AllThingsD » letter http://allthingsd.com Sat, 25 May 2013 15:17:48 +0000 en-US hourly 1 http://wordpress.org/?v=3.5.1 http://allthingsd.com/theme/images/logo-rss.jpg All Things Digital http://allthingsd.com/ 144 22 Alibaba Group Names Lu as CEO to Replace Ma http://allthingsd.com/20130310/alibaba-group-names-lu-as-ceo-to-replace-ma/ http://allthingsd.com/20130310/alibaba-group-names-lu-as-ceo-to-replace-ma/#comments Mon, 11 Mar 2013 06:47:11 +0000 Kara Swisher http://allthingsd.com/?p=302208 Jonathan Lu 1

Alibaba Group said it had selected Jonathan Lu Zhaoxi to replace its co-founder and CEO Jack Ma, starting on May 10. Ma, who is only 48 years old, will remain executive chairman, and will be involved in the Chinese Internet e-commerce giant’s business strategy and management development. Alibaba has seen tremendous growth in the last year, as it is has increased both its revenue and profit, and many expect it will go public within the next 12 months. The strong performance has, in turn, boosted the stock of Yahoo, which owns a 20 percent stake in the company.

Lu, 43, has been at Alibaba for more than a dozen years, leading major divisions of the company, including its massive and important Taobao unit. He is currently Alibaba’s chief data officer and president of Aliyun Mobile OS.

“Serving as Alibaba Group CEO is an extremely challenging and difficult job, especially succeeding a founder CEO like me. One can only imagine the responsibilities and pressure that Jonathan will shoulder,” said Ma in a letter to employees. “Alibaba has never been only the CEO’s business, it is everybody’s business.”

Here’s Ma’s full letter to employees on the change:
alibaba

And here is some of Lu’s bio, according to Alibaba:

Lu joined Alibaba in 2000, a year after the company was founded as an Internet directory allowing China’s increasingly competitive factories to more easily connect with international buyers. After forming Alibaba.com’s sales team for South China, including manufacturing powerhouse Guangdong Province, Lu in 2004 led the launch of Alipay, the company’s online payments affiliate. He later served as Alipay’s president.

In early 2008 Lu moved to Taobao, China’s dominant online retailing platform. During his tenure Taobao’s GMV (total sales generated by sellers using the platform) soared eightfold, and the online shopping unit began developing and integrating social networking into e-commerce.

Lu, who holds a master’s degree in business administration from China Europe International Business School in Shanghai, was named chief executive officer of Alibaba.com in early 2011, presiding over the privatization of the business-to-business trading website the following year.

Since July 2012, Lu has been an Alibaba executive vice president and the Group’s chief data officer. In this role, he has been responsible for driving the company’s strategically important Big Data initiative, centered on the creation of a data-sharing platform that can be accessed by the millions of small businesses that use Alibaba services. He is also responsible for Alibaba’s Aliyun mobile device operating system.

]]> http://allthingsd.com/20130310/alibaba-group-names-lu-as-ceo-to-replace-ma/feed/ 0 Hewlett Packard: Products Weren't Knowingly Sold to Syria http://allthingsd.com/20121125/hewlett-packard-products-werent-knowingly-sold-to-syria/ http://allthingsd.com/20121125/hewlett-packard-products-werent-knowingly-sold-to-syria/#comments Sun, 25 Nov 2012 13:30:12 +0000 Ian Sherr http://allthingsd.com/?p=272381 Hewlett-Packard Co. says its technology wasn’t knowingly sold to Syria.

The Palo Alto, Calif., technology giant made that assertion to the Securities and Exchange Commission in response to a letter dated Sept. 6 and disclosed in a recent regulatory filing.

Last year, news reports surfaced saying H-P’s technology was being used as part of a surveillance program by the Syrian government.

Read the rest of this post on the original site

]]> http://allthingsd.com/20121125/hewlett-packard-products-werent-knowingly-sold-to-syria/feed/ 0 Viral Video: The Scott-Also-Isn't-Sorry-for-Posting-These iPad Mini Spoofs http://allthingsd.com/20121029/viral-video-the-scott-also-isnt-sorry-for-posting-this-late-banned-ipad-mini-spoof/ http://allthingsd.com/20121029/viral-video-the-scott-also-isnt-sorry-for-posting-this-late-banned-ipad-mini-spoof/#comments Tue, 30 Oct 2012 03:14:27 +0000 Kara Swisher http://allthingsd.com/?p=264833

What with Hurricane Sandy here in the East and the management upheaval swirling around Apple in the West — complete with the ouster of its mobile software head Scott Forstall and retail chief John Browett — excuse us for taking so long to get up this latest adorkable video from John Elerick.

It came out earlier today and is the second of the “Banned” mockumentaries, which spoof the slick Apple commercials using top execs chattering on about its products.

Also below is one Conan O’Brien’s TeamCoco just put out that will air tonight about the many sizes of the iPad mini.

Forstall was one of those Apple execs, though he was not featured in these videos. But he was ousted earlier today from the tech giant for a range of problems, including refusing to sign a company apology letter about how bad the new mapping software that Apple recently released to replace Google’s maps was.

Here’s the new one on the recently released iPad mini and the first on the iPhone 5, as well as the TemCoco one:

]]> http://allthingsd.com/20121029/viral-video-the-scott-also-isnt-sorry-for-posting-this-late-banned-ipad-mini-spoof/feed/ 0 Mayer to Get Close to $60 Million (And Maybe More) in Overall Compensation for Yahoo's Top Job http://allthingsd.com/20120719/mayer-to-get-40-million-in-overall-compensation-for-yahoos-top-job/ http://allthingsd.com/20120719/mayer-to-get-40-million-in-overall-compensation-for-yahoos-top-job/#comments Thu, 19 Jul 2012 21:25:47 +0000 Kara Swisher http://allthingsd.com/?p=232094

Yahoo revealed in a regulatory filing that it could be paying its new CEO Marissa Mayer a total of close to $60 million to turn the company around.

The mega-sum includes salary, equity grants, stock options, a make-whole payment for the Google shares she left behind and, perhaps most remarkably, a $30 million one-time retention award.

The amount, which is a whole lot more than what the last two Yahoo CEOs — Carol Bartz and Scott Thompson — were paid is, um, rather large.

One Yahoo board member had characterized the pay package to me as “big, big bucks,” as I reported earlier today.

I would say so!

(Side note: Mayer is already extraordinarily wealthy from her stint at Google, where she was its 20th employee.)

Here’s the breakdown of the largely performance-based compensation:

The salary amount is typical at $1 million, with an annual bonus of up to 200 percent of the base salary, which is $2 million. But, according to Yahoo’s employment letter, she could also get up to a 400 percent bonus, dependent on exceeding targets, which is $4 million.

Mayer also gets an equity award for 2012 of $12 million in stock ($6 million) and options ($6 million) that vests over three years. (She could get another similar grant annually, but I did not include that in the overall number, which is $12 million annually or more if she exceeds targets.)

The really big number is a huge up-front, one-time retention award, vesting over five years, of $15 million in stock and $15 million in options.

Finally, there is a make-whole payment of $14 million for the stock she left behind at Google.

Overall, that means about $5.4 million for the rest of this year and could add up to $20 million each year to come.

The pay package was hotly debated by the board as to whether the high-profile exec was worth the huge amount.

While Mayer is considered a talented techie, a very strong decision maker and adept at product innovation, some of the board’s directors raised concerns about her and paying so much to retain her.

One issue: She had been notably passed over by Google CEO Larry Page for one of the major unit jobs in his reorganization of the company, while others in her peer group had been promoted.

That said, since such company ups and downs happen all the time, others argued that Mayer was just the kind of disruptive agent of change that Yahoo needs, especially because she could inspire its engineers and also attract much needed talent.

The enormous compensation was pushed through, said several sources, by Dan Loeb, the one-time activist shareholder who now appears to be the puppet master of the Yahoo board. He owns about six percent of the Silicon Valley Internet giant.

(Another side note: Multiple sources tell me that Loeb has been making calls to all kinds of Internet figures this week, looking for high-fives for his landing of Mayer, a hiring that was largely engineered by him.)

Her appointment has surely garnered a lot of attention for Yahoo, with massive media coverage of the dynamic young exec. Some of the coverage has focused on her being a woman and also on the fact that she is currently pregnant.

But much of it is focused on how Yahoo — a deeply troubled company that has been trying to revive itself for many years now without success and with a lot of management mishegas — has been able to attract such a high-profile and impressive-resumed leader to goose both its products and its stock.

Let’s hope Mayer can do just that, because Yahoo is surely paying up big-time for the privilege.

Please take a gander here at the filing, directly from the Department of the Internet Rich Get Richer:

YHOO-20120719-8K-20120715

Please see this disclosure related to me and Google.

]]> http://allthingsd.com/20120719/mayer-to-get-40-million-in-overall-compensation-for-yahoos-top-job/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.

