-up-to-2000-will-only-be-the-first-move-of-a-larger-purge-to-come/#comments Tue, 03 Apr 2012 22:16:46 +0000 Kara Swisher http://allthingsd.com/?p=192483

According to sources close to the situation, Yahoo’s massive round of layoffs — which is likely to impact up to 2,000 employees — is just the tip of the proverbial iceberg that will hit the storied Silicon Valley Internet giant in the months to come.

Sources said Yahoo is currently planning to announce the cuts in staff in the early morning, just as the markets open. That could change, of course, but the cuts will definitely occur within the next two days.

The layoffs, which will touch all units of the company, are expected to hit hardest in the product division, which is headed by Blake Irving.

But the fate of two key parts of the soon-to-be-blown-apart unit — Yahoo’s advertising technology businesses, Right Media and APT, and its search business — is still being contemplated, as I have previously reported. Possible scenarios include a sale or a joint venture transaction for both, which employ thousands of Yahoo staffers.

Also set to be hard hit are Yahoo’s local businesses, as well as its marketing and research divisions. While still sustaining losses, its media units will not be as badly impacted. And it’s not clear how many employee terminations will be aimed at the company’s general and administrative staff.

The layoffs tomorrow are not the end of the road in cutting costs. Along with the likely shedding of its ad tech and search businesses, Yahoo leadership is also looking at future cuts as it evaluates current businesses, which could lop even more employees off its roster.

That said, Yahoo will be “doubling down” in some older and new arenas, so there would also be simultaneous hiring in the months ahead.

But not tomorrow, which will be one of the tougher days in Yahoo’s long history of periodic layoffs. Newly installed CEO Scott Thompson had told employees in memos and also in recent meetings that “real change” was coming to the company.

That is indeed the case, which is causing massive strain throughout the company, which now employs over 14,000 and has many thousands more hired as contractors.

Along with the trauma of the layoffs, Yahoo is also facing two other tense face-offs externally. In one, activist shareholder Third Point is waging a proxy fight for board seats and stepped up the public pressure this week; and Facebook struck back hard at Yahoo’s patent lawsuit with a counter-claim of its own.

After the layoffs tomorrow, sources say Yahoo will be announcing a new organization by next week, which will create several major, soup-to-nuts units at the company. Thompson, along with consultants he has hired from the Boston Consulting Group, are making what appear to be profound changes.

Sources said Yahoo will most likely be comprised of a global media division, one that encompasses Yahoo’s consumer products businesses and one focused on global and regional sales. There could also be a small organization of about 50 employees aimed at future innovation.

Americas head Ross Levinsohn is pegged to run the media arm, which will also include its leads/commerce businesses, such as autos; Shashi Seth — who now heads search and marketplaces — is likely to run consumer products, which will include Yahoo’s communications and search businesses.

Yahoo has already been conducting a search for a new worldwide sales head, who will also be boss of the U.S., Asia and Europe, Middle East and Africa sales regions. Rich Riley, who was recently running EMEA, is reportedly the pick for U.S. sales; Rose Tsou, who is running Asia, would presumably stay put; Yahoo is looking for an EMEA sales lead.

Some current operational execs — such as service engineering and ops head David Dibble, CFO Tim Morse, and top lawyer Mike Callahan — are likely to continue to operate as before.

One big question mark is how Chief Product Officer Irving fits in the possible new org, in which the new units get control of their product development. Irving has reportedly had several incoming job offers, although it is not clear if he has responded to that interest.

Let’s hope that Yahoos who will be let go tomorrow find themselves with many new employment choices after the ax falls.

]]> http://allthingsd.com/20120403/yahoos-layoffs-tomorrow-morning-of-up-to-2000-will-only-be-the-first-move-of-a-larger-purge-to-come/feed/ 0 Here Are the 10 New Back-at-You Patent Exhibits in Facebook Versus Yahoo http://allthingsd.com/20120403/here-are-the-10-new-back-at-you-patent-exhibits-in-facebook-versus-yahoo/ http://allthingsd.com/20120403/here-are-the-10-new-back-at-you-patent-exhibits-in-facebook-versus-yahoo/#comments Tue, 03 Apr 2012 18:52:23 +0000 Kara Swisher http://allthingsd.com/?p=192713

Here are the actual 10 patents that Facebook is using in its just-filed counter-claim against Yahoo’s patent infringement lawsuit.

Several are held by Facebook CEO and co-founder Mark Zuckerberg, as well as other employees of the social networking giant, in areas such as personalized news feeds, tagging digital media and headline posting algorithms.

The patent ball, as irritating lawyers say, is in Yahoo’s court.

