AllThingsD » hedge fund http://allthingsd.com Sat, 26 May 2012 19:52:25 +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 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 Loeb Lobs Lawsuit, as Expected, at Yahoo's Borked Bio Mess http://allthingsd.com/20120507/loeb-lobs-lawsuit-as-expected-at-yahoos-borked-bio-mess/ http://allthingsd.com/20120507/loeb-lobs-lawsuit-as-expected-at-yahoos-borked-bio-mess/#comments Mon, 07 May 2012 16:23:59 +0000 Kara Swisher http://allthingsd.com/?p=204506

Botched CEO bio. Activist shareholder. Screwy board of directors. Mix it all together and what do you get?

More legal filings, natch!

This — as I reported this weekend would happen today — from Dan Loeb of Third Point, which is waging a proxy fight against Yahoo.

The aggressive hedge-fund investor — who owns close to 6 percent of Yahoo — recently scored a direct hit by revealing that new CEO Scott Thompson had added a faux degree in computer science to his bio, which somehow made its way into regulatory filings of the Silicon Valley Internet giant.

This, despite a supposed thorough vetting by Yahoo’s board of the former president of eBay’s PayPal payments unit.

Not so much, as it turns out — which is why Loeb is asking for all the information about Thompson’s hiring process and more.

Third Point said it was making a demand “under Section 220(b) of the Delaware General Corporation Law to inspect books and records relating to the hiring of CEO Scott Thompson, the appointment of Patti Hart to the Yahoo! Board, and the selection of Board Members Peter Liguori, John Hayes, Thomas McInerney, Maynard Webb, Jr., and Fred Amoroso.”

And its press release added:

“Third Point believes that Yahoo! shareholders and employees will be best served if the Board accepts responsibility quickly for this latest debacle … We believe that this internal investigation by this Board must not be conducted behind a veil of secrecy and shareholders deserve total transparency.”

Well, it looks like it will eventually be all out in the open, what with all the legal motions flying.

Expect a Yahoo response soon, which sources said will focus on a board investigation — using an outside law firm, and headed by independent director Amoroso.

Here you go on Loeb’s shot today:

Third Point May 7 Demand Letter Release

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]]> http://allthingsd.com/20120507/loeb-lobs-lawsuit-as-expected-at-yahoos-borked-bio-mess/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.

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]]> http://allthingsd.com/20120503/how-did-phantom-cs-degree-get-on-ceos-bio-in-sec-filings-yahoos-not-saying/feed/ 0 Third Point's Loeb to Yahoo About Board Rejection: "Illogical Alice-in-Wonderland World" http://allthingsd.com/20120328/third-points-loeb-to-yahoo-about-board-rejection-illogical-alice-in-wonderland-world/ http://allthingsd.com/20120328/third-points-loeb-to-yahoo-about-board-rejection-illogical-alice-in-wonderland-world/#comments Wed, 28 Mar 2012 17:45:31 +0000 Kara Swisher http://allthingsd.com/?p=190878

Third Point’s Dan Loeb, the activist Yahoo shareholder, fired back at the company today about recent board appointments that ignored his alternate slate of directors, in yet another colorful letter that compared the Silicon Valley Internet giant to the famous children’s book “Alice in Wonderland.”

And not in a nice way.

“Our view of the nomination process is further reinforced by your explanation on Sunday as to why I would not be an acceptable Director. You told me that the Board felt my experience and knowledge ‘would not be additive to the Board’ and that as Yahoo!’s largest outside shareholder, I would be ‘conflicted’ as a Director, wrote Loeb to CEO Scott Thompson. “Am I conflicted to advocate for the interests of other shareholders because we are owners of 5.8% (over $1 billion) of Yahoo! shares (unlike the non-retiring and proposed board members who have never purchased a single share of Yahoo! except for subsidized shares issued through option exercises and shares “paid” by the Company in lieu of fees)? Only in an illogical Alice-in-Wonderland world would a shareholder be deemed to be conflicted from representing the interests of other shareholders because he is, well, a shareholder too. This sentiment further confirms that Yahoo!’s approach to Board representation is “shareholders not welcome.”

We’re about to go down the rabbit hole, indeed, as the well-known New York hedge fund exec moves to significantly step up his proxy battle against Yahoo. While it will be a tough road for Third Point to attract enough investor support for his side, it’s still a noisy mess that Yahoo can ill afford, especially as Thompson readies significant layoffs as part of a major restructuring.

Here’s the full text of Loeb’s saucy letter:

TP March 28 Letter to CEO Thompson Re Board Negotiations

]]> http://allthingsd.com/20120328/third-points-loeb-to-yahoo-about-board-rejection-illogical-alice-in-wonderland-world/feed/ 0 What Does Dan Loeb Want for His $1B -- Lotsa Yahoo News, That's What! http://allthingsd.com/20120320/what-does-dan-loeb-want-for-his-1b-lotsa-yahoo-news-thats-what/ http://allthingsd.com/20120320/what-does-dan-loeb-want-for-his-1b-lotsa-yahoo-news-thats-what/#comments Tue, 20 Mar 2012 13:59:30 +0000 Kara Swisher http://allthingsd.com/?p=188144

Last week, Yahoo’s activist shareholder Dan Loeb of Third Point, the New York hedge fund that is waging a proxy fight against the Silicon Valley Internet giant, made a regulatory filing noting that it had spent $971.1 million to acquire 70.5 million shares of Yahoo, a 5.8 percent stake. Loeb asked for Yahoo to consider his alternate board slate, and also wanted its shareholder list to communicate with other investors.

But that’s not all: In another action last week, Third Point asked a Delaware court to give it a look at sealed documents from a now-settled 2008 shareholder lawsuit related to Microsoft’s failed bid for Yahoo.

Said Third Point in its legal request, which Yahoo is seeking to block (of course!): “It is not surprising, then, that Yahoo and its soon-to-be former directors wish to keep details of their embarrassing — and fiduciarily suspect — conduct hidden from view.”

Here’s a video I did talking about the mishegas on WSJ.com’s “Digits” online show:

]]> http://allthingsd.com/20120320/what-does-dan-loeb-want-for-his-1b-lotsa-yahoo-news-thats-what/feed/ 0 Here's Dan Loeb's Letter to Investors About the Value of Yahoo's Alibaba Stake http://allthingsd.com/20120312/heres-dan-loebs-letter-to-investors-about-the-value-of-yahoos-alibaba-stake/ http://allthingsd.com/20120312/heres-dan-loebs-letter-to-investors-about-the-value-of-yahoos-alibaba-stake/#comments Tue, 13 Mar 2012 00:29:26 +0000 Kara Swisher http://allthingsd.com/?p=185273

I got ahold of parts of the fourth-quarter 2011 investor letter that the New York-based Third Point hedge fund — which is prepping a proxy fight with Yahoo — is sending out tomorrow.

(The Wall Street Journal did a short post after it had reviewed excerpts of the letter, but had no text, so here is the real thing about Yahoo in its entirety, folks!)

The letter includes a long section about how Third Point’s main man Dan Loeb feels about Yahoo, and especially in the value of its investment in China’s Alibaba Group. The stakes that the Silicon Valley Internet giant hold in Asia — including in Yahoo Japan — make up for a great deal of its valuation now, as many know and as the activist shareholder points out in detail.

Here’s the Yahoo-Alibaba part, titled “The Case for Alibaba,” in what is a very sharp analysis — except for the part about dinging the press (not nice, Danno!):

Long Equity: Yahoo! — The Case for Alibaba

As investors are aware, we established a sizeable position in Yahoo following a difficult operational and strategic stretch during the waning days of CEO Carol Bartz’s tenure that culminated in a significant sell-off in the shares in August. Initially, we were attracted to the company simply by its significant discount to intrinsic value. In September, we announced publicly that we had accumulated 5.2% of the shares of the company and laid out our case for why valuation was depressed. While the travails of “core Yahoo” grab all the headlines, core Yahoo forms only a modest portion of the Company’s actual value (a mere $2.00 per share, trading at ~14.49 as of 03/12/12). The after-tax value of Yahoo’s Asian assets — Alibaba and Yahoo! Japan — currently constitutes $11 per share of its value (73%), with an additional $2 per share of net cash.