RELATED POSTS:

]]> http://allthingsd.com/20120514/yahoos-parting-with-thompson-will-be-for-cause/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 Loeb Calls Again for Thompson Firing From Yahoo, as Former eBay Boss Supports Him http://allthingsd.com/20120509/loeb-again-calls-for-thompson-firing-from-yahoo-as-former-ebay-boss-support-him/ http://allthingsd.com/20120509/loeb-again-calls-for-thompson-firing-from-yahoo-as-former-ebay-boss-support-him/#comments Wed, 09 May 2012 14:33:40 +0000 Kara Swisher http://allthingsd.com/?p=205930

As expected, activist shareholder Daniel Loeb of Third Point released a new letter on the bio controversy he set off at Yahoo, again calling for the firing of its CEO, Scott Thompson.

“It seems farcical to us that the Board will most likely spend more time deliberating over whether Mr. Thompson should be fired than it did properly vetting whether he should have been hired,” read the letter in part. “The necessary investigation into whether certain senior executives and Board Members knew of Mr. Thompson’s deceptions before hiring him should not delay decisive action over his ethical breaches.”

Loeb, who is waging a proxy fight with Yahoo over board seats he wants, also offered to work with the Yahoo board to find a new CEO if it accepted his slate of directors. In the interim, he suggested Yahoo put either CFO Tim Morse or media head Ross Levinsohn in the job. Morse had taken that position temporarily after Yahoo fired its last CEO Carol Bartz last fall.

Confused yet?

Loeb set off a management crisis there last week with the revelation that Thompson had added a fake computer science degree to his bio.

The first casualty came yesterday with the stepping down of Yahoo director Patti Hart, who was charged with vetting Thompson for the job.

The Yahoo board also announced yesterday that it would be conducting a probe of the circumstances around the hiring, as well as how the faux academic credentials got in Thompson’s bio and also the company’s regulatory filings.

The new letter was a reaction to Thompson’s apology on Monday for the borked bio becoming a “distraction” (but not, oddly, for the mistake itself). Loeb had previously called for Thompson’s firing over the bio fibbing.

Loeb will be appearing at an investor conference in Las Vegas later today, where he will surely be asked about the situation.

In related news, eBay CEO John Donahoe, Thompson’s former boss, lent words of support, but also underscored that the online commerce company’s legal filings of his bio were always correct, even if its Web site and other PR documents handed out were not. Thompson came to Yahoo from a stint as president of eBay’s PayPal payments unit.

As reported by Bloomberg, Donahoe said:

“When Scott was hired at EBay Inc., all of EBay’s filings had the accurate information. Some of EBay’s PR materials had that bio. Our legal filings were taken care of by our legal department. Some of the PR materials had that info,” he said while in Tokyo of the correct bio versus the incorrect one.

Donahoe added: “I think Scott Thompson did a great job at PayPal. I think he’s a very talented leader and I believe he can help Yahoo. I hope they get through this and he can continue to do the very challenging job he’s got of helping to turn Yahoo around. I’m Scott’s biggest fan.”

This has been the first public support of Thompson by a prominent Internet figure, which might help lagging morale at the company.

Here’s the full version of the latest Loeb letter:

Third Point May 9 Letter Release

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]]> http://allthingsd.com/20120509/loeb-again-calls-for-thompson-firing-from-yahoo-as-former-ebay-boss-support-him/feed/ 0 Yahoo Should Expect Incoming Lawsuit Lobbed by Loeb Tomorrow on CEO Hiring http://allthingsd.com/20120506/yahoo-should-expect-incoming-lawsuit-lobbed-by-loeb-tomorrow-on-ceo-hiring/ http://allthingsd.com/20120506/yahoo-should-expect-incoming-lawsuit-lobbed-by-loeb-tomorrow-on-ceo-hiring/#comments Sun, 06 May 2012 16:01:48 +0000 Kara Swisher http://allthingsd.com/?p=204107

On Friday, Third Point’s Dan Loeb — the activist shareholder who is waging an ever-nastier proxy battle against Yahoo — said in a letter regarding the inexplicable errors in the resume of its CEO Scott Thompson that he would take “further action” if he did not get answers.

Let me translate that for Yahoo and any other interested observers: Come Monday, the Silicon Valley Internet giant is likely to be on the receiving end of an official lawsuit demanding all the notes and records related to the hiring of Thompson.

Presumably, Loeb hopes that if he gets ahold of the material on the quick hiring of the former president of eBay’s PayPal payments unit that it will show a sloppy vetting by the board, which led to it not catching inaccurate educational information about Thompson.

Last week, Loeb discredited Yahoo CEO Scott Thompson’s academic credentials and credibility by showing that his bio listed a computer science degree, even though he never obtained one while at Stonehill College.

Perhaps most problematically, that data got into official regulatory filings Yahoo made.

After proven correct, Loeb than quickly lobbed in another letter, making an explicit legal threat to get the resume information:

Third Point will consider it grounds for further action if the Board does not take the following steps by Noon EDT on Monday, May 7th:

1) Publicly reveal the process by which it vetted Mr. Thompson as a potential CEO candidate. This disclosure should include the release of all minutes of any meeting at which Mr. Thompson’s candidacy was discussed and any reports or other materials upon which directors relied to evaluate Mr. Thompson’s candidacy.

2) Disclose whether any Board member, including Maynard Webb, who has long-standing ties to Mr. Thompson, and Ms. Hart, who headed the Search Committee, was aware of Mr. Thompson’s deception prior to receipt of Third Point’s letter yesterday.

3) Provide shareholders with all information regarding the director nomination process, including the so-called “skills matrix” referred to in the Company’s preliminary proxy statement, which the Board purportedly used to determine the qualifications of various candidates, including Third Point’s nominees.

How such a legal demand will be greeted by Yahoo will be interesting, especially given the tension internally. While Yahoo initially reacted to Loeb’s allegations about the inaccurate bio by saying the insertion of a computer science degree was an “inadvertent error,” the board quickly backpedaled and said it would conduct an investigation into the matter.

But that will not be speedy enough for the aggressive Loeb — so, I expect his lawyers have been working all this weekend to prep for his next attack.

RELATED POSTS:

]]> http://allthingsd.com/20120506/yahoo-should-expect-incoming-lawsuit-lobbed-by-loeb-tomorrow-on-ceo-hiring/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.

RELATED POSTS:

]]> 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 Response on CEO's Computer Science ResumeGate: "Inadvertent Error" http://allthingsd.com/20120503/yahoos-response-on-computer-science-resumegate-inadvertent-error/ http://allthingsd.com/20120503/yahoos-response-on-computer-science-resumegate-inadvertent-error/#comments Thu, 03 May 2012 19:27:37 +0000 Kara Swisher http://allthingsd.com/?p=203351

A Yahoo spokesperson just confirmed as accurate allegations from an activist shareholder Dan Loeb of Third Point that its CEO Scott Thompson did not have a computer science degree from Stonehill College as claimed on his bio and also in regulatory filings.

He does not, a mistake that the Silicon Valley Internet giant is calling an “inadvertent error.”

Except this is a mistake that goes back more than a half-dozen years, as it is also on the Web site bio at eBay, where he served as president of its PayPal payments unit and its CTO before that.

(Update: Yahoo just removed the line about Thompson’s college degrees from his Web site bio entirely.)

While Yahoo sought to underplay the controversy, it could become a serious issue for Yahoo, both from a credibility and regulatory compliance issue.

It would also call into question — as Loeb does in the letter — the amount of vetting done by Yahoo on the CEO choice, which was conducted by board member Patti Hart.

It gets worse: Loeb also alleged that Hart changed her degree from Illinois State College from business administration to a loftier economics and marketing. And Yahoo admitted it was so, noting the director had a business administration degree, with a specialty in economics and marketing — whatever that means.

But, incompetent vetting by Hart aside, it is how and why Thompson changed his resume that will be at issue.

Here’s one fact that is true: Thompson only has an accounting degree from Stonehill College, near Boston, which he attended from 1975 to 1979.

(Second Update: Stonehill also confirmed that Thompson’s degree was only a Bachelor’s of Science in Business Administration (Accounting).)

Here is, in fact, a screenshot of an alumni newsletter when Thompson got the job at Yahoo earlier this year:

Despite the mistake, however it was made and which presumably serves to burnish Thompson’s tech cred, Yahoo said in a statement that it does not diminish his qualifications to lead the tech company.

Said the statement in full:

“Scott Thompson’s degree at Stonehill College was in bachelor science in accounting. There was an inadvertent error that stated Mr. Thompson also holds a degree in computer science. This, in no way, alters that fact that Mr. Thompson is a highly qualified executive with a successful track record leading large consumer technology companies. Under Mr. Thompson’s leadership, Yahoo! is moving forward to grow the company and drive shareholder value.”

Here’s the definition of inadvertent, for those who don’t know:

1. failing to act carefully or considerately; inattentive
2. resulting from heedless action; unintentional inadvertently

I’d say it’s going to turn out to be a lot more than that, but we’ll see what the board of Yahoo and, ultimately, shareholders, have to say.