Enjoy:

Exhibit A – US7827208

Exhibit B – US7945653

Exhibit C – US6288717

Exhibit D – US6216133

Exhibit E – US6411949

Exhibit F – US6236978

Exhibit G – US7603331

Exhibit H – US8103611

Exhibit I – US8005896

Exhibit J- US8150913

]]> http://allthingsd.com/20120403/here-are-the-10-new-back-at-you-patent-exhibits-in-facebook-versus-yahoo/feed/ 0 Facebook Smacks Back at Yahoo With Patent Claims in Counter-Lawsuit http://allthingsd.com/20120403/breaking-facebook-smacks-at-yahoo-with-patent-claims-of-its-own/ http://allthingsd.com/20120403/breaking-facebook-smacks-at-yahoo-with-patent-claims-of-its-own/#comments Tue, 03 Apr 2012 18:13:58 +0000 Kara Swisher http://allthingsd.com/?p=192686

Facebook has just taken strong aim back at Yahoo’s patent lawsuit with an answer and counter-claim filing of its own, alleging infringement over a number of issues.

“From the outset, we said we would defend ourselves vigorously against Yahoo’s lawsuit, and today we filed our answer as well as counter-claims against Yahoo for infringing ten of Facebook’s patents,” said Ted Ullyot, general counsel of Facebook. “While we are asserting patent claims of our own, we do so in response to Yahoo’s short-sighted decision to attack one of its partners and prioritize litigation over innovation.”

In its counter-claim filing involving 10 patents held by Facebook, the social networking giant said that Yahoo is infringing via a wide range of its offerings, including its homepage, content optimization, relevance engine, Flickr photo-sharing service and advertising throughout its huge site.

You know: The ads that make up most of Yahoo’s revenue.

In other words, Facebook CEO and co-founder Mark Zuckerberg does not like being poked by new Yahoo CEO Scott Thompson, especially on the eve of a $100 billion IPO.

You might have heard that Facebook is going public and it’s a big deal around Silicon Valley, which is why no one much liked Yahoo’s skunk-at-a-garden-party legal move two weeks ago.

Yahoo fired back at Facebook’s firing back, in a statement:

“We have only just received Facebook’s answer and counterclaims, but on their face we believe they are without merit and nothing more than a cynical attempt to distract from the weakness of its defense. As we have made clear from the outset, the unauthorized use of our patented technology is unacceptable and must be resolved appropriately. Other leading companies license these technologies, and Facebook must do the same or change the way it operates. We have proposed that Facebook join us in discussions to resolve the matter, but our overtures have been rejected. As a result, we are prepared to continue to seek redress through the courts.”

The new filing could not come at a worse time for Yahoo, which will announce thousands of layoffs of employees tomorrow morning, in a wrenching restructuring to revive its lackluster business.

In its legal filing, Facebook also pushed back on assertions in Yahoo’s initial patent lawsuit, noting that it denies that “[w]ithout Yahoo!’s achievements, websites such as Facebook would not enjoy repeat visitors or substantial advertising revenue.”

I think Facebook — which is sure to try to drag this thing out for a long, long time — just called Yahoo a tech loser.

Here is the full document:

FB_ANSWER_AND_COUNTERCLAIMS

More to come, obvi.

Here I am talking about the whole enchilada on WSJ Live’s News Hub.

]]> http://allthingsd.com/20120403/breaking-facebook-smacks-at-yahoo-with-patent-claims-of-its-own/feed/ 0 Sticks and Stones: Third Point Launches "Value Yahoo" Blog (Which Does Not Value Current Leadership) http://allthingsd.com/20120402/third-point-launches-value-yahoo-blog-which-does-not-value-current-leadership/ http://allthingsd.com/20120402/third-point-launches-value-yahoo-blog-which-does-not-value-current-leadership/#comments Mon, 02 Apr 2012 14:30:09 +0000 Kara Swisher http://allthingsd.com/?p=192096

In another high-profile parry in its increasingly aggressive proxy fight against Yahoo, activist shareholder Third Point has launched an extensive Web blog to support its case with investors called “Value Yahoo.”

Along with a long statement — a blogifesto of sorts — about what it will take to fix the Silicon Valley Internet giant, Value Yahoo also tries to keep up the pressure on Yahoo’s board and management.

The purple-themed site — this is Yahoo’s well-known color — features a humorous take on Yahoo’s now dearly departed neon sign in San Francisco, with the banner: “Yahoo Shareholders Deserve Overdue Representation!”

It includes a section on “Failed Leadership,” info on its “Road to Recovery” slate of alternate directors and even an FAQ and mission statement.

“We believe in Yahoo!, its loyal users, committed employees, dedicated partners, and the potential of the brand,” it reads, in part. “Yahoo! shareholders, employees, and partners have suffered for too long with a revolving door of management teams and Directors who have been unable to seize opportunities despite the Company’s enduring role as the premier online source for news, sports, business, entertainment and email.”

By the way, in a clever dig, there is also a Facebook site for Value Yahoo — patent lawsuit or no, you can “like” Third Point’s effort.

Here, for example, is one of Value Yahoo’s charticles:

The goal of all this, presumably, is to get Yahoo to give in to demands for several board seats using its directors, including Third Point’s Dan Loeb. So far, ongoing discussions between Loeb and Yahoo have failed to stop the shareholder battle, which comes in the midst of the company’s wrenching restructuring.