Central to our investment thesis is the hidden jewel in the Asian asset portfolio, and indeed in Yahoo itself: Yahoo’s 40% stake in Alibaba Group, the dominant e-commerce platform in China. According to iResearch, Alibaba currently has 49% of the B2B e-commerce market (four times greater than its nearest competitor), 90% of the C2C e-commerce market (analogous to Ebay), and 53% of the B2C e-commerce market (analogous to Amazon) in 2011. It has complemented these core commerce positions with the leading online payment platform, Alipay, with 49% market share, and also holds the #2 share of the Chinese online ad market (17%, behind Baidu at 28%). Particularly exciting is Alibaba’s share of China’s rapidly growing B2C market represented by Taobao Mall, or Tmall (recently renamed Tian Mao).

According to iResearch, China had 187 million online shoppers in 2011, compared to 170 million in the U.S. As Boston Consulting Group noted in its November 2011 report, “The World’s Next E-Commerce Superpower,” e-commerce transaction value in China is likely to overtake the U.S. by 2015, helped by conditions that mirror the U.S. and in some ways favor e-commerce in China. A combination of broad product assortments and lower prices mirror the U.S., while e-commerce in China benefits from the fixed price certainty missing in China’s traditional retail culture (where haggling is common), from relatively lower shipping costs than in the U.S., and from the limited geographic reach of brick-and-mortar chains.

The Boston Consulting Group report highlights “The Taobao Phenomenon” and notes more products were purchased on Taobao in 2010 than at China’s top-five brick and mortar retailers combined.

The scale and velocity of China’s e-commerce opportunity, when combined with Alibaba’s dominant position, make for a very compelling story. As it moves toward an IPO, Alibaba should quickly take its place amongst China’s online leaders — Tencent ($47 billion market cap), and Baidu ($48 billion market cap). A November 2011 report on Softbank by UBS’s Makio Inui, the product of extensive research into Alibaba Group and a detailed valuation, placed a $63 billion value on Alibaba Group, which would imply just over $13 per Yahoo share after tax. It appears that while 2012 will be the year of Facebook, 2013 could very well be the year of Alibaba as it moves toward a listing.

At the reported $35 billion valuation ascribed to the October 2011 purchase of employee shares by Silver Lake, Temasek and Yunfeng (an affiliate of CEO Jack Ma), Yahoo’s stake was worth ~$7.60 per share after tax. That implies Yahoo’s stake has grown at a compounded rate of 55% per annum since its investment in October 2005, and it is significant that the majority of Yahoo’s value is now driven by its Alibaba stake.

Clearly, as evidenced above, we see tremendous upside in just the Alibaba piece of the Yahoo puzzle.
While the media has covered the drama surrounding the negotiations with Mr. Ma in some detail, Wall Street has continued to neglect the underlying Alibaba valuation story and the press makes too little of it. Certainly there is some compelling reason why Mr. Ma is so interested in repurchasing Yahoo’s stake! We share his excitement and enthusiasm for the Alibaba opportunity, and we respect and appreciate the dominant and dynamic franchise he has built amongst the world’s largest base of Internet users.

Over the last six months we have witnessed the Board of Directors’ “strategic review” that has to date resulted in the hiring of a new CEO, Scott Thompson, the resignation of Jerry Yang, and the pending exit of Board Chairman Roy Bostock and three other Directors. In mid-February we announced that we intend to run our own slate of Directors for the Yahoo board during this proxy season. We stated our intention to nominate well-known leaders in the media space Jeff Zucker and Michael Wolf, restructuring guru Harry Wilson, and Dan himself to the Board. We are glad Yahoo has played a critical role in Alibaba’s early development and hope new leadership at Yahoo can chart a new course for the company’s relationship with Mr. Ma and Alibaba.

]]> http://allthingsd.com/20120312/heres-dan-loebs-letter-to-investors-about-the-value-of-yahoos-alibaba-stake/feed/ 0 Ex-Yahoos Getting Downloaded by PE Firms and Others on Possible Deals http://allthingsd.com/20111111/ex-yahoos-getting-downloaded-by-pe-firms-and-others-on-possible-deals/ http://allthingsd.com/20111111/ex-yahoos-getting-downloaded-by-pe-firms-and-others-on-possible-deals/#comments Fri, 11 Nov 2011 22:53:54 +0000 Kara Swisher http://allthingsd.com/?p=143361

One of Yahoo’s biggest problems — brain drain — has turned out to be an asset for private equity firms and other players interested in figuring out their best moves related to the Silicon Valley Internet giant.

A plethora of ex-Yahoos, including many former top execs, are getting buttonholed by those who want to know more about the inner workings of the company that might not be obvious from its copious financial data available publicly.

That includes former Americas head Hilary Schneider, who has a longer-term consulting gig with TPG Capital, one of the several PE firms that has recently signed a non-disclosure agreement with Yahoo; former COO and President Sue Decker, who has had a longtime informal relationship with Blackstone, which has not signed the NDA and has been in talks with Yahoo’s Asian partners, China’s Alibaba Group and Japan’s SoftBank; and even former CEO Carol Bartz, who sources say has also been contacted to get her insights.

She is one of many in that regard, in a large pool of former Yahoos, such as: LinkedIn CEO Jeff Weiner, who had run Yahoo’s media efforts; Chegg CEO Dan Rosensweig, former Yahoo COO; SurveyMonkey CEO Dave Goldberg, who ran swathes of Yahoo’s entertainment properties; Criteo CEO Greg Coleman, former Yahoo sales head; former CEO Terry Semel, who is now an investor; former communications exec Brad Garlinghouse, who is now at AOL; and Demand Media Chief Revenue Officer Joanne Bradford, who also was a top Yahoo advertising exec.

Not all are cooperating with the requests for a chitchat about Yahoo, but there is much incoming interest in ex-Yahoos and what they might know.

There’s lots more where that came from, from all parts and all levels of Yahoo, given the breadth of the exes now doing very well — thank you very much — throughout the tech and media industries.

Thus, calls from PE firms, from Silver Lake to Bain Capital to Providence Equity Partners, as well as interest from major and majorly irritated shareholders, such as activist hedge fund investor Dan Loeb.

It’s a smart idea to tap this rich vein of information, as all contemplate possible multi-billion-dollar investments.

While some of these execs have not worked at Yahoo in many years, all have significant knowledge about the challenges and also the culture that cannot be gleaned from spreadsheets.

They also know a lot about the internal politics and personalities of the existing inside players, too. More importantly, several were involved in similar previous major business decisions at Yahoo.

Decker, for example, was a key exec in the Yahoo takeover attempt by Microsoft several years ago; Schneider and Bartz were deeply involved in striking the advertising and search partnership with Microsoft.

“Between everyone, it’s a good way to figure out where all the bodies are buried,” said one person close to the situation. “And there are a lot of bodies.”

]]> http://allthingsd.com/20111111/ex-yahoos-getting-downloaded-by-pe-firms-and-others-on-possible-deals/feed/ 0 With No-Yahoo-CEO Pledge, David Kenny Back in the Strategic Fray http://allthingsd.com/20111108/with-no-yahoo-ceo-pledge-david-kenny-back-in-the-strategic-fray/ http://allthingsd.com/20111108/with-no-yahoo-ceo-pledge-david-kenny-back-in-the-strategic-fray/#comments Tue, 08 Nov 2011 20:42:44 +0000 Kara Swisher http://allthingsd.com/?p=139031 What will David Kenny do?

Maybe get something cooking in the whole what-will-Yahoo-do stakes, now that one of Yahoo’s more active board members is back.

And by “back,” I mean that Kenny — no longer a candidate for CEO — has no further need to recuse himself from the strategic process in which the Silicon Valley Internet company finds itself.

In an interview with Advertising Age last week, Kenny — the well-regarded online ad exec who recently stepped down as president of network infrastructure giant Akamai — released an unusual statement:

As a matter of policy, I do not comment on matters related to Yahoo as a Yahoo director. However, as a personal matter, I want to clarify that I believe Yahoo is a great company with enormous potential, but I am not — and will not be — a candidate for the CEO position. I look forward to my continued service on the Yahoo Board of Directors.”