(And, ironically, just yesterday Yahoo wrote a letter to shareholders claiming that Loeb did not have “relevant” expertise to be on its board. Turns out, he’s definitely pretty good at vetting.)

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]]> http://allthingsd.com/20120503/yahoos-response-on-computer-science-resumegate-inadvertent-error/feed/ 0 Dan Loeb Alleges "Discrepancies" on Yahoo CEO Scott Thompson's Resume Related to Computer Science Degree http://allthingsd.com/20120503/dan-loeb-alleges-discrepancies-on-yahoo-ceo-scott-thompsons-resume-related-to-computer-science-degree/ http://allthingsd.com/20120503/dan-loeb-alleges-discrepancies-on-yahoo-ceo-scott-thompsons-resume-related-to-computer-science-degree/#comments Thu, 03 May 2012 18:53:08 +0000 Kara Swisher http://allthingsd.com/?p=203301

The gloves are now really off in the proxy battle for Yahoo.

In a letter to Yahoo’s board, activist shareholder Dan Loeb of Third Point is alleging that the company’s new CEO Scott Thompson has inaccurately added a computer science degree to his resume.

(Update: Yahoo confirmed that Loeb is correct about Thompson not having such a degree and called it an “inadvertent error.”)

Thompson went to Stonehill College, near Boston, from 1975 to 1979, according to his LinkedIn profile, but it does not specify his degree.

(Second Update: Stonehill College also confirms that Thompson only graduated with a Bachelor’s of Science in Business Administration (Accounting).)

And older bios, such as one from his director bio for F5 and one from Forbes, as well as a Stone Hill College alumni newsletter, note that he graduated only with a Bachelor’s of Science in accounting.

But in official bios from his job at eBay as head of its PayPal payments division, as well as on the current Yahoo one, a degree in computer science also appears, along with the accounting degree.

“Scott received a bachelor’s in accounting and computer science from Stonehill College,” read the Yahoo and eBay bios. It is also in Yahoo’s regulatory filings.

According to Loeb’s letter:

Upon recognizing this discrepancy, Third Point initially assumed that the documents we had reviewed were incorrect and the representations in Yahoo!’s public filings were accurate. However, we were then informed by Stonehill College that Mr. Thompson did indeed graduate with a degree in accounting only. Furthermore, Stonehill College informed us that it did not begin awarding computer science degrees until 1983 — four years after Mr. Thompson graduated. We inquired whether Mr. Thompson had taken a large number of computer science courses, perhaps allowing him to justify to himself that he had “earned” such a degree. Instead, we learned that during Mr. Thompson’s tenure at Stonehill only one such course was even offered — Intro to Computer Science. Presumably, Mr. Thompson took that course.

I am awaiting a call back from Stonehill about Thompson’s degree, which the college is checking now. And I called Yahoo for comment and also am waiting for that, too.

If Loeb’s allegations are true and Thompson burnished his resume to add educational expertise to lend him more tech credibility, it could become a serious issue for Yahoo.

It would also call into question — as Loeb does in the letter — the amount of vetting done by Yahoo on the CEO choice, which was conducted by board member Patti Hart.

It gets worse: Loeb is also alleging that Hart changed her degree from Illinois State College from business administration to a loftier economics and marketing.

(Update: Loeb is correct. Yahoo said Hart has a degree in business administration, with a specialty in economics and marketing — although I am not sure what that means exactly.)

But Thompson’s educational pedigree is the main issue here, of course, and Loeb is calling for his head if explanations are not provided.

“If Mr. Thompson embellished his academic credentials we think that it 1) undermines his credibility as a technology expert and 2) reflects poorly on the character of the CEO who has been tasked with leading Yahoo! at this critical juncture. Now more than ever Yahoo! investors need a trustworthy CEO,” said Loeb in the letter.

But read it for yourself — here is the full letter from Loeb:

Third Point Letter to Board May 3 Release

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]]> http://allthingsd.com/20120503/dan-loeb-alleges-discrepancies-on-yahoo-ceo-scott-thompsons-resume-related-to-computer-science-degree/feed/ 0 Yahoo Gives Dan Loeb a Fresh One, but Real Action in Proxy Fight Begins in Coming Weeks http://allthingsd.com/20120502/yahoo-gives-dan-loeb-a-fresh-one-but-real-action-in-proxy-fight-begins-in-coming-weeks/ http://allthingsd.com/20120502/yahoo-gives-dan-loeb-a-fresh-one-but-real-action-in-proxy-fight-begins-in-coming-weeks/#comments Thu, 03 May 2012 00:28:54 +0000 Kara Swisher http://allthingsd.com/?p=202837

Earlier today, Yahoo released a letter talking itself up to investors, introing a new Web site called Yahoo Forward to do more bragging and — you guessed it — giving yet another smackdown to activist shareholder Dan Loeb of Third Point.

The move comes as the proxy fight over the Silicon Valley Internet giant moves ever closer to its annual meeting, which is set to take place sometime this summer.

In the letter, which had precisely zero new news, Yahoo recounted again that it tried hard to settle things with its disgruntled shareholder, but underscored its desire not to have Loeb on the board.

Why? Because the man who owns about six percent of Yahoo — which is about 99.99 percent more than any other current board member, which seems to make him pretty interested in Yahoo’s fate — is not qualified to be a director.

“The board continues to believe that Mr. Loeb himself does not bring the relevant skill set and experience to the board, particularly in comparison to the candidates selected by the board,” the Yahoo letter read. “In addition, we believe that, based on the specific qualifications of Third Point’s nominees relative to Yahoo!’s business and opportunities, the candidates nominated by the board’s Nominating and Governance Committee are significantly superior to those proposed by Third Point. “

Buuuurn! (Not really.)

Loeb has his own Web site, Value Yahoo, which he launched last month to pillory Yahoo. He used it today to post an infographic titled “The Incredible Shrinking Yahoo.”

Buuuurn! (Not really.)

In fact, the real fire could start as early as next week and in the months ahead when other Yahoo investors start to pick sides in the fight.

That should really begin when independent proxy advisory firm Institutional Shareholder Service gives its recommendation on the issue to Yahoo investors.

A backing by ISS for another prominent proxy advisor Glass Lewis will help Loeb, although he still has an uphill battle to convince other shareholders to vote down Yahoo, which has a new CEO in Scott Thompson and a mostly new board.

That will be even more difficult, given how active Thompson has been in making a ton of productive-sounding moves, such as a recent restructuring which included 2,000 layoffs. While results will not be in for a while, a lot of we’re-hard-at-work strategery noise is probably a good tack for Yahoo.

The company will surely try to drop some more Yahoo bombs on Loeb to burnish its chances in the coming month — most likely first around a taxable sale of a large portion of its Asian assets related to new rounds of talks now taking place again, which might include a fat dividend to investors.

(Investors like fat dividends and the people who give them fat dividends, by the way!)

The company could also sell off some of its underperforming units, such as its advertising technology business and renegotiate its search partnership with Microsoft, all of which will give Yahoo more of a case that Loeb’s complaints are now unfounded.

But don’t count Loeb out, either. He’s a deft campaigner and also deserves some credit for forcing Yahoo to make several of its recent moves to oust weak members of its longtime dysfunctional board.

In that regard, at least, Loeb has been very relevant.

Here’s Yahoo’s letter today, in full (the odd bolding is all done by the company):

Yahoo! Shareholder Letter Outlines Forward Momentum and Urges Election of Its Board Nominees

SUNNYVALE, California, May 2, 2012 — Yahoo! Inc. (NASDAQ: YHOO), the premier digital media company, today released the following letter to all shareholders from its board of directors:

Dear Shareholder,

Since last August, Yahoo! has moved forward aggressively, implementing a plan to position itself for future success and to increase the value of Yahoo! for you, our shareholders.

* Just four months ago, we appointed CEO Scott Thompson, a highly accomplished and dynamic leader with the experience and expertise required to lead Yahoo! to renewed growth, innovation, and success. Scott is already moving the company forward fast — dramatically reorganizing the business around its core strengths with a mindset of focus, speed, discipline, and putting the customer first.

* The company has reconstituted the board of directors, with the optimal mix of expertise, experience, and fresh perspectives to accelerate the company’s transformation. We recruited five new, highly qualified independent directors through the Nominating and Corporate Governance Committee’s thorough search process. In addition, four of our directors volunteered not to stand for re-election at the 2012 shareholders’ meeting. As reconstituted, following the annual meeting a majority of Yahoo!’s directors will be new to the board this year, and all directors will have joined the board since 2010.

* Following a detailed and diligent review in an accelerated timeframe, the company produced a comprehensive strategic framework that will change what we do and, most importantly, how we do it to enable us to put our customers first in everything we do. We will deliver fun, engaging, and personalized experiences on all screens and forge strong relationships with our advertisers by producing measurable results, including consumer insights derived from our vast data, and delivering a higher rate of return on advertising spend. Specifically, we will focus all we do on the consumers who trust us to deliver personalized content and communications in our core businesses, and on the advertisers who want to connect with our consumers. Just as importantly, we are identifying what we will no longer do, in order to direct resources toward those businesses that generate the highest consumer engagement and the best return on our investment. As we excel in our core business, we will earn the right to pursue new growth opportunities.