Last week, Yahoo said it had appointed three new directors to its board. In a pointed slap at Loeb, the company said it had rejected him specifically, although Yahoo added that it was willing to accept one of his current choices and another that was mutually agreed to.

Loeb reacted to that, um, badly, with another letter last week that said Yahoo leadership was living in an “illogical Alice-in-Wonderland world.”

The war of words continues with the new site, which Third Point said it will maintain actively like a blog, with updates, charts, filings, outside news stories and more.

(Since Yahoo has apparently banned me from its internal news offering to employees, according to more sources than you can shake a stick at, I hope they can see my work here!)

In its newest post — titled “Why Are We Running for Election to the Yahoo! Board?” — Third Point presents an argument for other shareholders to act, even though Yahoo has actually made a lot of the changes that Loeb has been pushing for already.

(In fact, that’s an FAQ question on Value Yahoo, natch: “Yahoo! has made changes to its Board. Hasn’t Third Point already gotten what it wanted?” Short answer: Vigilance, since they are well-known backsliders over there!)

As the firm notes in its reasons-why essay, with the original bolding on the Value Yahoo blog:

“After years of failed leadership and poor governance, Yahoo! shareholders have a chance to inject experienced, independent voices aligned with their interests. The “Shareholder Slate” — Daniel Loeb, Harry Wilson, Michael Wolf, and Jeff Zucker — seeks a voice and a choice for Yahoo! owners hurt by the current “Legacy Board’s” track record of value disintegration, and wants to prevent the Board from simply nominating their handpicked replacements — the “Insider Slate” — for Yahoo!’s board.”

]]> http://allthingsd.com/20120402/third-point-launches-value-yahoo-blog-which-does-not-value-current-leadership/feed/ 0 Yahoo Layoffs Set to Begin Next Week, Followed by Restructuring the Week After http://allthingsd.com/20120330/yahoo-layoffs-set-to-begin-next-week-followed-by-restructuring-the-week-after/ http://allthingsd.com/20120330/yahoo-layoffs-set-to-begin-next-week-followed-by-restructuring-the-week-after/#comments Fri, 30 Mar 2012 16:00:38 +0000 Kara Swisher http://allthingsd.com/?p=191538

Yahoo is preparing to begin layoffs of what could be thousands of employees starting next week, according to multiple sources, and is then expected to announce a new restructuring of the company the week after.

The swirl at the Silicon Valley Internet giant has grown more intense this week, as new CEO Scott Thompson has brought in top management for a series of meetings both Tuesday and Wednesday to outline the plans.

What has emerged — although sources noted that Thompson and others communicating the pending changes said nothing was yet set in stone — is the picture of a drastically slimmed-down organization with a focus on media, advertising and new but unclear “future” initiatives.

First the layoffs: Sources said the cuts will be deep and mostly aimed at the product, research and marketing units of Yahoo, which are likely to take place Wednesday. The ultimate goal, said multiple sources, is to cut many thousands from Yahoo’s staff of close to 14,000 employees, which is actually much larger, due to contract workers not officially in its roster.

The entire cut will not take place at once, said sources, since Thompson and others are still trying to figure out how to dispense with its ad technology org and, potentially, its search business. He has been in discussions with both Microsoft and Google about this, although there are other possibilities, too.

Both these parts of Yahoo together have about 2,500 staffers, whose fate is not yet sorted out.

Also still baking is the new structure, although sources said it is most likely to be comprised of a global media division, one that encompasses Yahoo’s communications and search businesses, and ones focused on global and also regional sales. There could also be a small organization of about 50 aimed at future innovation.

Americas head Ross Levinsohn is the likeliest exec to run the media arm, while Shashi Seth — who now heads search and marketplaces — would be the obvious candidate for the the communications/search one.

Thompson has already been conducting a search for a new worldwide sales head, although one possible internal exec for the job could be Rich Riley, who was recently running Yahoo’s Europe, Africa and Middle East region.

It is not clear how Chief Product Officer Blake Irving fits in the possible new org, since much of the development could now move to the decentralized units.

Some current operational execs — such as service engineering and ops head David Dibble, CFO Tim Morse, and top lawyer Mike Callahan — are likely to continue to operate as before.

Thompson, along with consultants he has hired from the Boston Consulting Group, presented the possible plan in front of Yahoo’s senior execs on Tuesday. That was followed by more meetings with a wider range of top management yesterday, although Thompson was not as highly specific in these meetings.

In fact, according to a half-dozen sources, Thompson apparently grew somewhat testy in one of the gatherings, when asked if there was a strategy he was going to announce in more detail to the group.

(Dear Scott, these are very talented employees who love the company and who have been through the wringer and it’s not their fault that leadership has failed them, so it might be a good idea to treat them with as much respect as possible right now.)

More to come, obviously.

]]> http://allthingsd.com/20120330/yahoo-layoffs-set-to-begin-next-week-followed-by-restructuring-the-week-after/feed/ 0