Yahoo's board under fire as speculation heats up

Yahoo's board under fire as speculation heats up

Summary: Jerry Yang is reportedly trying to buy Yahoo and big shareholders want to toss the board of directors.

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Speculation about Yahoo's future has kicked off in earnest and who takes over as CEO is taking a back seat to boardroom feuds. The consensus view is that the board needs to be tossed.

Business Insider noted a rumor that co-founder Jerry Yang is trying to buy Yahoo. Apparently, Yang and Yahoo Chairman Roy Bostock are duking it out.

The Yang thesis will be one of many floated as folks ponder whether Yahoo should go private. Going private would have some advantages. The biggest edge for Yahoo is that it wouldn't have to restructure and reinvent itself in the public eye. And should Yahoo's revamping be successful, there would be a nice cash-out IPO moment at some point.

Indeed, the chances of taking Yahoo private are probably pretty good. The chance that Yang could round up funding are slim.

But before any of these takeover talks get rolling, investors want to toss the board starting with Bostock. In a letter to Yahoo, Third Point, a hedge fund that owns 5.1 percent of the company, said that it wants to toss the board. Third Point is now one of Yahoo's top shareholders (right as of April).

Third Point's case goes like this:

  • The board was dumb enough to hire former CEO Carol Bartz in the first place.
  • Bostock and the gang stood by Bartz too long.
  • The board "made a gross error" when it turned down a $31 a share bid from Microsoft in 2008. Today, Yahoo is $13 and change.
  • "Merely replacing the company's CEO---yet again---will not be enough to alter the direction of the company."
  • Yahoo's entire board should be tossed. A new board is needed to recruit a new CEO or "strategic counterparty with a stable and responsive governance structure."

Third Point comes off as Captain Obvious in its letter, but other shareholders are likely to feel the same way. Add it up and there needs to be more than a CEO change. Toss the board. Hire a new CEO. And then maybe fix Yahoo enough to sell out to generate some shareholder value.

These needs are probably the main reason a lot of CEO candidates haven't surfaced---everyone realizes that more than Bartz needs to go.

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16 comments
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  • RE: Yahoo's board under fire as speculation heats up

    Oh well.
    owlnet
  • Pay Attention, Apple...

    This will be your future before too long.
    SonofaSailor
    • RE: Yahoo's board under fire as speculation heats up

      @SonofaSailor - Wow, where did that come from?
      Gr8Music
  • "Jerry Yang is trying to buy Yahoo

    Sure, Jerry. That'll be $45 billion U.S. please.
    Rabid Howler Monkey
    • RE: Yahoo's board under fire as speculation heats up

      @Rabid Howler Monkey - Yahoo!'s market cap is currently $18.23Bn. Yang won't have to buy the whole company - just a significant portion of it.

      What worries me though is what, exactly, Yang thinks he can do to restore Yahoo! to glory. Yahoo hasn't really been relevant for a very, VERY long time now.
      bitcrazed
      • RE: Yahoo's board under fire as speculation heats up

        @bitcrazed wrote:<br>"Yahoo!'s market cap is currently $18.23Bn.<br><br>Understood, but I'm referring to its approx. value when he, as CEO, turned down Microsoft's offer to acquire Yahoo!.<br><br>I don't think that he can let go. Which is probably why he refused Microsoft's generous offer.
        Rabid Howler Monkey
      • RE: ...just a significant portion of it.

        @bitcrazed

        All Yang needs is the <b>support</b> of more than 50% of the stockholders to toss the board; he does not have to own that much.
        fatman65536
    • RE: Yahoo's board under fire as speculation heats up

      @Rabid Howler Monkey Yahoo is worth nowhere near 45 billion dollars. They weren't worth 45 billion dollars when Microsoft offered that price to Yahoo. Thank God that deal fell through, because it save Microsoft 45 billion and a lot of misery. They should have sold to Microsoft. But again, thankfully it didn't happen.
      jhammackHTH
  • Jerry (pull my) Yang is responsible for point 3.

    Look for more incredibly stupid desicsions if he buys back in...
    Johnny Vegas
    • Good for him

      He made a company that's worth $31 a share or more to Microsoft.

      The board and Icahn are responsible for it now only being worth $13.
      guihombre
  • Yahoo?

    Isn't that some dinosaur from the 90's, totally irrelevant now?
    HollywoodDog
  • I think I'll turn around AOL instead

    This is a chicken-and-egg thing, which is why in spite of the odds against him, Jerry Yang will end up cobbling together enough private funding to get control. Why? Because no one else will go near it.

    What "shining star" out there is going to get recruited into being the CEO of a company that's going through a big boardroom shake-up? That's like accepting a position, your boss to be named later. Will you get to implement your vision, or will they micromanage you? Can't tell. No thanks.

    Yet when most CEOs come in, the first thing they want to do is stack the board with their friends. (Never mind whether this is a good idea. Let's just say it happens.) But in this case, every board member will have just been elected... nobody scheduled to leave for years.

    I think at this point, Yang's the only one who is going to want it badly enough to put together a deal.
    Robert Hahn
  • proof that most who rise to the top levels

    Are mediocre minds who's only accomplishment is that they put up with the day to day headches, meetings, business travel. They have no ideas, only nice cars, nice hair and corner offices.
    otaddy
  • RE: Yahoo's board under fire as speculation heats up

    Wait, Yahoo! is still in operation?
    swmace
  • Larry...opportunity knocks.

    I think Larry Page should consider buying Yahoo, this will eliminate competition. At this price now, you can't beat that. I see it very beneficial to rid competition more than buying Motorola and Zagat. Although they will generate some business getting into a new industry. Seriously, buy Yahoo! Larry.
    fnabulsi
  • RE: Yahoo's board under fire as speculation heats up

    ...make it possible to opt-out of graphic ads - maybe i'll stop add-blocking it, meybe even click on some...

    too bad beancounters won't let it happen.
    vgrig