* With this renewed operational focus, the company has defined a new organizational structure to support our core business and put resources closer to our customers. Effective May 1, Yahoo! will operate in three groups — consumer, regions and technology — all supported by our corporate teams. Each of these three groups will have clear accountability for getting results by delivering the best customer experiences. This more efficient structure will enable faster decision-making and more effective delivery of innovative products and services that measurably impact the bottom line.

* Beyond our core business, we are committed to continuing to be prudent stewards of our non-core assets and investments and to be thoughtful and diligent about monetizing their significant value at the right time and in the right manner. Should we do so, returning capital to shareholders will be a high priority.

In identifying qualified new members for the board, the Nominating and Corporate Governance Committee, led by its independent chairperson Patti Hart, conducted a thorough and impartial search process. Working with a leading executive recruitment firm and using the committee’s desired skill sets and experience for new board members, the committee identified over 100 potential candidates and sought input from a number of our major shareholders. Committee members engaged with over 20 individuals, including the four nominees proposed by Third Point. Committee members then conducted numerous in-depth interviews and carefully analyzed the qualifications of each candidate, including each of Third Point’s nominees. Committee members conducted additional interviews with those candidates that warranted further consideration, as determined by the committee in its meetings held throughout the process. Following completion of the full process, the committee and the board determined that the distinguished group of five candidates recently announced were the best choices, based on their individual accomplishments, experience directly relevant to Yahoo!’s business and its challenges, and records of value creation.

The new directors have strong records of significant accomplishment at the highest levels of media, advertising, marketing, Internet, technology, and finance, including corporate finance and restructuring, and insight into customers’ perspectives. The continuing directors are independent thinkers who bring impressive track records of success, and have been actively and constructively engaged as the company has developed its strategic framework to deliver renewed success and value to shareholders. We are challenging Yahoo!’s entire leadership team by asking tough questions, establishing rigorous goals, and developing a framework for strict accountability to move Yahoo! forward … fast.

Our focus now is on operating the company so that it delivers superior value to our shareholders. Supported by the many talented people who have contributed to charting our new course and inspired by the many shareholders, customers, and employees who have communicated passion for this great brand, we know that we will succeed.

Regrettably, our efforts to avoid a proxy contest with Third Point were unsuccessful. Following the recommendation of the Nominating and Corporate Governance Committee, we offered Third Point two board seats, including one of its nominees and a second mutually agreeable candidate, which would bring Third Point’s perspective into the boardroom. Unfortunately, Mr. Loeb declined to end his proxy solicitation on that basis, insisting that there could be no settlement unless he was personally appointed to the board. The board continues to believe that Mr. Loeb himself does not bring the relevant skill set and experience to the board, particularly in comparison to the candidates selected by the board. In addition, we believe that, based on the specific qualifications of Third Point’s nominees relative to Yahoo!’s business and opportunities, the candidates nominated by the board’s Nominating and Governance Committee are significantly superior to those proposed by Third Point. Nevertheless, we want to emphasize that we remain committed to an open dialogue with all our shareholders and to working in a constructive manner with Third Point.

At the end of the day, we recognize that you, our shareholders, will make the decision as to the board you want to lead your company. We are confident that when you assess our new board’s qualifications against Third Point’s slate, you will come to the same conclusion that we did—that this is the right board with the right mix of skills and experience to lead the company forward to create value for shareholders. We also recognize that we have a great deal of work to do to support and challenge the management team to move the company forward fast. We intend to keep ourselves and the company focused and we do not intend to let ourselves be distracted from the work at hand.

Yahoo! is looking forward, focused on delivering superior value to all of our shareholders. We are building momentum with a great leadership team, unified in focusing the company on its core strengths, redeploying resources to the most productive areas of the business, and equipping the company to invest in growth and innovation. Your new board includes individuals who have proven operating expertise in media, advertising, marketing, Internet, technology, and finance, and have consistently proven to be thoughtful and responsible stewards of shareholder value, with a strong emphasis on disciplined capital allocation and a willingness to embrace structural change. They are already contributing to the rigorous action plan to realize Yahoo!’s potential and deliver increased value for shareholders.

With new leadership and the new board, we are building a stronger, nimbler, more profitable Yahoo! that is better equipped to innovate for our customers and will ultimately increase the value of Yahoo! for all shareholders.

You can read more about Yahoo!’s actions to move the company forward and create shareholder value at http://yahooforward.com.

Thank you for your support.

Yahoo! Board of Directors

]]> http://allthingsd.com/20120502/yahoo-gives-dan-loeb-a-fresh-one-but-real-action-in-proxy-fight-begins-in-coming-weeks/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 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 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 Yahoo Hopes to Fight Back at Activist Shareholder Third Point With More New Board Members of Its Own http://allthingsd.com/20120322/yahoo-hopes-to-fight-back-at-activist-shareholder-third-point-with-more-new-board-members-of-its-own/ http://allthingsd.com/20120322/yahoo-hopes-to-fight-back-at-activist-shareholder-third-point-with-more-new-board-members-of-its-own/#comments Thu, 22 Mar 2012 20:34:10 +0000 Kara Swisher http://allthingsd.com/?p=189323

Yahoo leadership, betting it can stave off a challenge from activist shareholder Daniel Loeb of Third Point, has been stepping up efforts to name three additional new board members to replace directors that are leaving.

Yahoo has already named two of the five open slots — former Rovi CEO Fred Amoroso and LiveOps Chairman (and former CEO) Maynard Webb, who was once COO of eBay.

But now, the company is pushing harder to get the last three on board in light of Third Point’s ever-increasing proxy pressure.

Several sources said that Yahoo’s new CEO Scott Thompson has told people inside and outside the Silicon Valley Internet giant that the threat from Third Point, which owns almost six percent of the company, is not as worrisome as some think it could be.

Thus, Yahoo’s headhunting firm Heidrick & Struggles has been contacting a number of high-profile media players about joining the board, including former News Corp. execs Peter Chernin and Tony Vinciquerra, as well as former MTV head Judy McGrath.

Both Chernin and Vinciquerra, sources said, have turned down the prospect of joining the Yahoo board in the midst of a possible proxy battle, along with other massive changes taking place.

Yahoo has not yet been successful at landing the remaining directors.

Meanwhile, Loeb, via saucy letters and filings, has been aggressively making a case that Yahoo should add his alternate slate of directors, including former NBC head Jeff Zucker, to the board. He recently submitted preliminary proxy filing with the Securities and Exchange Commission.

That’s because his cursory discussions with Thompson have apparently led nowhere, causing him to also publicly call for Yahoo to pay more attention to Third Point’s board selections.

If Yahoo names more directors to replace outgoing ones, it will be a slap in the face to Loeb, followed by inevitable ground battle war for investor votes.

Yes, that too.

Here’s a video from the WSJ.com’s “Digits” online tech show I did on the topic:

]]> http://allthingsd.com/20120322/yahoo-hopes-to-fight-back-at-activist-shareholder-third-point-with-more-new-board-members-of-its-own/feed/ 0 Nobody Puts Dan Loeb in the Corner: Third Point Begins Proxy Bombing Yahoo in 3 … 2 … 1 http://allthingsd.com/20120314/nobody-puts-dan-loeb-in-the-corner-third-point-begins-proxy-bombing-yahoo-in-3-2-1/ http://allthingsd.com/20120314/nobody-puts-dan-loeb-in-the-corner-third-point-begins-proxy-bombing-yahoo-in-3-2-1/#comments Wed, 14 Mar 2012 20:24:51 +0000 Kara Swisher http://allthingsd.com/?p=186404

Yahoo just got yet another poison-pen letter from activist investor Dan Loeb of Third Point, which says the company has been “dismissive” of his alternate slate of board members, including former NBC head Jeff Zucker.

It is another doozy, full of all kinds of interesting details and signals, which I will go into more detail about below, although the main message is: Perhaps it is actually time for a proxy fight.

Wrote Loeb to Yahoo CEO Scott Thompson: “The Board’s stonewalling, apparent insouciance and decision not to engage with us in a serious manner, has left us no choice but to directly approach our fellow owners with the Shareholder Slate. Accordingly, we hereby notify you that we intend to file our Preliminary Proxy Statement with the Securities and Exchange Commission within the week.”

Before the battle begins, let me just note: Who uses the great word “insouciance” anymore? Kudos, Dan! (It means indifference, Cliff Clavin.)

In an e-mailed statement, Yahoo said: “As previously stated, in order to achieve the best possible outcome for all Yahoo! shareholders, the Board’s nominating and corporate governance committee continues to review a wide range of highly qualified candidates. The committee has included Third Point’s candidates in its thorough review process and will make its recommendations to the full Board in due course.”

