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:

• Yahoo’s Parting With Thompson Will Be for “Cause” (a.k.a. CSLie)
• Ross Levinsohn’s Yahoo Plan: Back to the Future
• Here’s New Yahoo CEO’s First Note to Troops! (The Leaking-Internal-Memos-to-ATD Policy Remains in Effect As Usual)
• Yahoo Officially Confirms ATD Report on CEO Changes and Proxy Settlement
• Meet the Man I Call “The Hair”: The Video Stylings of Yahoo’s Newest CEO Ross Levinsohn
• Will Thompson’s Ouster Mean a Yahoo-Facebook Patent Settlement Too?
• Exclusive: Yahoo’s Thompson Out; Levinsohn In; Board Settlement With Loeb Nears Completion
• Heidrick & Struggles Slaps Back at Thompson’s Yahoo in Blame Game Over ResuMess
• Is He In or Is He Out? Crunchtime for Scott Thompson at Yahoo.
• Not So Scott Free? Yahoo’s Other Big Shareholder — Cap Re — Leaning Toward Supporting Loeb Over Thompson ResuMess.
• Tech Nation’s Gunn Says She and Yahoo CEO Discussed Their CS Degrees Before 2009 Show (Video and Audio)
• Loeb Calls Again for Thompson Firing From Yahoo, as Former eBay Boss Supports Him
• Place Your Bets: Will Loeb Drop Another Bomb on Yahoo at Vegas Confab Later Today?
• Exclusive: Yahoo Director in Charge of Botched CEO Vetting to Step Down From Board
• CEO Says Sorry to Yahoos for Borked Bio “Distraction” — But Will Mea Culpa Work Without an Apology for Error? (Memo)
• Buffett Comments on Trust Issue in Yahoo CEO BioGate: “You’ve Got a Problem”
• Loeb Lobs Lawsuit, as Expected, at Yahoo’s Borked Bio Mess
• As Yahoo CEO Reaches Out to Top Staff, Board Meets to Weigh “Options” (I.E., Deciding Who Gets to Take the Borked Bio Blame)
• Yahoo Should Expect Incoming Lawsuit Lobbed by Loeb Tomorrow on CEO Hiring
• They Shoot Yahoo CEOs, Don’t They? But Not Without a Really Smoking Gun and a Much Stronger Board.
• Yahoo’s Thompson Asks Employees to “Stay Focused” — Except Not on Him
• In 2009 Interview, Yahoo CEO Does Not Deny He Has a CS Degree, and Calls Himself an “Engineer” (Audio)
• Yahoo’s Board Will “Review” Resume Discrepancy of CEO
• How Did a Phantom CS Degree Get on CEO’s Bio in SEC Filings? Yahoo’s Not Saying.
• Yahoo’s Response on CEO’s Computer Science ResumeGate: “Inadvertent Error”
• Dan Loeb Alleges “Discrepancies” on Yahoo CEO Scott Thompson’s Resume Related to Computer Science Degree

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

RELATED POSTS:

• Yahoo’s Parting With Thompson Will Be for “Cause” (a.k.a. CSLie)
• Ross Levinsohn’s Yahoo Plan: Back to the Future
• Here’s New Yahoo CEO’s First Note to Troops! (The Leaking-Internal-Memos-to-ATD Policy Remains in Effect As Usual)
• Yahoo Officially Confirms ATD Report on CEO Changes and Proxy Settlement
• Meet the Man I Call “The Hair”: The Video Stylings of Yahoo’s Newest CEO Ross Levinsohn
• Will Thompson’s Ouster Mean a Yahoo-Facebook Patent Settlement Too?
• Exclusive: Yahoo’s Thompson Out; Levinsohn In; Board Settlement With Loeb Nears Completion
• Heidrick & Struggles Slaps Back at Thompson’s Yahoo in Blame Game Over ResuMess
• Is He In or Is He Out? Crunchtime for Scott Thompson at Yahoo.
• Not So Scott Free? Yahoo’s Other Big Shareholder — Cap Re — Leaning Toward Supporting Loeb Over Thompson ResuMess.
• Tech Nation’s Gunn Says She and Yahoo CEO Discussed Their CS Degrees Before 2009 Show (Video and Audio)
• Loeb Calls Again for Thompson Firing From Yahoo, as Former eBay Boss Supports Him
• Place Your Bets: Will Loeb Drop Another Bomb on Yahoo at Vegas Confab Later Today?
• Exclusive: Yahoo Director in Charge of Botched CEO Vetting to Step Down From Board
• CEO Says Sorry to Yahoos for Borked Bio “Distraction” — But Will Mea Culpa Work Without an Apology for Error? (Memo)
• Buffett Comments on Trust Issue in Yahoo CEO BioGate: “You’ve Got a Problem”
• Loeb Lobs Lawsuit, as Expected, at Yahoo’s Borked Bio Mess
• As Yahoo CEO Reaches Out to Top Staff, Board Meets to Weigh “Options” (I.E., Deciding Who Gets to Take the Borked Bio Blame)
• Yahoo Should Expect Incoming Lawsuit Lobbed by Loeb Tomorrow on CEO Hiring
• They Shoot Yahoo CEOs, Don’t They? But Not Without a Really Smoking Gun and a Much Stronger Board.
• Yahoo’s Thompson Asks Employees to “Stay Focused” — Except Not on Him
• In 2009 Interview, Yahoo CEO Does Not Deny He Has a CS Degree, and Calls Himself an “Engineer” (Audio)
• Yahoo’s Board Will “Review” Resume Discrepancy of CEO
• How Did a Phantom CS Degree Get on CEO’s Bio in SEC Filings? Yahoo’s Not Saying.
• Yahoo’s Response on CEO’s Computer Science ResumeGate: “Inadvertent Error”
• Dan Loeb Alleges “Discrepancies” on Yahoo CEO Scott Thompson’s Resume Related to Computer Science Degree

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

According to sources close to the situation, AOL’s CTO Alex Gounares is leaving the New York-based Internet company.

At AOL, he was in charge of all of AOL’s vast technical operations. He is among a number of execs who have been hired by CEO Tim Armstrong and then have departed.

Gounares came to AOL from Microsoft in May of 2010. He was corporate VP of Advertising Research and Development and CTO for the software giant’s Online Services division.

Sources said Gounares wanted to move back to the Seattle area.

His departure is certainly bad timing, in any event.

AOL has recently been targeted by activist shareholder Starboard Value, which put up an alternate slate of directors last week in a brewing proxy battle.

An AOL spokeswoman declined to comment.

Have you never heard of Starboard Value?

Me, either!

But the New York activist fund is readying to make a splash as soon as today, several sources said, if it follows through on the expected naming of an alternate board to challenge AOL.

Saturday is the official deadline to nominate directors to the board of AOL, also based in New York, which will have all eight up for reelection.

Sources said Starboard has talked to several Internet types, but that it has plans to put up a slate made up more of Wall Streeters to present at the company’s annual meeting later in the year.

In a filing last week, Starboard said it had been in discussions with AOL management about its concerns, so it is certainly possible the investor and the company could come to some agreement over board seats and strategic direction before it gets Yahoo-ugly.

That would make it a kind of an East Coast proxy battle version of what’s been going on over at Yahoo and its tussle with Third Point’s Daniel Loeb. He recently followed through on long-expressed unhappiness with the Silicon Valley Internet giant, and named a slate of directors — including well-known media exec Jeff Zucker — to replace current ones there.

The same kind of thing has been in the works at Starboard, which sent a letter in late December to AOL CEO Tim Armstrong, saying his much-touted strategy around content was not a good one for investors.

Like Loeb at Yahoo, Starboard is one of AOL’s largest shareholders, with a stake of just over five percent.

The letter signaled an increasing impatience with the pace of Armstrong’s turnaround efforts, which are still in turnaround. Meanwhile, AOL’s stock has rebounded from last summer’s lows of near $10 a share.

The stock is up more than 22 percent this year, to $18.44. But that’s still down almost 20 percent from when AOL spun off from Time Warner and went public in late 2009.

The grumpy (and opportunistic) Starboard entered the picture late last year.

According to The Wall Street Journal:

“Starboard, which focuses mainly on small-cap companies, was spun off from Cowen Group Inc.’s Ramius Capital LLC in March. In October, the fund successfully waged a proxy fight against hair-salon chain owner Regis Corp. when three of its director nominees were elected to Regis’s board. AOL, which was spun off from Time Warner Inc. in 2009 after a failed merger, is its most high-profile target yet.”

One of the investment fund’s bugaboos is Patch, the local news network that AOL has sunk a lot of dough into. Also under fire is Armstrong’s content efforts and the pace of its display advertising sales, including the high-profile acquisition of the Huffington Post and TechCrunch.

