Yahoo!'s Santa Monica location. Activist shareholder Dan Loeb has fired another salvo in his ongoing battle to change the company's management.
Dan Loeb, the swashbuckling hedge funder who's trying to remake Yahoo's board of directors and, while he's at it, get Yahoo to jettison its CEO, has just upped the ante yet again. And he's done it, in typical Dan Loeb fashion, with an ancient means of communication. No, I don't mean a stone tablet or dispatch carried by Pheidippidian messenger over great distance. I mean a letter. Printed on paper and delivered, the letter itself says, by "Federal Express and Hand Delivery."
You half expect Loeb to revive the Pony Express at this point! This is all starting to feel like a novel by Laclos.
But I kid. Here's the top part:
Third Point LLC sent Yahoo! a demand today pursuant to Section 220(b) of the Delaware General Corporation Law to inspect books and records relating to the hiring of CEO Scott Thompson, the appointment of Patti Hart to the Yahoo! Board, and the selection of Board Members Peter Liguori, John Hayes, Thomas McInerney, Maynard Webb, Jr., and Fred Amoroso. A copy of Third Point’s demand is attached below.
Third Point believes that Yahoo! shareholders and employees will be best served if the Board accepts responsibility quickly for this latest debacle. If the Directors are truly interested in “working in a constructive manner with Third Point”, they should provide answers promptly. We believe that this internal investigation by this Board must not be conducted behind a veil of secrecy and shareholders deserve total transparency.
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A Yahoo! billboard is visible through trees in San Francisco, California.
Yahoo co-founder and chairman (and former CEO) Jerry Yang has resigned completely from Yahoo. The Wall Street Journal has a succinct explanation why:
Mr. Yang's exit is the latest chapter for Yahoo and underlines the widening gap between old Internet companies and newer ones. Yahoo was part of an earlier crop of Web companies from the 1990s that helped spark the dot-com boom and came of age as users world-wide began going online.
But after riding that wave, new companies such as Google Inc. and Facebook Inc.—often with younger leaders like 27-year-old Mark Zuckerberg at Facebook—came to prominence with Web technologies such as search and social networking, leaving older firms like Yahoo struggling to catch up.
Those two paragraphs, in their way, explain the precise problem with Yahoo: it isn't a tech company. Rather, it's a media company and always really has been. Yahoo was conceived in the Web 1.0 world of unruly distraction and idealistic alternatives to legacy media, especially television.
Carol Bartz is out as CEO of Yahoo, reportedly fired by phone call yesterday. Bartz was brought in to turn the Web pioneer around and redefine its identity after founder Jerry Yang and his board failed to sell company to Microsoft in 2008 and former Warner Bros. executive Terry Semel failed to turn Yahoo into a kind of full-service online media machine.
Back in 2008, when the Microsoft deal fell through, I wrote about how Yahoo, the key company of the Web 1.0 era, hooking up with Bill Gates and all that was definitely not of the Web 1.0 world was the only hope we had of beating back Google and its total dominance of Web 2.0. But that was before Facebook achieved critical mass.
Now Yahoo looks even more desperate and confused — even as observers acknowledge its still-massive Web presence. The company's identity crisis — which Bartz, a Silicon Valley veteran, tried to cure by returning Yahoo to its core as a tech firm — took root during the Semel years and culminated in 2006 when an executive wrote a scathing memo now referred to as the "Peanut Butter Manifesto."