The Silicon Valley Internet giant also sent this turgid (look it up!) explanation of how proxy fights go down:

Yahoo! will be filing a proxy statement with the SEC in connection with the solicitation of proxies for its 2012 annual meeting of stockholders. Stockholders are strongly advised to read Yahoo!’s 2012 proxy statement (including any amendments or supplement thereto) when it becomes available because it will contain important information. Stockholders will be able to obtain copies of Yahoo!’s 2012 proxy statement, any amendments or supplements to the proxy statement, and other documents filed by Yahoo! with the SEC in connection with its 2012 annual meeting of stockholders for no charge at the SEC’s website at www.sec.gov.

Yahoo!, its directors, executive officers and certain employees may be deemed participants in the solicitation of proxies from stockholders in connection with Yahoo!’s 2012 annual meeting of stockholders. Information concerning the ownership of Yahoo! securities by Yahoo!’s directors and executive officers is included in their SEC filings on Forms 3, 4 and 5, and additional information is also available in Yahoo!’s proxy statement for its 2011 annual meeting of stockholders filed with the SEC on April 29, 2011. Information regarding Yahoo!’s directors, executive officers and other persons who may, under rules of the SEC, be considered participants in the solicitation of proxies for the 2012 annual meeting of stockholders, including their respective interests by security holdings or otherwise, also will be set forth in the definitive proxy statement for Yahoo!’s 2012 annual meeting of stockholders when it is filed with the SEC.

Got that?

One interesting part of the Loeb’s much more sassy letter is a suggestion at the bottom about Yahoo’s lack of a chairman when current head Roy Bostock steps down later in the year. Loeb’s idea is to keep on Gary Wilson, former CFO of Disney and Marriott, who was also leaving, in that role for one year.

“We believe this role should be for one year only, with the explicit understanding that Mr. Wilson would recruit his replacement prior to the end of the term,” wrote Loeb, who appears to be sending a none-to-subtle smoke signal that this might have been discussed already. “We suggest this in the spirit of continuity and compromise, and believe it would be in the best interests of all shareholders. We encourage the Company and Mr. Wilson to strongly consider this idea.”

The letter is a bit of a olive branch, followed by a swift kick, presumably an attempt by Loeb to get Yahoo to start taking him more seriously.

“Scott, it is not too late for you to take decisive leadership action and avoid the costs and distraction of an expensive proxy contest fighting the Shareholder Slate (which, according to our research, will be well-received by shareholders),” Loeb noted archly, before referring to Yahoo’s current lawsuit against Facebook over patent infringement. “You appear to have enough battles to fight already.”

In other words, if you prefer the “Fatal Attraction” movie metaphor rather than from “Dirty Dancing,” Loeb is not going to be ignored!

Oh, read it all for yourself — here’s the full letter:

Third Point Letter 3.14.12

]]> http://allthingsd.com/20120314/nobody-puts-dan-loeb-in-the-corner-third-point-begins-proxy-bombing-yahoo-in-3-2-1/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 Like I Said: AOL Activist Investor Files Alternate Slate (and AOL Declines to Agree) http://allthingsd.com/20120224/like-i-said-aol-activist-investor-file-alternate-slate/ http://allthingsd.com/20120224/like-i-said-aol-activist-investor-file-alternate-slate/#comments Fri, 24 Feb 2012 19:11:27 +0000 Kara Swisher http://allthingsd.com/?p=177824

As I reported this morning, an activist fund aiming at AOL took a shot today, by putting up its slate of alternate directors.

In a nutshell, Starboard Value does not like the way CEO Tim Armstrong is running the company and thinks it can do better.

My two cents: The New York-based investment firm might have actually named some directors with some more recent media or Internet operating experience.

Several Internet execs approached by Starboard said they declined because they did not want to engage in a hostile action against AOL, even if they might agree with its assessment of the dicey situation for the company.

Instead, it’s investor guys, advisor guys and even an intellectual property guy. (Oh joy, so the plan is patent lawsuits a la Kodak?)

Yes, it is, according to Starboard’s letter to the AOL board.

It read, in part:

“We appreciate the ongoing dialog we have had with management and certain members of the Board over the past two months. However, we are extremely disappointed that our conversations regarding the issues raised in our letter have stalled. Specifically, we are troubled that the Company remains closed-minded to alternative value creation initiatives, and instead appears solely focused on pursuing the status quo.”

AOL fired back with a statement of its own, essentially saying things are just fine and Starboard’s characterization of the company was inaccurate.

Said AOL in a statement:

“We ended 2011 with our best performance as a company in the past five years, with substantial growth in advertising revenue, improvements in legacy revenue streams, and significant cost reductions. Our stock price has acted in kind, appreciating approximately 80% from our 2011 low and 20% year-­‐to-­‐date.”

Starboard declined to agree apparently.

Nothing like a he-said-he said, which follows a similar proxy fight situation at Yahoo!

Here is Starboard’s official press release with board selections, followed by AOL’s full statement:

Starboard Delivers Letter to AOL Board Nominates a Slate of Highly Qualified Candidates for Election at the 2012 Annual Meeting

NEW YORK, Feb. 24, 2012 /PRNewswire via COMTEX/ — Starboard Value LP (together with its affiliates, “Starboard”), one of the largest shareholders of AOL Inc. (“AOL” or the “Company”) AOL -0.95% with current ownership of approximately 5.2% of the outstanding shares, today announced that it has delivered a letter to the Company’s Board of Directors and has nominated a slate of highly qualified candidates for election to the AOL Board at the Company’s 2012 Annual Meeting.

The full text of the letter to the Board follows:

February 24, 2012

AOL Inc.
770 Broadway
New York, NY 10003
Attn: Members of the Board of Directors

To the Board of Directors,

Starboard Value LP, together with its affiliates (“Starboard”), currently owns approximately 5.2% of the outstanding shares of AOL Inc. (“AOL” or “the Company”), making us one of the Company’s largest shareholders. As you know, we have strong views regarding the current state and future direction of AOL, which we articulated in our comprehensive letter to the Board of Directors (the “Board”) on December 21, 2011 (the “December Letter”). We appreciate the ongoing dialog we have had with management and certain members of the Board over the past two months. However, we are extremely disappointed that our conversations regarding the issues raised in our letter have stalled. Specifically, we are troubled that the Company remains closed-minded to alternative value creation initiatives, and instead appears solely focused on pursuing the status quo. AOL is a diverse company with tremendous assets in a variety of different businesses that collectively are being undervalued in the marketplace. We continue to believe that significant opportunities exist to unlock value based on actions within the control of management and the Board.

As one specific example, in addition to the valuable assets highlighted in our December Letter, AOL owns a robust portfolio of extremely valuable and foundational intellectual property that has gone unrecognized and underutilized. This portfolio of more than 800 patents broadly covers internet technologies with focus in areas such as secure data transit and e-commerce, travel navigation and turn-by-turn directions, search-related online advertising, real-time shopping, and shopping wish list, among many others.

Since our initial public involvement in AOL, we have been approached by multiple parties specializing in intellectual property valuation and monetization, some of whom believe that (i) a significant number of large internet-related technology companies may be infringing on these patents, and (ii) AOL’s patent portfolio could produce in excess of $1 billion of licensing income if appropriately harvested and monetized. Unfortunately, several of these parties have expressed severe frustration that AOL has been entirely unresponsive to their proposals regarding ways to take advantage of this underutilized asset. The Company’s inaction is alarming given our understanding that many of the key patents have looming expiration dates over the next several years which could render them worthless if not immediately utilized.

As a result of the dynamics highlighted above, we are increasingly uncomfortable with the direction of the Company and the leadership of the Board. To this end, and as a result of our inability to arrive at a mutually agreeable resolution on the composition of the Board, we have identified the following highly-qualified candidates who have agreed to be nominated to the AOL Board at the 2012 Annual Meeting. We believe these nominees possess a well-balanced mix of skill sets to ensure that the Company evaluates, with an open mind and a keen sense of urgency, all alternative strategies to determine the best path forward to maximize value for all shareholders.

Starboard’s Director Nominees:

Ronald S. Epstein is the Founder and CEO of Epicenter IP Group LLC, a company dedicated to assisting patent owners in obtaining maximum value for their intellectual property. Previously, Mr. Epstein was Vice President and General Counsel of Brocade Communications Systems, Inc., and Director of Licensing at Intel Corporation. Before joining Intel, Mr. Epstein was a member of the Technology Licensing Group at Wilson, Sonsini, Goodrich and Rosati. Mr. Epstein has more than 20 years of experience in developing, optimizing, and transacting intellectual property asset portfolios, and has delivered significant value to patent owners from the sale or licensing of patents in over 150 transactions.