I have emails into all the bigs at AOL and Starboard, so we’ll see who calls back first, if at all.

Let’s put this in the simplest terms: Yahoo cannot spend the next half year in any kind of testy proxy battle with activist shareholder Daniel Loeb.

Not shouldn’t. Can’t.

Having closely covered the last goat rodeo in 2008 with corporate troublemaker Carl Icahn — which ended in big shareholders dinging the board badly and the controversial activist joining it — I can say definitively that the experience damaged the Silicon Valley Internet company in ways that are still resonating.

Angry shareholders (whose anti-Yahoo votes were initially miscounted in a stunning bumble), distracted management, media story after story about the fight, it eventually led to the departure of then CEO Jerry Yang by the holidays of that year, a rejiggered board and a new CEO, Carol Bartz, and fervent promises of change and turnaround.

Fast forward to today: Bartz was ousted in the fall of last year, a newish board is coming in, there’s another new CEO and, of course, more fervent promises of change and turnaround.

This is like the movie “Groundhog Day,” except not nearly as funny.

Speaking of funny, a Heard on the Street in The Wall Street Journal yesterday actually went fabulously snarktastic with its headline on Yahoo’s current tussle with Loeb of Third Point: “Is Yahoo Ready for a Loebotomy?”

Heh.

Opening with the line, “How many activists does it take to screw in Yahoo’s light bulb?,” the piece went on to ponder back and forth the impact of Loeb on the already dicey situation at Yahoo.

It concluded: “Yahoo investors shouldn’t expect a quick fix whoever the directors are. But, given how long Yahoo has been struggling to gain traction on its own, having a champion of shareholder value on the board can’t hurt.”

Nope, it can’t, as long as said investor wants to help find the successful fix previous Yahoo leaders have been heretofore unable to.

Another commentary in the Journal, “Dealpolitik: The Yahoo Paradox” took an opposite tack.

“Even giving Mr. Loeb a single seat could further weaken Yahoo. As a gadfly Mr. Loeb could challenge each board decision,” it read.

Actually, given this board changes direction more often than Republican presidential candidate Mitt Romney — witness the now non-talks with its Asian partners this past week and, before that, with private equity investors — I am not sure Loeb would change the status quo all that much if he threw one tantrum per meeting.

So, which is it? Will a settlement with Loeb lead to more trouble or will it create the kind of change that Yahoo has long needed and never gotten?

At this point, I have no idea — but I do know that a fight between Loeb and Yahoo is good for no one, except lawyers and perhaps page views on this site and others.

And, frankly, I don’t want them.

That’s because — even as the rest of Silicon Valley reinvents and innovates more aggressively than ever these days — Yahoo and its still deeply committed employees will be caught up in more fraught financial mishegas and machinations and will be unable to do anything to attract new talent and begin to truly fix itself and its products in the profound ways it needs to.

And new CEO Scott Thompson — who seems intent on setting a new course for Yahoo in a non-advertising arena — will be inevitably distracted, no matter the also inevitable protestations that he will not be.

And, it won’t just be Loeb who is hovering — there is no doubt a panoply of other interested outside investors still waiting in the wings to see what tasty bits of Yahoo might come available if the crisis deepens.

It’s certainly not come to roadkill yet by any measure. But it’s not a recipe for hitting the ground running, either.

Here is a video of me talking about the problematic situation on WSJ.com’s “Digits” online show:

No one should have any hopes that Carl Icahn, who on Thursday disclosed an 11.3 percent stake in the video game maker, can ride to the rescue. Not only have his efforts fizzled at several other companies in the past few years–Yahoo (YHOO), Blockbuster (BBI), Motorola (MOT), to name a few – but the fundamental issues at Take-Two aren’t easy to fix.

After all, the current management team led by media veteran Strauss Zelnick, was voted in with the support of another group of investors in a proxy battle in 2007 amid unhappiness over the previous management. So far, the Zelnick team has conspicuously failed to resolve Take-Two’s major challenges.

Consider: In fiscal 2007, the year the Zelnick team took over, revenue was $981.8 million and the net loss was $138.4 million. In fiscal 2009, which ended Oct. 31, Take-Two reported a loss of $137.9 million on revenue of $968.5 million. It has projected another loss next year. One real difference between 2007 and now: Take-Two’s stock price, around $20 when Mr. Zelnick and colleagues took over, is today less than half that level, even after a bump on news of Mr. Icahn’s increased investment.

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