By removing himself from the fray, that means, according to several sources, that Kenny will be diving back into sleeve-rolling duties at Yahoo, as one of its — how can I put this? — less comatose board members.

In fact — until he was sidelined by the obvious conflict of interest inherent in wanting to be CEO, while also directing the fate of Yahoo for shareholder value — Kenny had been deeply involved in a lot of the changes that had taken place of late, after a long period of board inaction.

That included the ouster of CEO Carol Bartz, who was fired for a number of reasons, including lack of strategic vision. It was relatively new board member Kenny — he became a director in February — who led the strategy committee that had asked Bartz for her road map, which she did not deliver to their liking. Obviously.

Because of the swirl around his possible CEO candidacy — Kenny was a noticeable inside candidate, since he is well known in the Internet advertising world for running and then selling Digitas to the Publicis Groupe for $1.3 billion in 2006 — he gave up leadership of the committee to Intuit President Brad Smith.

Sources said it is unlikely Kenny will get that top job back, but he remains a member of the transactions committee, which is leading the strategic review of the company.

That’s the key slot for the independent board members of Yahoo, who must ultimately be the ones to determine what path or offer the company will take.

One plus: Kenny has close relationships with most of the bidders — largely private equity firms — looking at Yahoo, and also is well known among the media and tech companies poking around, too. He also has advertising — and now tech — experience, which will be much needed as Yahoo explores its options.

Most importantly, Kenny is an independent director, which will be very important to the process going forward, especially since a lot of the spotlight has fallen on Yahoo co-founder and director Jerry Yang.

Yang — who has been a bit of a Yahoo lightning rod at times — has been involved in some of the meetings with those interested, along with interim CEO Tim Morse. The company recently noted that this was at the behest of the board.

While these were only informational meetings so far — and not negotiations, as some reports have surmised — Yang’s involvement will likely have to be more curtailed, at least publicly, especially if any of the deals include using his own large stake in Yahoo.

“This process has to be above board, since it is so easy for those wanting a better deal to try to cause all kinds of trouble,” said one source. “The company is already under attack in that regard.”

That’s a reference to a recent salvo by hedge fund activist Dan Loeb, a major Yahoo shareholder who has taken aim at the board and, last week, at Yang. Loeb essentially accused Yang of double-dealing in the process.

Enter Kenny, along with Smith and — to an increasingly lesser extent, of late — Yahoo Chairman Roy Bostock. While there are other independent board members involved, these are the three to watch most closely now.

While some think Kenny still would like to be CEO of Yahoo — he was also on the short list several years ago when Bartz was hired — sources said he is more likely to take a job at another consumer Internet company.

While he certainly could slot into a large advertising firm or into the digital division of a big media concern, sources said Kenny is looking to be a CEO.

Just not at Yahoo.

At least for now, since down the road it is unclear what will become of Yahoo and who will run it in years to come.

In fact, it might even be Kenny in the end.

]]> http://allthingsd.com/20111108/with-no-yahoo-ceo-pledge-david-kenny-back-in-the-strategic-fray/feed/ 0 Yahoo's Activist Shareholder Loeb Now Targeting Jerry Yang and Wants Him Off the Board http://allthingsd.com/20111104/yahoos-activist-shareholder-loeb-now-targeting-jerry-yang/ http://allthingsd.com/20111104/yahoos-activist-shareholder-loeb-now-targeting-jerry-yang/#comments Fri, 04 Nov 2011 18:53:40 +0000 Kara Swisher http://allthingsd.com/?p=140701

Third Point’s Daniel Loeb — the smack-tastic hedge fund manager who has bought up a 5.23 percent stake in the Silicon Valley Internet giant and has been hitting some of Yahoo’s board upside the head with those shares ever since — is now taking aim at its co-founder and director Jerry Yang. Loeb wants him to step down as a director due to conflict of interest.

Loeb also reiterated his threat of a proxy fight to get control of the board. In fact, sources in Silicon Valley said he has already been reaching out to potential alternative board members.

In a previous 13-D filing with the Securities and Exchange Commission, Loeb had backed Yang against Yahoo Chairman Roy Bostock.

But that’s all over. Reports have surfaced that Yang has been trying to get a private equity firm to back a plan that would keep him and current management in charge of the company.

In a new letter to the Yahoo board today, Loeb said that Yang’s attempt amounts to cronyism and self-dealing.

Wrote Loeb, in part:

We are deeply concerned by news reports that you are considering a leveraged recapitalization that will allow private equity firms to gain substantial equity positions that will, when combined with Jerry Yang’s and David Filo’s ownership, effectively establish a controlling position in Yahoo. More troubling are reports that Mr. Yang is engaging in one-off discussions with private equity firms, presumably because it is in his best personal interests to do so. The Board and the Strategic Committee should not have permitted Mr. Yang to engage in these discussions, particularly given his ineptitude in dealing with the Microsoft negotiations to purchase the Company in 2008; it is now clear that he is simply not aligned with shareholders. At a bare minimum, Mr. Yang must declare whether he is a buyer or a seller — he cannot be both. If we are correct and he is effectively a buyer, corporate ethics require him to recuse himself from any further discussions on behalf of the Company. He should also be requested by the Company to promptly leave the Board and join Mr. Filo in solely an operating capacity.

Loeb is also demanding two seats on the board; in fact, the ones he hopes will be vacated by Bostock and Yang.

While it is likely the Yahoo board will try to minimize the Loeb letter, which is below in its entirety, other shareholders hold the same opinion of the prospects of the same-old-same-old staying on at Yahoo.

“Nothing can excuse such an action, and shareholders will not be bought off with a dividend of our own money while value is destroyed,” wrote Loeb, channeling a lot of others I have spoken to about a Yang insider deal.

Here is the full letter, Yahoo’s tiresomely typical (and borderline fibbish — but I will get to that later) rejoinder, as well the the new 13-D filing by Loeb:

Third Point LLC Letter to Yahoo! Inc. Board of Directors

NEW YORK — (BUSINESS WIRE) — Third Point Requests Two Yahoo Board Seats, Demands Yang’s Resignation from Board, and Opposes Reported Negotiations for “Sweetheart” Deal with Private Equity Firms

About Third Point LLC: Third Point is an investment firm headquartered in New York, managing $8.0 billion in assets, including a London Stock Exchange listed closed-end fund. Founded in 1995, Third Point follows an event-driven approach to investing globally.

Board of Directors
Yahoo! Inc.
701 First Avenue
Sunnyvale, CA 94089
Dear Members of the Board of Directors:

As you are aware, Third Point LLC (“Third Point”) manages investment funds that are, collectively, the second largest shareholder of Yahoo! Inc. (“Yahoo” or the “Company”).

We are deeply concerned by news reports that you are considering a leveraged recapitalization that will allow private equity firms to gain substantial equity positions that will, when combined with Jerry Yang’s and David Filo’s ownership, effectively establish a controlling position in Yahoo. More troubling are reports that Mr. Yang is engaging in one-off discussions with private equity firms, presumably because it is in his best personal interests to do so. The Board and the Strategic Committee should not have permitted Mr. Yang to engage in these discussions, particularly given his ineptitude in dealing with the Microsoft negotiations to purchase the Company in 2008; it is now clear that he is simply not aligned with shareholders. At a bare minimum, Mr. Yang must declare whether he is a buyer or a seller — he cannot be both. If we are correct and he is effectively a buyer, corporate ethics require him to recuse himself from any further discussions on behalf of the Company. He should also be requested by the Company to promptly leave the Board and join Mr. Filo in solely an operating capacity.

In our view, a leveraged recapitalization makes no sense and its only purpose would be to put substantial equity stakes into friendly hands to entrench management and transfer effective control without payment of a premium or even, it appears, a shareholder vote. Nothing can excuse such an action, and shareholders will not be bought off with a dividend of our own money while value is destroyed.