Steven B. Fink is currently a private investor with extensive experience building and managing technology companies. Mr. Fink is the former CEO of Lawrence Investments, LLC, a venture with Larry Ellison that owns and manages all of Mr. Ellison’s non-Oracle investments. Lawrence Investments founded and invested in numerous technology, education, medical, and biotechnology companies. Mr. Fink previously served as Chairman and CEO of Anthony Manufacturing Company, Chairman and Managing Director of Knowledge Universe, and Chairman and CEO of Nextera. Mr. Fink currently serves as Vice Chairman of Heron International, and as a member of the Board of Directors of K-12. Previously, Mr. Fink served as the Chairman of the Board of Leapfrog, Inc., and Spring Group until its sale in 2007.

Dennis A. Miller is a strategic advisor to Lionsgate Entertainment and has been focused primarily on investing at the intersection of media and technology. Previously, he was a General Partner at Spark Capital, a venture fund where he invested in companies including Twitter, CNET, and AdMeld. As a Managing Director for Constellation Ventures, he invested in companies such as Capital IQ. Mr. Miller has also served as Executive Vice President of Lionsgate Entertainment, Executive Vice President of Sony Pictures Entertainment, and Executive Vice President of Turner Network Television.

Jeffrey C. Smith is co-Founder and CEO of Starboard Value, a New York-based investment firm that is one of the largest shareholders of AOL. Mr. Smith has extensive public company board experience. Currently, he serves on the boards of Regis Corp., and SurModics Inc. Previously, he was the Chairman of the Board of Phoenix Technologies Ltd., and a director of Zoran Corporation, Actel Corporation, S1 Corporation, and Kensey Nash Corp. Mr. Smith also served as a member of the Management Committee for Register.com.

James Warner is the principal of Third Floor Enterprises, an advisory firm specializing in digital marketing and media. Previously, he was Executive Vice President of Avenue A | Razorfish, and served on the executive committee of aQuantive, its parent company. He has also served as President of Primedia Magazine Group, President of the CBS Television Network, President of CBS Enterprises, and Vice President at HBO. Mr. Warner served as a director on the board of MediaMind Technologies Inc until its sale to DG FastChannel, Inc. in July 2011.

It is our understanding that the terms of eight directors currently serving on the Board expire at the 2012 Annual Meeting. We would view any attempt by the Company to expand the size of the Board following the receipt of this letter, and given our previous discussions regarding board composition, as a tactic designed to manipulate the composition of the Board with regard to this year’s Annual Meeting. To preserve our rights, and in the event that the Company expands the Board prior to the 2012 Annual Meeting, we are therefore nominating five director candidates. We do not currently intend to seek to replace a majority of the Board. However, we do believe significant change to the composition of the Board is warranted given the qualifications of our nominees and the long-term underperformance of AOL.

We remain prepared to engage in constructive dialog with the Board to reach a mutually agreeable resolution. However, if an agreement is not reached, we are fully prepared to solicit the support of our fellow shareholders to elect a new slate of directors at the 2012 Annual Meeting who are committed to representing the best interests of all AOL shareholders. Starboard has a long history of working constructively with undervalued public companies to improve board effectiveness and enhance shareholder value. We hope that the Board will begin to recognize that our interests are directly aligned with those of all shareholders and that we only want what is best for AOL and its shareholders.

Best Regards,

Jeffrey C. Smith
Managing Member
Starboard Value LP

AOL ISSUES STATEMENT

NEW YORK, NY — February 24, 2012 – AOL Inc. (NYSE: AOL) issued the following statement in response to Starboard Value LP’s Letter to the AOL Board

The recent improved earnings results of AOL Inc. (“AOL” or “the Company”) highlight the significant progress we are making in executing our strategy to improve AOL’s growth trajectory and create meaningful shareholder value. We ended 2011 with our best performance as a company in the past five years, with substantial growth in advertising revenue, improvements in legacy revenue streams, and significant cost reductions. Our stock price has acted in kind, appreciating approximately 80% from our 2011 low and 20% year-­‐to-­‐date.

AOL’s Board of Directors and management team consistently review the strategy and performance of the Company and have taken meaningful actions to enhance shareholder return including the divestiture of non-core assets, significant cost reduction, a meaningful buyback of Company equity, and the implementation of an accountable and performance-based culture to operate against our clear strategy.

AOL has held several meetings with Starboard Value LP to address their questions. AOL communicated our continued intent to simplify AOL’s business and our efforts to accelerate shareholder value creation. AOL has offered Starboard Value LP an opportunity to help shape the Company’s Board of Directors composition and size. Unfortunately, Starboard Value LP has a singularly focused agenda and rejected this productive path to address their stated concerns and drive increased shareholder value.

Our Board of Directors and management team remain firmly committed to creating value for all shareholders. We have a valuable patent portfolio and several months ago, prior to Starboard’s first letter, the AOL Board of Directors authorized the start of a process, and hired advisors, to realize the value of these non-strategic assets. AOL has a clear plan to provide our consumers and customers with exceptional value, which we believe will lead to the creation of shareholder value. We will continue to aggressively execute and innovate on our strategy as we continue the turnaround of AOL.

]]> http://allthingsd.com/20120224/like-i-said-aol-activist-investor-file-alternate-slate/feed/ 0 Outgoing Yahoo Chairman Roy Bostock's Farewell Letter (And Other Stuff) http://allthingsd.com/20120207/outgoing-yahoo-chairman-roy-bostocks-farewell-letter-and-other-stuff/ http://allthingsd.com/20120207/outgoing-yahoo-chairman-roy-bostocks-farewell-letter-and-other-stuff/#comments Tue, 07 Feb 2012 21:11:38 +0000 Kara Swisher http://allthingsd.com/?p=172183

Earlier today, I had reported that Yahoo Chairman Roy Bostock was stepping down.

He is, and the full letter he just released saying so is below.

Bostock did not say in the missive who will be Yahoo chairman in his place. Intuit CEO Brad Smith has a full-time job, and the newly installed Weather Channel CEO David Kenny does, too. Among the current directors, that would leave Sue James, Patti Hart and newly installed Yahoo CEO Scott Thompson — or one of Yahoo’s new board members.

In the letter, Bostock outlined the departures of four board members and the addition of five more directors (two of which were just named); did a little back-patting of his recent efforts to turn Yahoo around (after presiding over the board that got the Silicon Valley Internet giant into this mess); noted that the Asian talks to sell Yahoo’s stakes there are proceeding (it’s coming!); gave Thompson a thumbs-up (go, Scott!); and delivered kudos to Jerry Yang, the co-founder who left only weeks ago.

“Working with Jerry was always a delight,” wrote Bostock.

(Me, not so much, I would guess! Bygones?)

All kidding aside, Bostock has been the subject of a lot of criticism about Yahoo’s troubles, both deserved and undeserved, most especially for the non-sale to Microsoft several years ago. Many, including activist shareholder Daniel Loeb most recently, have called for his resignation.

It has not been an easy job, to be sure, so it must be a bit of a relief for the longtime advertising exec, who serves on other prominent boards, to finally pull away from the Yahoo black hole.

So, who’s next?

One interesting line in the letter, which everyone already knew, was that none of the various bids from outside investors have passed muster.

Wrote Bostock: “We have engaged with potential investors and reviewed proposals concerning an equity investment in the Company, although at this time there have not been any proposals which have been deemed by the Committee to be attractive to our shareholders.”

Here’s the Bostock letter:

Yahoo! Releases Chairman’s Update for Shareholders

SUNNYVALE, Calif., February 7, 2012 – Yahoo! Inc (NASDAQ: YHOO), the premier digital media company, today released the following shareholder update from its Chairman Roy Bostock.
February 7, 2012

Dear Fellow Shareholders:

I write today to update you on the actions the Yahoo! board has taken, and the actions it is pursuing, to increase shareholder value and position the Company for growth. These actions result from a process I initiated about six months ago in a special meeting of the independent directors in which we analyzed the reasons why Yahoo! was not meeting either our own expectations or those of our shareholders.

The board decided then to move aggressively on three fronts to position Yahoo! for future success: one, we initiated a search for a new Chief Executive Officer with a vision and set of skills to lead Yahoo! into the future; two, we undertook a comprehensive strategic and structural review of the business; and three, we decided to assess the composition of the Company’s board of directors relative to its ability to enhance the prospects for Yahoo!’s future success. We have made progress on all three fronts.

First, and most importantly, we have appointed Scott Thompson as CEO to lead our company. Scott is a capable and dynamic leader who brings the experience and expertise the Company needs to achieve robust growth and success in the marketplace. Over the coming months and years, Scott will lead an outstanding team of Yahoos to deliver engaging user experiences driven by innovative products.

Second, we have made significant progress on the comprehensive strategic review which is overseen by the board’s Transactions and Strategic Planning Committee, chaired by director Brad Smith, the CEO of Intuit. The Committee’s guiding principle has been to assess alternatives which would increase value for all Yahoo! shareholders, and the Committee has been open to any transaction or initiative that would serve this objective.

