Yahoo!'s Santa Monica location. Embattled CEO Scott Thompson was caught faking his resume and could resign this week.
It's unclear whether Scott Thompson, the Yahoo CEO who was caught faking his resume last week by activist hedge-fund investor Dan Loeb of Third Point, will stay or go as the latest leader of the embattled Internet giant. The Guardian suggests he could be gone this week. But it also fudges a bit, quoting Colin Gills of BGC Financial, who says that canning Thompson would be a major setback for Yahoo's turnaround plans.
In any case, who is this Dan Loeb, owner of almost 6 percent of Yahoo and a perpetual thorn in the side of the company's management and board?
He's a man who's unafraid to express his outrage, as it turns out. But his vehicle is so old-fashioned that it's almost charming. Last week, he attacked Thompson using the form of communication that predates the Internet, search engines, hedge funds, iPhones, automobiles, indoor plumbing, the United States of America, and sea voyages under sail. That's right, he wrote a...letter.
Yahoo!'s Santa Monica location. A shareholder proxy battle may loom.
Recently, Yahoo admitted that it can't come to terms with Dan Loeb, who runs a hedge fund called Third Point that owns a decent percentage of the struggling Internet company and really, really doesn't like where Yahoo is going. Yahoo isn't nuts about Loeb, either — and said so when it revealed that it isn't going to let him gain a seat on the board on directors.
Loeb owns almost six percent of the company and has been making noise for months now about undertaking a proxy battle for control the Yahoo board. He's been extremely un-quiet about what he thinks Yahoo is doing wrong, going so far as to establish a website, valueyahoo.com, which outlines Third Point's case for turning Yahoo around and replacing four board members with its own slate.
Here's the vision that Loeb & Co have outlined:
Sean Gallup/Getty Images
Visitors watch a presentaiton of fetaures of the new Windows 8 operating system at the Microsoft stand on the first day of the CeBIT 2012 technology trade fair in Hanover, Germany. Microsoft announced that its selling $550-million worth of former AOL patents to Facebook.
Microsoft recently beat out Facebook for the right to purchase 925 patents and patent applications from AOL. The winning bid? $1.6 billion. But now Microsoft has turned around and essentially flipped a large portion of that patent portfolio, and the buyer is...Facebook!
In the context of a declining stock market and problems in Europe, Facebook — and more accurately, Facebook's investors — has to be getting worried about its upcoming IPO, which is supposed to be able to value the company at $100 billion. The Instagram purchase was stage one. Now comes this big patent buy, with Facebook paying for $550-million worth of patents that Microsoft evidently doesn't really need.
That said, you could argue — as CNET's Paul Sloan implies — that Microsoft was just doing Facebook a nice, big favor by leveraging its balance sheet to vacuum up the AOL patents, sparing Facebook the need to spend any of its own cash. Microsoft is nowhere in social media, so a "long-standing alliance" with Facebook makes sense, as both companies pitch in to weaken Google.
Yahoo!'s Santa Monica location.
I think Yahoo is unique among current companies for several reasons. First, it's got a foot firmly planted in both Silicon Valley and Southern California — two places with business models that just can't seem to get along (SOPA? PIPA? Hollywood?). And it's been this way for a while, going back to the days when Terry Semel was CEO and Yahoo was looking a lot more like a media company than a tech company. (Yahoo also has an office in New York, which adds yet another wrinkle, as the Big Apple is the capital of media.)
Second, Yahoo still has a huge number of users, some 700 million, but it can't seem to grow its revenue. This has caused great turmoil at the company and no end of speculation about its future. But why does it have so many users? Because it's one of two big holdovers from the Web 1.0 era, before the dotcom crash. The other is AOL. (Microsoft and Amazon are a different story, by the way.) Both companies occupy a lot of Internet mindspace. But no one thinks they have the same potential as Facebook (which, interesting, Yahoo is now suing, and Facebook is suing back).
Facebook founder and CEO Mark Zuckerberg speaks during a news conference at Facebook headquarters on October 6, 2010 in Palo Alto, California.
The long-awaited day will finally arrive next week, when Facebook files for its initial public offering (IPO) later this year. According to the Wall Street Journal, the offering — which will be fairly limited as far as actual stock sold goes — will price the social network at $75-$100 billion. That would make it one of the biggest IPOs of all time. It could actually help California balance its budget.
But there's more!
The Vampire Squid — aka Goldman Sachs — may not get to lead the IPO. the WSJ reports that Morgan Stanley, Goldman's main Wall Street rival, will get the plumb role.
Let's not sugar-coat it: This would be humiliating for Goldman, which has been angling to lead Facebook's IPO ever since it set up a private market in Facebook shares in 2011 (and likely before that). It would also be costly. While Goldman will certainly participate, it won't get the millions in fees it was probably expecting, and definitely lobbying for.