Moreover, such a transaction would undermine the basic tenets of free markets, including democratic voting, accountability and fairness. We do not blame our friends at the private equity firms rumored to be involved for trying to get the best deal possible for their investors; we have great respect for these firms and their leaders — Jim Coulter of Texas Pacific Group, Jonathan Nelson of Providence Equity Partners, Glenn Hutchins of Silver Lake, Henry Kravis of KKR and Stephen Schwarzman of Blackstone. However, we at Third Point are also in the value-maximizing business. We will not tolerate any transaction which appropriates for insiders opportunities that duly belong to current Yahoo shareholders. However, we would welcome the prospect of any of these firms’ presence on a reconstituted Yahoo Board of Directors and work on a long-term strategy for the Company should it be necessary for us to pursue a proxy contest next year.

If you, as board members, undertake the current course of action, Third Point will hold you personally responsible for such a flagrant violation of your duty of loyalty. Any transaction with a third party who assists members of management and the board in protecting their jobs, and/or involves the effective sale or transfer of control without payment of a control premium, will likewise be subject to scrutiny.

Given the Board’s inability — or perhaps unwillingness — to properly solicit true strategic alternative bids, let alone to negotiate them, Third Point demands that we be awarded two board seats — those created by the vacancies of Chairman Bostock and Mr. Yang, or two newly-created ones. We are prepared to assume these positions immediately.

Sincerely,

Daniel S. Loeb
Chief Executive Officer
Third Point LLC
390 Park Avenue
New York, New York 10022

Yahoo’s Board of Directors’ objective is, and always has been, to serve the best interests of all the company’s shareholders. The Board’s comprehensive strategic review is being properly managed for the benefit of all shareholders and is guided by outside counsel for the independent directors and investment bankers retained separately by the Board. The Board of Directors (eight independents and Mr. Yang) controls the strategic review process and has directed its Transactions and Strategic Planning Committee (comprised of four independent directors) to manage the process day-to-day and report regularly to the Board.

News reports based on rumor and speculation are just that. The Board’s comprehensive strategic review process is still underway, with a wide range of options under active consideration. We can assure all Yahoo shareholders that whatever the outcome of the strategic review process may be, it will serve the best interests of all the company’s shareholders.

Mr. Yang is one of 9 directors with the exact same fiduciary duties and motivation as all of his fellow directors — to serve the best interests of all the company’s shareholders. The Board and the Transactions and Strategic Planning Committee initiate, direct, and oversee any work Mr. Yang undertakes in relation to the strategic review process.

YHOO-20111104-SC13DA-0

]]> http://allthingsd.com/20111104/yahoos-activist-shareholder-loeb-now-targeting-jerry-yang/feed/ 0 Yahoo Shares Melt as Rumors Collide (Plus, I Add Another Log to the Fire) http://allthingsd.com/20111031/yahoo-shares-melt-as-rumors-conflict-with-other-rumors/ http://allthingsd.com/20111031/yahoo-shares-melt-as-rumors-conflict-with-other-rumors/#comments Tue, 01 Nov 2011 00:13:03 +0000 Kara Swisher http://allthingsd.com/?p=138192

Do sale rumors make a troubled asset more attractive? Yes — except when more rumors (that those sales rumors might not be true) appear.

Welcome to just another day in the life of Yahoo, which saw its shares drop more than 5.5 percent today. Its stock declined almost a dollar to close at $15.64, after it was reported by various news orgs that Yahoo might be leaning toward no sale and a shareholder dividend, and toward taking control of its own sale of its lucrative Asian assets.

That was counter to the news — from a number of the very same outlets — touting a variety of ever more elaborate and sometimes breathless sale scenarios last week, featuring various configurations of Microsoft, Google and private equity firms like Silver Lake and others.

Silver Lake, in fact, appears to be the most aggressive in the possible bidding for all or parts of Yahoo, and has been noodling such a deal most intently, and for a long time now.

It makes sense, given that Silver Lake was successful in a vaguely similar deal that ultimately saved the Internet telephony service Skype, which it eventually peddled at a high price to Microsoft.

In fact, according to several sources, Yahoo director and co-founder Jerry Yang — also a former CEO of the company, who appears to have seized the ball firmly in the strategy game — met with Silver Lake today for an unspecified little chitchat.

That said, one source told me, “what is deeply uncertain is whether Silver Lake will do something at all.”

This is par for the course in this everything-but-the-kitchen-sink drama. Because — although it makes for a boring post, and the back and forth throat-clearing before an actual event might be entertaining — so far, not very much is actually happening as yet at Yahoo, with regard to its variety of options.

Of course, this could change in an hour. Or tomorrow, or the next day. Most of all, it’s clear that Yahoo’s board has to move in some significant way before the end of the year.

So, yes, the Silicon Valley Internet giant is doing all the sales-oriented stuff it should do with its coterie of pricey bankers (presumably being paid by the hour).

Yes, it has recently hired a talent-search firm, which is eyeing the landscape to find a willing CEO. (Even more adviser costs!)

And, yes, it is still wrangling with its Asian partners — Alibaba Group and SoftBank — over how to do a tax-free transaction (you’d think from all the sweating over it that this deal was harder to solve than the European debt crisis).

And, on schedule, activist shareholders — like hedge-fund agitator Dan Loeb of Third Point — should be attacking again soon, until a deal is done.

But according to many sources both inside and outside Yahoo, what’s happening is pretty much business as usual for this Hamlet of a company, which is lugubriously debating and weighing and pondering its fate.

I suppose it should, given the importance of it all, except it is a conundrum that has been going on for far too long at Yahoo, and under a number of different leaders.

In other words, it’s like “As the World Turns,” except with some new characters and a whole lot more amnesia.

But the slowness of a very real process is also causing deep frustration with all those dealing with Yahoo now — including possible bidders, and definitely its Asian partners.

Their gripes — which are louder than in most deals — are not surprising: They refuse to sign a too-onerous NDA to look at Yahoo’s books; there’s an irksome tone of indecision on the part of the company’s board; and, as always, the incessant leaks about all of this and more are making it worse.

One bidder has likened the company to a “melting iceberg that has a lot less time than the planet has to put its house in order.”

Another bemoaned the variety of trial balloons being floated, and noted that no movement was what Yahoo seems to do best.

That’s not exactly true, of course, so expect to see more leaks about plots and plans and meetings.

But no matter what you hear, keep in mind that having Yahoo’s fate being spun about like a top on a daily basis on Wall Street and in the media is not good for the company itself — or for its employees and shareholders.

Since it makes me dizzy — even though I like a good scoop as much as the next reporter — that’s the reason I have largely stuck to reporting about the actual internal turmoil inside Yahoo, from poor employee morale to various staff rejiggerings to more relentless brain drain.

Because while everyone fiddles, Yahoo’s real prospects of maintaining its core business melt a little bit more every day.

Yahoo is on its third CEO in four years, it has lost advertising momentum to Google and Facebook, its engagement levels are dangerously slowing, its social and mobile strategies are unclear and even its powerful email product is under siege.

And in the end, it is only these things that will matter to whoever runs the company in the end.

[Photo from Mat Honan's fantastic tweet here.]

]]> http://allthingsd.com/20111031/yahoo-shares-melt-as-rumors-conflict-with-other-rumors/feed/ 0 Loeb on Yahoo Board: I've Looked at Clowns From Both Sides Now http://allthingsd.com/20110915/loeb-on-yahoo-board-ive-looked-at-clowns-from-both-sides-now/ http://allthingsd.com/20110915/loeb-on-yahoo-board-ive-looked-at-clowns-from-both-sides-now/#comments Thu, 15 Sep 2011 09:17:16 +0000 Kara Swisher http://allthingsd.com/?p=121095

And you thought former Yahoo CEO Carol Bartz could lay into the Yahoo board with some zingers, including the not-used-enough “doofuses” insult.

Time to meet Third Point’s Daniel Loeb, the smack-tastic hedge fund manager who has bought up a 5.1 percent stake in the Silicon Valley Internet giant and has been hitting the company upside the head with those shares since last week, on a seemingly daily basis.

Actually, twice yesterday — in a morning letter he filed with regulators, and then at an afternoon investor conference.

After trying to entice Yahoo co-founder Jerry Yang into throwing Chairman Roy Bostock under the bus, and noting in the letter that Bostock hung up on him in a recent phone call, Loeb told the attendees at the Delivering Alpha conference in New York that “no one wants to work with these clowns on the [Yahoo] board.”

Also that “Yahoo had one of the most horrendous management teams” that Loeb had “seen in 16 years.”