As part of this review, we have pursued a wide range of discussions with potential partners. We have engaged with potential investors and reviewed proposals concerning an equity investment in the Company, although at this time there have not been any proposals which have been deemed by the Committee to be attractive to our shareholders. We are also in active discussions with our partners in Asia regarding the possibility of restructuring our holdings in Alibaba Group and Yahoo! Japan. The complexity and unique nature of these transactions is significant. While we continue to devote significant resources to these discussions, we are not in a position at this time to provide further detail or to provide assurance that any transaction will be achieved.

Finally, the board has concluded that in order to accelerate the Company’s transformation, the combination of a new Chief Executive Officer with an enhanced team of independent directors would provide Yahoo! with the expertise and perspectives necessary to drive innovation and growth going forward. Therefore, Mr. Joshi, Mr. Kern, Mr. Wilson and I have volunteered not to stand for re-election at the next shareholders’ meeting.

Furthermore, the board today elected two highly qualified independent directors, Alfred Amoroso and Maynard Webb, Jr. Mr. Amoroso served as President and CEO of Rovi Corporation until December 2011 and, among other positions, had previously served as the President, CEO and Vice Chairman of META Group, Inc., the President and CEO of CrossWorlds Software, Inc. and as a member of the world-wide management committee of IBM Corporation. Mr. Webb, the Chairman of LiveOps, Inc., served as that company’s CEO until July 2011. Prior to that, Mr. Webb was Chief Operating Officer of eBay and Senior Vice President and Chief Information Officer for Gateway, Inc., in addition to management, leadership and board positions at several other companies spanning his 30-year career.

The board continues its search for additional independent directors. This search is being led by director Patti Hart, CEO of International Game Technology, Inc., who chairs our Nominating and Corporate Governance Committee. We anticipate announcing additional directors to round out the board as soon as this process concludes.

Separately, as previously announced, Jerry Yang has resigned from the board of directors and other positions within the Company to pursue his many interests outside of Yahoo!. Working with Jerry was always a delight. He is a visionary and a pioneer who contributed enormously to Yahoo! since he co-founded the Company in 1995. He will be missed. The board thanks him deeply for his service and commitment to the Company.

Thus, following this year’s Annual Meeting a majority of Yahoo!’s directors will be new to the board this year, and all directors will have joined the board since 2010. We believe that this reconfigured board, with a fresh set of perspectives and diverse set of skills, will enable the Company to move forward even more aggressively.

It has always been a privilege for me to serve as Chairman of Yahoo!. The employees of Yahoo! remain the heart, soul, and future of the company. And with Scott Thompson leading them, they are the reason why I believe Yahoo! will create significant shareholder value over the coming years.

In September, this board moved proactively and decisively to improve the performance of the Company for the benefit of its shareholders. These actions could not have been accomplished without the support and active participation of each director on the board. For that, I thank them. And I thank them for the knowledge, expertise, talents and commitment they have brought to Yahoo!. We all take pride in the fact that we are positioning Yahoo! for success in the future. Yahoo! is an incredibly strong brand with formidable assets. I have every expectation that under Scott’s leadership, working together with the reconstituted board, the Company will thrive for many years to come.

Sincerely,
Roy Bostock
Chairman of the Board

]]> http://allthingsd.com/20120207/outgoing-yahoo-chairman-roy-bostocks-farewell-letter-and-other-stuff/feed/ 0 Four Yahoo Board Members to Depart, Two New Ones Arrive and Three More on the Way (Like I Said) http://allthingsd.com/20120207/exclusive-four-yahoo-board-members-to-depart-two-new-ones-arrive-and-three-more-on-the-way-like-i-said/ http://allthingsd.com/20120207/exclusive-four-yahoo-board-members-to-depart-two-new-ones-arrive-and-three-more-on-the-way-like-i-said/#comments Tue, 07 Feb 2012 20:38:25 +0000 Kara Swisher http://allthingsd.com/?p=172094

According to sources close to the situation, Yahoo will announce the impending departure of four of its longtime board members, including chairman Roy Bostock.

The others headed out the door are Hewlett-Packard exec Vyomesh Joshi, Gary Wilson and Arthur Kern.

I had reported in several previous posts that this exact group of directors was leaving, and noted in one yesterday that it was about to happen, and that new board members were also on the way.

And, presto, it is so!

(Update: Yahoo confirmed all in a letter it just released from Bostock, which I have posted separately.)

Yahoo’s two new directors are former Rovi CEO Fred Amoroso and LiveOps Chairman (and former CEO) Maynard Webb, who was once COO of eBay (pictured, left to right).

Rovi does digital entertainment technology, while LiveOps offers cloud-based enterprise solutions.

The Silicon Valley Internet giant will also be adding three more board members, said sources, but those people are not confirmed as yet.

And it is not clear who will be chairman of Yahoo’s board, either. Intuit CEO Brad Smith has a full-time job, and the newly installed Weather Channel CEO David Kenny does, too.

Sources said the news is coming after the markets close, with other updates, including: The news-free status of its ongoing strategery (the Asian deal is coming along — blah, blah, blah — but you read that here yesterday in much more detail); ladling praise on new CEO Scott Thompson (also formerly of eBay); and giving props to co-founder Jerry Yang, who stepped away from the board and from the company several weeks ago.

The moves by Yahoo are designed to thwart a possible proxy fight that might be coming from activist shareholder Daniel Loeb, who has been working on a board slate of his own.

It’s been hard for him, and also for Yahoo, to attract significant names to the board. The two new additions are solid tech execs, although certainly not high-profile appointments.

Yahoo declined to comment.

Here are their bios from the Rovi and LiveOps Web sites, if you want to know more:

Fred Amoroso is a member of Rovi Corporation’s Board of Directors.

Fred Amoroso is a member of Rovi Corporation’s Board of Directors. Fred Amoroso previously served as Rovi’s president and chief executive officer from July 2005 to December 2011. Prior to joining Rovi, Mr. Amoroso served as an advisor to Warburg Pincus, an investment firm from September 2004 to June 2005. From July 2002 to August 2004, Mr. Amoroso served as the president, chief executive officer and vice chairman of Meta Group, an information technology research and advisory firm. From October 1999 until its merger with IBM in January 2002, Mr. Amoroso served as president, chief executive officer and a director of CrossWorlds Software, Inc. Prior to CrossWorlds, Amoroso was a member of the world-wide management committee of IBM, was general manager of IBM Global Services Asia Pacific and held various other executive positions at IBM. Before joining IBM, Amoroso held various positions at Price Waterhouse, now PricewaterhouseCoopers, including lead technology partner.

Mr. Amoroso holds a B.S. in systems engineering and M.S. in operations research from Polytechnic Institute of Brooklyn.

As Chairman, Maynard brings almost 30 years of experience developing and leading high-growth companies to his role at LiveOps. From December 20, 2006 to July 18, 2011, Maynard was also LiveOps CEO. He joined LiveOps from eBay where he served as Chief Operating Officer. At eBay, Maynard directed engineering and technology operations, product development, customer support, trust and safety, global billing, human resources, and legal functions. Prior to eBay, Maynard was Senior Vice President and Chief Information Officer for Gateway, Inc. He has also held management and leadership positions at Bay Networks, Quantum Corporation, Thomas-Conrad Corporation and IBM. A respected member of the Silicon Valley technology community, Maynard sits on the boards of several successful companies, including Salesforce.com, Admob and Baynote. Maynard holds a Bachelor of Arts degree from Florida Atlantic University.

]]> http://allthingsd.com/20120207/exclusive-four-yahoo-board-members-to-depart-two-new-ones-arrive-and-three-more-on-the-way-like-i-said/feed/ 0 Jerry Yang's Short Goodbye: The Official Letter http://allthingsd.com/20120119/jerry-yangs-short-goodbye-the-official-letter/ http://allthingsd.com/20120119/jerry-yangs-short-goodbye-the-official-letter/#comments Thu, 19 Jan 2012 22:31:42 +0000 Kara Swisher http://allthingsd.com/?p=165634

Yahoo filed the letter that Jerry Yang sent resigning from the board of directors, as well as all other positions at the company he co-founded 17 years ago.

(To liven it up, despite a vow to use fewer of them this year, I had to go with a LOLcat.)

It’s similar to the statement he made at the time of the departure earlier this week, and is unusually short given the importance of the move.

Here it is, penned to Yahoo Chairman Roy Bostock:

January 16, 2012
Roy Bostock
Chairman
Yahoo! Inc.
701 First Avenue
Sunnyvale, CA 94089

Dear Roy:

I am writing to inform you that I hereby resign from the Board of Directors of, and all other positions with, Yahoo! Inc. effective January 17, 2012.

My time at Yahoo!, from its founding to the present, has encompassed some of the most exciting and rewarding experiences of my life. However, the time
has come for me to pursue other interests outside of Yahoo! As I leave the company I co-founded nearly 17 years ago, I am enthusiastic about the appointment of Scott Thompson as Chief Executive Officer and his ability, along with the entire Yahoo! leadership team, to guide Yahoo! into an exciting and successful future.

Sincerely
/s/ Jerry Yang
Jerry Yang

]]> http://allthingsd.com/20120119/jerry-yangs-short-goodbye-the-official-letter/feed/ 0 Come West, Daniel Loeb: A Silicon Valley Visit As Yahoo's Activist Shareholder Mulls Proxy Fight http://allthingsd.com/20120109/come-west-daniel-loeb-a-silicon-valley-visit-as-as-yahoos-activist-shareholder-mulls-proxy-fight/ http://allthingsd.com/20120109/come-west-daniel-loeb-a-silicon-valley-visit-as-as-yahoos-activist-shareholder-mulls-proxy-fight/#comments Mon, 09 Jan 2012 18:21:36 +0000 Kara Swisher http://allthingsd.com/?p=160849

When you own a large chunk of a major Silicon Valley Internet company, it’s probably not a surprise that you want to come to the center of the tech world to have a look around.

But Yahoo — of which Third Point’s Daniel Loeb owns over five percent — is unlikely to get a visit from the activist shareholder, who is in California this week.

Several sources said he has contacted many former Yahoos and other tech execs for meetings in the Internet heartland to chitchat about digital issues.

And, of course, search for possible board members for an alternate slate of directors, in case he decides to wage a proxy fight against Yahoo.

The earliest nominations for directors can be submitted is February 24 for those “shareholder proposals not intended for inclusion in proxy materials and for nomination of director candidates,” according to Yahoo’s corporate bylaws on such matters.

Loeb then has a month after that to submit a competing slate. In addition, many of Yahoo’s major investors are mulling backing Loeb if he initiates a battle for control of the company.

But it’s not a definite move as yet. The New York-based investor has not decided whether he will take on a proxy fight, sources said, given he has yet to assess Yahoo’s new CEO, former eBay exec Scott Thompson.

Thompson was president of the online commerce site’s PayPal payments division.

But while there is a formal process, you will hear a lot of noise coming long before that, unless Yahoo gives Loeb board seats to quiet him down — which is unlikely but possible.

Such an ugly fight is not one Yahoo can afford to have, and it has already shown some cloddish sensibilities in its response to a recent letters by Loeb asking for the ouster of its Chairman Roy Bostock and co-founder and director Jerry Yang.

But given how badly the last Yahoo shareholder tussle with Carl Icahn went, another proxy battle could be deadly, and might drag on through the first half of 2012. In his Yahoo tussle, Icahn ultimately got three seats on the Yahoo board, but eventually went away with everyone the poorer.

And no one wants a replay of that.

]]> http://allthingsd.com/20120109/come-west-daniel-loeb-a-silicon-valley-visit-as-as-yahoos-activist-shareholder-mulls-proxy-fight/feed/ 0 What Cash Crunch? Revolution Growth Raises $450M for Its First Fund. http://allthingsd.com/20111130/what-cash-crunch-revolution-growth-raises-450m-for-its-first-fund/ http://allthingsd.com/20111130/what-cash-crunch-revolution-growth-raises-450m-for-its-first-fund/#comments Thu, 01 Dec 2011 04:30:09 +0000 Kara Swisher http://allthingsd.com/?p=148959

Revolution Growth, a new investment vehicle led by former AOLers Steve Case, Ted Leonsis and Donn Davis, has raised $450 million in their first investment fund.

Originally, as I reported in March, the growth fund was going to be $400 million, but more was added due to investor interest.

The figure is a large one for a new venture and includes two dozen limited partners.

According to a letter to its partners, which I posted below in its entirety, Revolution said it will make 10 to 12 investments over five years in the consumer space of about $25 million to $50 million and mostly on the East coast, where its principals live and work.

The fund will focus on the “speed-up” stage — which is apparently just past venture stage and not yet in growth.

While both Leonsis and Case have done a lot of investing in the Web 2.0 space both together (Revolution Money) and apart (the Groupon and LivingSocial social buying sites, respectively), this is the first time the pair of well-known Web pioneers are creating a more formal investment partnership.

The pair are also investing $75 million of their own money in total in the Revolution Growth fund.

Revolution’s three partners said they will also be deeply involved with entrepreneurs at its companies.

“We are not just investors, but former CEOs and business builders who have the expertise and passion to be actively involved with the companies we back,” said the letter. “By making only a few investments each year, we will have the time to really help the entrepreneurs with whom we partner.”

Well, you can read about the Revolution Growth fund yourself here:

letter

]]> http://allthingsd.com/20111130/what-cash-crunch-revolution-growth-raises-450m-for-its-first-fund/feed/ 0 For Yahoo (And Me, Too), Time Is Brain http://allthingsd.com/20111123/for-yahoo-and-me-too-time-is-brain/ http://allthingsd.com/20111123/for-yahoo-and-me-too-time-is-brain/#comments Wed, 23 Nov 2011 22:38:45 +0000 Kara Swisher http://allthingsd.com/?p=147167

I hate to use a personal story to make a professional point — but when I was in the hospital recently, after suffering from a mini-stroke, I got an important piece of health advice that, oddly enough, applies perfectly to Yahoo, the Silicon Valley Internet icon I cover very closely.

I know, I know, but listen up …

When I was close to going home, one of my doctors told me I had to make sure I paid attention to any signs that might indicate a recurrence. The issue around any possible future ischemic attack taking place, he said, is speed in getting critical care once any unusual symptoms become apparent, such as numbness, tingling, confusion and cognitive difficulty.

That’s because every second of delay translates to increased damage to cerebral cells that could badly impact speech, movement and worse.

“Remember,” the doctor intoned with great and very appropriate gravity. “Time is brain.”

Yes, indeed it is — for me, and also very much so for Yahoo these days.

Leaving aside my own mortality, one of the most important issues going forward for Yahoo’s long-hoped-for revival will be how quickly the company moves in the next month, in what has so far been a lugubrious and rumor-heavy process to figure out its strategic plan in the wake of the firing of CEO Carol Bartz in early September.

That means — going into a major holiday season — Yahoo has about 30 working days to make what has to be a complex and multiparty deal. It is likely to include private equity firms, big companies, Asian partners, investment bankers, major shareholders and scrutiny from the media, in an effort that is approximately akin to herding cats.

This from a board that has often moved with snail-like reflexes in the midst of much more minors crises, and has shown a talent for disaster.

So, while speed is sometimes the enemy of reason, in this case, it is now more necessary than ever before.

There are three key reasons why Yahoo’s leaders have to perform quickly now, each of which could spell even more turmoil for the long-troubled company, if botched.

The first is the possibility — actually, the probability — of a proxy fight that might begin informally just after the new year.

That’s when you could start hearing from someone like activist shareholder Daniel Loeb of Third Point — who has been vocal about ousting Yahoo board members, including co-founder Jerry Yang. Yahoo directors are fully aware that he is eyeing this ugly option, which will include readying an alternate slate of directors.

According to a Yahoo spokeswoman, the earliest nominations for directors can be submitted is February 24 for those “shareholder proposals not intended for inclusion in proxy materials and for nomination of director candidates.”

But while there is a formal process, you will hear it coming long before that, unless Yahoo gives Loeb board seats to quiet him down — which is unlikely but possible.

Such a noisy fight is not one Yahoo can afford to have, and it has already shown some cloddish sensibilities in its response to a recent letter by Loeb — who has many more shares than Yang, and should still be accorded a certain amount of respect, no matter what he says.

Given how badly the last Yahoo shareholder tussle with Carl Icahn went, another proxy battle could be deadly, and might drag on through the first half of 2012. In his Yahoo tussle, Icahn ultimately got three seats on the Yahoo board, but eventually went away with everyone the poorer.

Second, Yahoo will report its fourth-quarter earnings in late January, which will likely continue to show weakness in key sectors of its business. While interim CEO Tim Morse is doing a laudable job given the shaky circumstances, drops in advertising revenue growth, engagement and search are not anything Yahoo can keep making excuses for.

While it is likely the company’s beleaguered operating execs will pull out the stops to make the numbers look better — a new game I like to play is “how many homepage ads can they jam in there at the quarter’s end?” — it’s no panacea for the kinds of dramatic and even drastic changes that new ownership will have to make, sooner than later.

And, speaking of beleaguered, perhaps the most important reason that Yahoo has to get the lead out and clarify its situation is due to one consistent thing about the company: Talent attrition and employee fatigue.

Speaking to one exec after another in recent weeks, it is dead clear that Yahoo is increasingly hard-pressed to hold on to the best of its current employees, or to attract any terrific new ones.

The impact on product innovation, morale and more is obvious.

One exec who has long been one of the more cheerleader types for Yahoo — often calling me out in the past for being too negative on the company’s prospects — has recently turned weary, cynical and even depressed about the future — so much so that I now find myself bucking up the worker.

“You can’t hire anyone, since you can’t tell them honestly who their bosses might be in three months,” said the staffer. “And you can’t look anyone who works for you now in the eye and tell them it will turn out right in the end, either, given the track record so far.”

Indeed. And, more than any other factor that could hurt Yahoo in the competitive tech sector, brain drain is what will always get you in the end.

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