Also that Yahoo “has the same crappy interface and the same stupid logo” since 2004.

Other than that, Mr. Loeb, how is the Internet site?

Here is Loeb’s latest filing to see for yourself:

loebsec

]]> http://allthingsd.com/20110915/loeb-on-yahoo-board-ive-looked-at-clowns-from-both-sides-now/feed/ 0 Yahoo for Sale: Possible Bidders Circling -- Including Marc Andreessen -- as Board Pressure Mounts http://allthingsd.com/20110914/yahoo-for-sale-big-bidders-circling-including-marc-andreessen-as-board-pressure-mounts/ http://allthingsd.com/20110914/yahoo-for-sale-big-bidders-circling-including-marc-andreessen-as-board-pressure-mounts/#comments Wed, 14 Sep 2011 19:28:49 +0000 Kara Swisher http://allthingsd.com/?p=120518

A range of major players interested in acquiring all or a large piece of Yahoo have been prepping possible bids and have been in touch with the Internet giant’s board over the last several days.

While Yahoo has publicly said it was not for sale, according to numerous sources both inside and outside the company, it has been receptive to the interest and its Chairman Roy Bostock and Co-founder Jerry Yang have spoken to several.

Among the possible players: Silicon Valley venture firm Andreessen Horowitz, which is working with private equity firm Silver Lake, in a deal that also might include Russia’s DST Global and Yahoo’s Japanese partner Masa Son; former News Corp. exec Peter Chernin, who is partnered with Providence Equity Partners; and the possibility that Yahoo’s Chinese partner, Alibaba Group, might consider entering the fray in what could be a reverse merger of sorts.

Also being rung up by some of the parties: Microsoft — Yahoo’s advertising and search partner — which is being seen as a possibly moneybags in any deal.

The movement among these investors is against a backdrop of increasing pressure for Yahoo’s board, after it fired CEO Carol Bartz last week. In the wake of the dramatic move, shareholders have upped criticism of Bostock and the board and have been looking hard for alternatives.

Today, that included hedge fund investor Daniel Loeb of Third Point, which has a 5.1 percent stake in Yahoo. In a filing this morning, he said he might increase that amount, and described a testy hour-long phone call he had earlier this week with Bostock that ended abruptly with a hang-up from Yahoo.

Sources said Loeb called Bostock a “fool,” among other not-so-nice names, on the call and asked for Yang’s help in dumping him.

This comes as exactly no surprise, given his previously strong letter in which Loeb called for Bostock’s ouster.

Loeb has been calling out Bostock — who is also on the boards of Morgan Stanley and Delta Airlines — for a series of gaffes at Yahoo since he became chairman in 2008 (he’s been on the board since 2003).

Those have included: Yahoo’s bungled effort to stave off a takeover by Microsoft several years ago; the too-long enthusiasm for Bartz, who was hired in early 2009 and fired last week; sitting unusually still as competitors such as Facebook, Google and more have out-innovated and outgrown Yahoo; and, of course, the falling knife of a stock, which has dropped precipitously since Bostock has been in charge of the board.

As Loeb wrote in a letter he sent to the company last week:

“It is time that certain members of this Board were held accountable for its past failures and their individual roles. Accordingly, we insist that Mr. Bostock, who championed Ms. Bartz’s hiring and led the charge against the Microsoft deal, promptly resign from the Board.”

Loeb is likely to add to that later today at a high-profile investor conference in New York, where the colorful but tough-talking investor is sure to add more logs to the fire.

But it not only him. Other major shareholders of Yahoo are also in touch with possible outside buyers, seeking a change at the long-troubled company, after its shares have remained in the doldrums, its attrition rate of employees has spiked and its product pipeline has slowed to drip.

This has all been taking place — of course — during one of tech biggest and most innovative booms, in which Yahoo competitors have grown strongly.

Enter Marc Andreessen, the well-known entrepreneur who has transformed himself into one of Silicon Valley’s most powerful venture capitalists.

He and his partner Ben Horowitz recently pulled off another similar deal — with Silver Lake — to take control of a then-troubled Skype. They later flipped it to Microsoft for a large return.

Sources familiar with the situation said the pair have become increasingly intrigued by the situation at Yahoo and believe that its assets and brand are still strong, despite its management turmoil in recent years.

One problem is the huge cost of almost any kind of takeover and also the complexity, given much of Yahoo’s $18.5 billion valuation is due to its Asian assets.

The sale of those shares, as well as the selling off of some of Yahoo’s less core properties, makes for a very complicated situation for anyone.

Said one person looking at the company: “It is one of the more massive hairballs around.”

That is a common sentiment among many of those looking at Yahoo, which has hired Allen & Co. to manage the process.

Also of worry is a bid that would include too many players. Yahoo has long been plagued by indecisiveness on the part of its execs and, mostly, its board.

But one thing all the possible buyers of Yahoo, as well as an increasing number of its shareholders, agree on: The Yahoo board needs a major shake-up.

As Loeb wrote last week, which many I interviewed also echoed:

“This letter details our principled demands for sweeping changes in both the Board of Directors (the “Board”) and Company leadership, and outlines the hidden value of Yahoo, which has been severely damaged — but not irreparably — by poor management and governance.”

]]> http://allthingsd.com/20110914/yahoo-for-sale-big-bidders-circling-including-marc-andreessen-as-board-pressure-mounts/feed/ 0 As Yahoo Board Meets Tomorrow, Investors Ready Thumbscrews http://allthingsd.com/20110913/as-yahoo-board-meets-tomorrow-investors-ready-thumbscrews/ http://allthingsd.com/20110913/as-yahoo-board-meets-tomorrow-investors-ready-thumbscrews/#comments Tue, 13 Sep 2011 23:56:55 +0000 Kara Swisher http://allthingsd.com/?p=120410

The Yahoo board will be meeting in Silicon Valley tomorrow to discuss a wide range of worrisome issues facing the troubled Internet giant.

Meanwhile, several sources said, even more private equity investors are weighing making major investments in the company, all pretty much aimed at ousting said directors.

So far, that has only been Third Point’s Daniel Loeb, whose massive hedge fund now owns 5.1 percent of Yahoo.

Loeb appears tomorrow at the high-profile Delivering Alpha investor conference in New York at 2 pm PT, where he is expected to take another swing at Yahoo’s board.

His next moves, sources said, could include buying up more shares to put the pressure on and also presenting his own alternate slate of directors, much as activist investor Carl Icahn did several years ago at Yahoo.

Translation: Forget AOL’s CrunchGate — this is big-boy corporate battling!

Add that to the pile on Yahoo’s board meeting agenda, along with some other critical issues that include: Outlining the criteria for any CEO candidate and a discussion of headhunting firms to hire; a review of strategic alternatives, including a presentation by its investment advisors, Allen & Co.; and how to stabilize the company and reassure its dusting-off-their-resumes employees.

Finding answers to these questions is going to be difficult enough, but the ever increasing pressure from outside investors is going to make it even harder.

Some definite tire-kickers reportedly looking at a bid include Providence Equity Partners, Silver Lake, Blackstone, Texas Pacific Group and even KKR.

While KKR has reportedly close ties with Yahoo Chairman Roy Bostock, he is now the main target for pretty much everyone else.

That includes Loeb, as well as other major Yahoo shareholders.

That’s no surprise: Bostock, who is also on the boards of Morgan Stanley and Delta Airlines, has presided over a series of gaffes at Yahoo since he became chairman in 2008 (he’s been on the board since 2003).

Those have included: Yahoo’s bungled effort to stave off a takeover by Microsoft several years ago; the too-long enthusiasm for CEO Carol Bartz, who was hired in early 2009 and fired last week; sitting unusually still as competitors such as Facebook, Google and more have out-innovated and outgrown Yahoo; and, of course, the falling knife of a stock, which has dropped precipitously since Bostock has been in charge of the board.

As Loeb wrote in a letter he sent to the company:

“It is time that certain members of this Board were held accountable for its past failures and their individual roles. Accordingly, we insist that Mr. Bostock, who championed Ms. Bartz’s hiring and led the charge against the Microsoft deal, promptly resign from the Board.”

Said another source with knowledge of the situation: “Under Roy’s leadership, this weak and bumbling board took too long to fire a clearly failing CEO and now has no plan, except throwing up their hands and hoping someone comes along.”

Here is one certainty: Someone is going to come along and it is not going to be pretty.

]]> http://allthingsd.com/20110913/as-yahoo-board-meets-tomorrow-investors-ready-thumbscrews/feed/ 0 Déjà Vu: Activist Yahoo Shareholder Takes Aim at Board http://allthingsd.com/20110908/activist-yahoo-shareholder-takes-aim-at-board/ http://allthingsd.com/20110908/activist-yahoo-shareholder-takes-aim-at-board/#comments Thu, 08 Sep 2011 16:36:17 +0000 Kara Swisher http://allthingsd.com/?p=118646

And so it begins again for Yahoo.

When shareholders attack, that is.

In a filing with the Securities and Exchange Commission, Third Point LLC, a large shareholder of Yahoo, called for a new board.

The multi-billion dollar hedge fund now owns 5.1 percent of the Silicon Valley Internet giant, making it the third largest shareholder.

“This letter details our principled demands for sweeping changes in both the Board of Directors (the “Board”) and Company leadership, and outlines the hidden value of Yahoo, which has been severely damaged — but not irreparably — by poor management and governance,” said Third Point CEO Daniel Loeb in a letter to Yahoo Chairman Roy Bostock.

Loeb outlines the damage, including the botched takeover fight with Microsoft and its hiring of the now ousted CEO Carol Bartz.

He calls for Bostock’s departure too from the board, as well as others:

“It is time that certain members of this Board were held accountable for its past failures and their individual roles. Accordingly, we insist that Mr. Bostock, who championed Ms. Bartz’s hiring and led the charge against the Microsoft deal, promptly resign from the Board. We also demand that fellow Directors Arthur Kern and Vyomesh Joshi, who have stood by silently during these last five years of woeful performance, join Mr. Bostock in resignation. Finally, we can only assume that Director Susan James, the President of Tri-Valley Animal Rescue, will also resign, given her close relationship with Ms. Bartz. If she does not do so voluntarily, the Board should request her resignation as well.”

The last time Yahoo had a big shareholder fight — with well-known investor Carl Icahn — there was much damage all around, especially to its share price.

You can read Third Point’s 13D filing here:

YHOO-20110908-SC13D-0

]]> http://allthingsd.com/20110908/activist-yahoo-shareholder-takes-aim-at-board/feed/ 0 As Einhorn Exits Mets, Will He Refocus on Striking Out Microsoft's Ballmer? http://allthingsd.com/20110902/as-einhorn-exits-mets-will-he-refocus-on-striking-out-microsofts-ballmer/ http://allthingsd.com/20110902/as-einhorn-exits-mets-will-he-refocus-on-striking-out-microsofts-ballmer/#comments Fri, 02 Sep 2011 18:14:45 +0000 Kara Swisher http://allthingsd.com/?p=116513

Yesterday, David Einhorn of Greenlight Capital dumped his bid to buy the New York Mets.

“I am disappointed to announce that I will not be purchasing an ownership interest in the New York Mets baseball team at this time,” said the well-known Wall Street hedge fund manager in a statement.

Why does that matter to tech? Well, because Einhorn has been an active player in the sector of late, including buying and then dumping a big chunk of stock in Yahoo earlier this year.

He currently owns slugs of Seagate, Apple, Best Buy and, in his largest holding, almost 15 million shares of Microsoft.

Now, it will be interesting to see if he’ll put his proverbial eye back on the ball of attacking the company’s CEO Steve Ballmer, as he had been doing many months ago.

While also maintaining that the stock was undervalued by investors, for example, Einhorn said in May that the software giant had “Charlie Brown management” and that Ballmer’s “continued presence is the biggest overhang on Microsoft’s stock.”

That did not stop Greenlight from adding more Microsoft shares to its holdings, jumping to an ownership stake of 14.8 million shares as of June 30, compared to 9.1 million shares at the end of the previous quarter.

Now that he has more time on his hands post-Mets, will Einhorn renew his Ballmer criticism?

We’ll see soon enough, as well as what Microsoft’s own outlook is, at its annual Financial Analyst Meeting later this month in Anaheim.

Ballmer, as well as a panoply of other Microsoft execs, will be making presentations there.

]]> http://allthingsd.com/20110902/as-einhorn-exits-mets-will-he-refocus-on-striking-out-microsofts-ballmer/feed/ 0 Another One Bites the Dust: Yahoo Shares Dip as Einhorn Sells Off Stake http://allthingsd.com/20110708/yahoo-shares-dip-as-einhorn-sells-off-stake/ http://allthingsd.com/20110708/yahoo-shares-dip-as-einhorn-sells-off-stake/#comments Fri, 08 Jul 2011 17:23:31 +0000 Kara Swisher http://allthingsd.com/?p=95763 It all started off so well.

But it didn’t go on for long in the case of David Einhorn’s high-profile hedge fund Greenlight Capital, which today dumped an investment it made earlier this year in Yahoo on high hopes of the value of the Internet giant’s stake in China’s Alibaba Group.

That was before the ugly public fight Yahoo got into with Alibaba over its Alipay payment unit and especially with its voluble CEO Jack Ma.

In a letter to investors, Einhorn (pictured right) said the kerfuffle, which has hit Yahoo’s stock hard, “wasn’t what we signed up for.”

Yahoo shares are down just below two percent today and are now at $15.52 each.

Einhorn said in the letter that his fund had “a modest loss” in Yahoo, which sources said was about $20 million.

Einhorn had bought less than .65 percent of Yahoo, or about 8.5 million shares in March, which he said was due to his feeling that the company was undervalued with regard to its Asian assets.

Said Einhorn at the time: “We would not be surprised if YHOO’s 40 percent stake in Alibaba Group alone was ultimately worth YHOO’s entire current market value.”

Fast forward to today:

“The Partnership bought Yahoo! (YHOO) earlier this year based on a sum of the parts analysis, which included putting substantial value on its Chinese assets. Shortly after the purchase, the value of the Chinese assets came into doubt as the CEO of the Chinese unit hived-off a valuable subsidiary into a corporation that he personally controls. From there, the finger pointing started in every direction. This wasn’t what we signed up for. We exited with a modest loss.”

Here’s the full Einhorn letter, which appeared on zerohedge.com:

Qlet2011-02

]]> http://allthingsd.com/20110708/yahoo-shares-dip-as-einhorn-sells-off-stake/feed/ 0 Yahoo Addresses Alipay Mess: Forget It, Shareholders–It's China. http://allthingsd.com/20110513/yahoo-addresses-alipay-mess-forget-it-shareholders-its-china/ http://allthingsd.com/20110513/yahoo-addresses-alipay-mess-forget-it-shareholders-its-china/#comments Fri, 13 May 2011 07:03:58 +0000 Kara Swisher http://kara.allthingsd.com/?p=43899

Back in April of 2009, like all the rest of the parts of the Chinese Internet giant Alibaba Group, its Alipay unit was listed this way on its Web site: “Alipay is wholly owned by Alibaba Group.”

And right now, describing the online payments platform? (my italics): “Alipay is an affiliate of Alibaba Group.”

Memo to Yahoo CEO Carol Bartz: You might have noticed that critical change in Alipay’s corporate status, which happened last August, given the company you lead owns 43 percent of the Alibaba Group.

More to the point, Alipay accounted for $1.7 billion of Yahoo’s valuation.

Not surprisingly, Yahoo shares are down more than six percent in after-hours trading, likely in reaction to an unusual statement by Yahoo yesterday, in which the company said it had no idea until March 31 that Alibaba CEO Jack Ma had transferred ownership of the Alipay unit to a separate entity.

Sources said that apparently happened in a letter from Alibaba to Yahoo’s accounting department. Since then, the company said it has been trying to figure it all out.

Said Yahoo:

On March 31, 2011, Yahoo! and Softbank were notified by Alibaba Group of two transactions that occurred without the knowledge or approval of the Alibaba Group board of directors or shareholders. The first was the transfer of ownership of Alipay in August 2010. The second was the deconsolidation of Alipay effective in the first quarter of 2011.

Yahoo! disclosed this restructuring in its 10-Q after discussions with Alibaba Group and obtaining a better understanding of this complex situation.

Yahoo! continues to work closely with Alibaba and Softbank to protect economic value for all interested parties. We believe ongoing negotiations among all of the parties provide the best opportunity to achieve an outcome in the best interest of all stakeholders.

Translation: Alibaba’s Ma–who cites upcoming new rules about foreign ownership from People’s Bank of China related to operating its payment business–just snookered us and we need to play dumb until we decide whether a lawsuit will be one disaster too many for our much-beleaguered investors.

Really pissed off shareholders is more like it–BoomTown has been on the receiving end of an explosive series of calls from Yahoo’s investors today asking a variety of questions.

They include:

1. How could Alibaba have reported its results with Alipay consolidated in, even though it was a separate entity since last year? And does that spell trouble for Yahoo, since it used those numbers in its own regulatory filings in the U.S.?

2. How could Ma initiate such a transaction without approval from shareholders and its board, as Yahoo claims?

3. In any case, why weren’t Yahoo execs paying more attention to the swirling changes related to foreign ownership in China, especially since Yahoo co-founder Jerry Yang is on the Alibaba board, anticipating that there could be real problems ahead?

4. Why did Yahoo execs not tell shareholders about the situation immediately or even at its April earnings call? Or perhaps before David Einhorn’s hedge fund Greenlight Capital hedge fund took a big position in Yahoo last week, specifically noting the value of the company’s Asian assets as highly attractive.

5. Does this move mean that those pretty Chinese assets Yahoo has touted are not so pretty after all, given that these kinds of things can happen there?

6. Should U.S. investors remove themselves from that Chinese market, given that these kinds of things can happen there?

7. Is Bartz’s extraordinarily tense personal relationship with Ma a big part of the problem, creating a distasteful public feud over issues better left to quiet backroom negotiations?

There will be plenty more, of course, especially around Yahoo’s disclosures to investors.

Yahoo execs will argue that it did disclose in the proper manner from a filing point of view and that it did not reveal the fissure so as not to put its negotiations with Alibaba over the situation at risk.

But–especially given the myriad of continued missteps by Bartz that have worked investors’ last nerve–that probably is not going to fly.

In fact, that irked sentiment will surely be on display at Yahoo’s upcoming investor day on May 25.

Yahoo had hoped to show off its new team of execs and talk about some legitimate momentum the company is making.

Now, it will doubtlessly all be about China and what happened there.

So, Bartz has to have a better line than a take on a Hollywood classic: “Forget it, Wall Street. It’s China.”

Maybe so, but it’s her problem to solve now.

And here’s my favorite version of that line:

]]> http://allthingsd.com/20110513/yahoo-addresses-alipay-mess-forget-it-shareholders-its-china/feed/ 4 Galleon Founder Convicted on All Counts in Insider-Trading Trial http://allthingsd.com/20110511/galleon-founder-convicted-on-all-counts-in-insider-trading-trial/ http://allthingsd.com/20110511/galleon-founder-convicted-on-all-counts-in-insider-trading-trial/#comments Wed, 11 May 2011 15:32:12 +0000 Michael Rothfeld and Chad Bray http://voices.allthingsd.com/?p=40907 A federal jury convicted Galleon Group founder Raj Rajaratnam on all 14 counts of securities fraud and conspiracy, providing the U.S. with a significant win in a push to prosecute insider trading on Wall Street and in corporate America.

The verdict by the 12-member jury, following 11 days of deliberation, capped a blockbuster trial that started in early March featuring 45 recorded calls showing how the hedge-fund executive trafficked in insider tips provided to him by a web of contacts at the top tier of American business.

The widely watched trial exposed the behind-the-scenes dealings of a once-prestigious hedge fund that gained access to highly sensitive information about, among other things, Goldman Sachs Group Inc. at the height of the financial crisis. The government put at $63.8 million the amount in illegal profits and avoided losses Galleon realized through the scheme.

Read the rest of this post on the original site »

]]> http://allthingsd.com/20110511/galleon-founder-convicted-on-all-counts-in-insider-trading-trial/feed/ 0 Galleon Witness Testifies of "Super Confidential" Deal Tips http://allthingsd.com/20110314/galleon-witness-testifies-of-super-confidential-deal-tips/ http://allthingsd.com/20110314/galleon-witness-testifies-of-super-confidential-deal-tips/#comments Mon, 14 Mar 2011 22:22:43 +0000 Michael Rothfeld and Susan Pulliam http://voices.allthingsd.com/?p=37642 A government witness at the insider-trading trial of Galleon Group founder Raj Rajaratnam told the jury Monday how he leaked details of “super confidential” negotiations between two technology companies to the hedge-fund chief, who was shocked at the terms of the possible deal.

The potential acquisition of ATI Technologies Inc., a Canadian graphics company, by chip maker Advanced Micro Devices Inc. was so secret that the project was at first code-named “Supernova,” and then “Go Big,” said Anil Kumar, a former McKinsey & Co. consultant who advised AMD on the deal. In discussions, AMD was referred to as “Los Angeles” and ATI was called “San Antonio,” he said.

But for months before the deal was announced in July 2006, Mr. Kumar testified, he had been discussing AMD’s plans with Mr. Rajaratnam. Mr. Kumar has testified that Mr. Rajaratnam had been paying him $500,000 a year for inside information, which was reinvested in Galleon through an account in India under his housekeeper’s name.

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]]> http://allthingsd.com/20110314/galleon-witness-testifies-of-super-confidential-deal-tips/feed/ 0 Microsoft and Some Big Thinking Heads at Farsight 2011: "Beyond the Search Box" http://allthingsd.com/20110201/microsoft-and-the-big-thinking-heads-at-farsight-2011-beyond-the-search-box/ http://allthingsd.com/20110201/microsoft-and-the-big-thinking-heads-at-farsight-2011-beyond-the-search-box/#comments Tue, 01 Feb 2011 16:15:47 +0000 Kara Swisher http://kara.allthingsd.com/?p=40038

Oh dear, BoomTown is still jetlagged from my recent trip to China and now Microsoft Bing is offering up a head-requiring event later this morning in San Francisco to explore the future of search.

There better be donuts.

A lot and with sprinkles, since speakers include the lugubrious investor and hedge fund philosophizer Peter Thiel and skunk-at-a-Web-garden-party author Malcolm Gladwell.

Here’s Microsoft Bing exec Satya Nadella’s blog post on the event, as well as one pre-video of what to expect from the sessions.

In it, Gladwell, noting the richness in search has yet to cure cancer, has a good point, which should be interesting with the backdrop of the protests going on in Egypt and elsewhere.

As in: If governments can block search, does it really matter?

I will be posting if someone comes up with a good answer to that one.

Bing and Big Think present Farsight 2011: “Beyond the Search Box” Event and Webcast

In the past ten years, search has transformed the way we experience the web even as the web itself has changed. New user interfaces, mobile devices, and interactive services are evolving beyond text pages intertwining the ‘web’ into all aspects of our lives and thus we expect to be able to do more online with less friction. Along with the innovation has come an explosion of information and services that are compounding at an exponential rate. Trying to get things done on the web is becoming more complex and fragmented every day. In short, unlike many consumer products, the problems facing the search industry are getting harder–not easier.

In order for us to truly realize the science-fiction dream of so many of us kids, of that ubiquitous intelligent agent, we want to elevate the discussion in search beyond next quarter’s technology. To begin to do that Bing has teamed with Big Think to bring the best minds from inside and outside the industry together for a series of spirited conversations, panels, and demos examining the “Future of Search.”

The group we’ve assembled includes Hedge Fund Manager and PayPal co-founder Peter Thiel, Recorded Future co-founder and CEO Chris Ahlberg, journalist entrepreneur Esther Dyson, contrarian journalist and “Tipping Point” author Malcolm Gladwell among others.

In addition, Farsight 2011 will include a search industry roundtable featuring Matt Cutts from Google, Rich Skrenta from Blekko and our very own Harry Shum from Bing. The panel and much of the day will be moderated by the entrepreneur and technologist, Vivek Wadhwa.

You are invited to take part in the discussion, by submitting your questions for the experts in advance at BigThink.com. Then return on February 1 to watch the conference streaming LIVE from 10:00am to 2:00pm PST on Big Think.com.

I encourage you to tune and be a part of the conversation to help all of us realize the potential that this most powerful technology can bring.

Satya Nadella–Senior Vice President, Online Services

]]> http://allthingsd.com/20110201/microsoft-and-the-big-thinking-heads-at-farsight-2011-beyond-the-search-box/feed/ 0 Harbinger Bets That Palm's Hand Is Better Than You Think http://allthingsd.com/20100414/harbinger-bets-that-palms-hand-is-better-than-you-think/ http://allthingsd.com/20100414/harbinger-bets-that-palms-hand-is-better-than-you-think/#comments Thu, 15 Apr 2010 04:04:59 +0000 Peter Kafka http://mediamemo.allthingsd.com/?p=18626 Somebody, somewhere is going to buy Palm. And whoever that is will end up paying more for the company than the market thinks it’s worth today.

That’s the thinking behind hedge fund Harbinger Capital’s bet on the troubled smartphone maker: The New York-based investment group disclosed today that it has purchased 16 million shares of Palm (PALM). That’s a little less than 10 percent of the company, which is actively looking for buyers after flailing against Apple’s (AAPL) iPhone, Research in Motion’s (RIMM) BlackBerry and Google’s (GOOG) Android.

The Securities and Exchange Commission filing detailing Harbinger’s investment doesn’t actually have much in the way of details. But it appears that Harbinger purchased its stake on or before April 12, the day news surfaced that Palm had hired bankers to shop the company.

If Harbinger sounds familiar to you, it may be because it’s one of the funds that bet on the New York Times (NYT) a couple years ago. That didn’t work out so well, but Harbinger was still up more than 45 percent last year, Reuters says.

More background on Palm.

]]> http://allthingsd.com/20100414/harbinger-bets-that-palms-hand-is-better-than-you-think/feed/ 0 Hedge Fund Scrapbooker http://allthingsd.com/20091109/hedge-fund-scrapbooker/ http://allthingsd.com/20091109/hedge-fund-scrapbooker/#comments Mon, 09 Nov 2009 22:27:21 +0000 Nitrozac and Snaggy http://voices.allthingsd.com/?p=17605

]]> http://allthingsd.com/20091109/hedge-fund-scrapbooker/feed/ 0 Intel CEO Says Had No Knowledge of Trading Probe http://allthingsd.com/20091019/intel-ceo-says-had-no-knowledge-of-trading-probe/ http://allthingsd.com/20091019/intel-ceo-says-had-no-knowledge-of-trading-probe/#comments Mon, 19 Oct 2009 21:29:56 +0000 Rebecca Blumenstein http://voices.allthingsd.com/?p=16774 Intel Corp.’s (INTC) chief executive said the company had no advance warning or knowledge about the insider-trading investigation into Galleon Group, which has implicated an Intel executive.

“No one in our legal department or management knows anything about this,” said Paul Otellini, chief executive of the chip giant, in an interview at The Wall Street Journal’s headquarters in New York.

An executive in Intel’s treasury department, Rajiv Goel, is one of those facing conspiracy and securities-fraud criminal charges, as well as civil insider-trading charges, in the investigation into Galleon, a hedge fund at the center of the biggest insider-trading case in decades.

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]]> http://allthingsd.com/20091019/intel-ceo-says-had-no-knowledge-of-trading-probe/feed/ 0 Da! Facebook Takes $200 Million From Russian Investors at $10 Billion Valuation http://allthingsd.com/20090526/da-facebook-takes-200-million-from-russian-investors-at-10-billion-valuation/ http://allthingsd.com/20090526/da-facebook-takes-200-million-from-russian-investors-at-10-billion-valuation/#comments Tue, 26 May 2009 16:17:32 +0000 Peter Kafka http://mediamemo.allthingsd.com/?p=7743 Facebook is indeed taking money from Russian investor Digital Sky Technologies. As previously reported, the social network is selling $200 million of preferred stock at a $10 billion valuation; DST will also buy up to $100 million of common stock at a lower valuation later this year.

DST will not get a board seat or “special observer rights” in return for its money. The two companies are holding a press conference shortly, so we may be able to extract a few more details.

The $10 billion valuation is comedown from the $15 billion figure that accompanied Microsoft’s (MSFT) 2007 investment, but no one expected that figure to hold up–in large part that deal was driven by a bidding war with Google (GOOG) and not much else.

Facebook and its newest investors are conducting a conference call to discuss the deal; I’ll be covering the call live.

FACEBOOK RECEIVES INVESTMENT FROM DIGITAL SKY TECHNOLOGIES

Passive Investment Includes Stake in Preferred Stock, Common Stock and Support for Facebook’s Continued Global Growth

PALO ALTO, Calif. — May 26, 2009 — Facebook today announced that Digital Sky Technologies (DST), one of the leading internet investment groups globally with significant stakes in Eastern European and Russian internet businesses, has made a $200 million investment in Facebook in exchange for preferred stock, representing a 1.96 percent equity stake at a $10 billion valuation.

In addition, DST has indicated that it is planning to offer to purchase at least $100 million of Facebook common stock from existing common stockholders that would facilitate liquidity for current and former employees’ vested shares in the company. The details of the plan are expected to be announced to eligible participants during the summer. Consistent with Facebook’s practice with other recent investors, DST will not be represented on the Facebook board or hold special observer rights.

“This investment demonstrates Facebook’s ongoing success at creating a global network for people to share and connect,” said Facebook CEO Mark Zuckerberg. “We’ve worked hard to bring more than 200 million people — 70 percent outside of the U.S. — onto Facebook to share with friends, family and co-workers. A number of firms approached us, but DST stood out because of the global perspective they bring — backed up by the impressive growth and financial achievements of their internet investments. We’re looking forward to working with the DST team.”

“Our investment experience in other regions reveals the tremendous value social networking companies create as they redefine how people communicate and interact,” said Yuri Milner, chief executive of DST.  “By every important metric — user growth and engagement, technological innovation and financial performance — Facebook is on a similar trajectory, though on a much more global scale. We’re delighted to invest in Facebook, Mark and his management team as they make the world more open and connected.”

Based in London and Moscow, DST is a well-respected investor in a number of successful internet companies, holding significant interests in Russia and Eastern Europe, such as Mail.ru, Forticom and vKontakte.  DST’s main assets account for over 70 percent of all page views in the Russian-speaking internet and its social networks are the market leaders in more than 13 countries, addressing a combined population of more than 350 million.

DST is run by its three partners who have complementary backgrounds in operations, investments and finance: Yuri Milner, previously CEO of Mail.ru, the #1 Russian language website; Gregory Finger, previously head of the Moscow office of NCH, a multi-billion dollar hedge fund; and Alexander Tamas, previously co-head of internet and software coverage in EMEA for the Investment Banking Division of Goldman Sachs. With its advanced understanding of opportunities in technology and social media, DST is a good fit for Facebook and an insightful partner that can help unlock additional growth opportunities.

]]> http://allthingsd.com/20090526/da-facebook-takes-200-million-from-russian-investors-at-10-billion-valuation/feed/ 0 Weekend Update, 10/10/08 http://allthingsd.com/20081011/weekend-update-101008/ http://allthingsd.com/20081011/weekend-update-101008/#comments Sat, 11 Oct 2008 07:00:25 +0000 John Paczkowski http://digitaldaily.allthingsd.com/?p=6600 The best thing that can be said of the week ending Oct. 10, 2008, is this: It’s over.

Marked by panic selling and wet-your-pants fear, it was one of the worst weeks in the financial world’s history–a week that cut the legs out from under Google (GOOG), beat Yahoo until its market cap bled purple and caused the Dow Jones Industrial Average to swing more than one thousand points on an intra-day basis.

It was a week that saw Sequoia Capital warn its portfolio companies to prepare for a protracted downturn or, in the words of partner Michael Moritz, be “spattered on windshields and radiator grills and be forgotten.” Turns out Bubble 2.0 sounds a lot like Bubble 1.0 when it pops.

Beneath the screams of agony echoing across Wall Street, there was other news worth noting:

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