

Yahoo board strife as Dan Loeb splits from board - yuhong
http://www.nypost.com/p/news/business/monster_mayer_VrobE7ww2asDBvpN9Uw6pJ

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Shenglong
Those interested in the history of Yahoo's rather complex corporate governance
issues should check out this HBS case (I assume this link has distribution
rights; I'm not supposed to distribute my copy):

[http://www.thedecisiongroup.nl/wp-
content/uploads/2013/03/Ca...](http://www.thedecisiongroup.nl/wp-
content/uploads/2013/03/Case-04.-Strategy-and-Governance-at-Yahoo-Inc..pdf)

That's a quick overview with some more quantitative data on how the whole
thing went down. It shows you what one man can do with 5% of a company.

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jacquesm
Loeb & co had agreed to step down if their %age of Yahoo shares ever dropped
below 2%. It did, so they're out.

A guy like Loeb doesn't hang around forever, just long enough to get the bulk
of the upside. At a guess Loeb is impatient with Mayer's reform, it takes too
long for him & his allies. Corporate raiders make their money with short term
plans, they rarely sit around as long as they did here.

~~~
soumyadeb
Loeb made more than a billion dollar (over 100% return) in 2 years.

[http://www.forbes.com/sites/nathanvardi/2013/07/22/billionai...](http://www.forbes.com/sites/nathanvardi/2013/07/22/billionaire-
dan-loeb-sells-most-of-his-yahoo-stock-makes-1-billion/)

This whole episode seems like another hedge-fund driven money making plan -
take some equity, get control of board, hire a high profile CEO, take
seemingly big bets, jack up the stock price and silently exit. This yahoo
stock buy-back seems to be a way to avoid the insider trading charges.

A good read on this
[http://online.wsj.com/article/SB1000142412788732478320457862...](http://online.wsj.com/article/SB10001424127887324783204578621642882020724.html)

~~~
jacquesm
Yahoo has been buying back lots of stock which is one reason it is as high as
it is.

It goes something like this:

\- Loeb & co buy 5% of the company

\- gain board seats

\- force the CEO to step down

\- headhunt Mayer

\- Yahoo uses cash it got with selling a chunk of Alibaba to buy its own stock

\- Loeb & Co unload at a huge profit

\- and give up their board seats again

~~~
constapop
Exactly - this was his plan whole time. That is why he sent letter about
Thompson's resume; that is why he wanted seat; that is why he wanted to
"unlock value" of Asian assets; that is why Yahoo bought his shares at July
19’s closing price, guaranteeing liquidity without forcing Third Point to pay
a discount, as usually happens when an investor offloads a large chunk of
stock.

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loceng
Smart move by Marissa. She played politics to get in, won - and then did what
is best for Yahoo! for the long-term. A large shareholder activist is merely
looking to make fast monetary gains, and doesn't care about long-term
projections.

~~~
nazgulnarsil
On average shareholder activism is good for share prices. Your assumption
seems bad without more info. In particular, the fact that he led the push to
hire mayer in the first place means that his net contribution to yahoo is
probably positive.

~~~
loceng
Shareholder prices, right. That's one metric, and the wrong one to follow IMHO
if you want to innovate and grow. Firing 12,000 people would have been
devastating for morale of the company, even if Marissa bought other good
talent and companies - and other problems with it too.

~~~
mzarate06
_Firing 12,000 people ..._

Point taken, but if you're referring to Loeb's firing plan that Mayer
supported, the firing would have been towards roughly 2,400 - 3,600 workers,
not 12,000.

From the article:

 _"... Loeb’s plan was to fire between 20 percent and 30 percent of Yahoo!’s
roughly 12,000 workers — an idea Mayer initially supported ..."_

Edit: yep, I agree it's still a lot, just wanted to point out the difference.

~~~
loceng
Ah - thanks for pointing that out, my mistake there, though that is still a
lot of workers. Up to 1/3rd of your co-workers gone.

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jonnathanson
"She liked being loved" is a probably a quaint (and fairly sexist) euphemism
for "She wasn't going along with the plan."

As others have said, the typical corporate-raider plan is to slash costs
(i.e., mass layoffs), sell off assets, create the appearance of a turnaround,
capture the upside, then jump ship. Mayer was to be a figurehead in this
arrangement. Whether she knew about this plan all along, or whether she put
the pieces together after arriving, it sounds like she wasn't going for it.
Loeb needed short-term profit (to the tune of $1B, it seems), and Mayer didn't
want to be stuck holding the bag after the company was strip mined.

You don't climb to Marissa Mayer's position in life being overly concerned
about "being loved." The more rational explanation is that her incentives and
Loeb's incentives didn't align, so to speak.

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nicholassmith
“She quickly decided it did not make sense,” the source said. “She liked being
loved.”

That seems oddly put, in all the background on Mayer it doesn't ever seem like
she's interested in much past the numbers and the strategy. Reasons for not
slashing staffing; a) you don't attract new talent, b) you get everyone
worried about how much security they've got and create conditions for an
exodus, c) you create an atmosphere of despondency rather than positivity.

So yeah, that seems an awful odd thing to say. Slashing staff would have been
a terrible decision that only would have had incredibly short term benefits.

~~~
abrahamsen
The unauthorized biography [http://www.businessinsider.com/marissa-mayer-
biography-2013-...](http://www.businessinsider.com/marissa-mayer-
biography-2013-8) certainly doesn't leave the impression that Marissa Mayer is
overly concerned about what people think of her. Unless she has a use for
them, that is.

You are probably right. Marissa Mayer wants to be known as a great CEO, which
requires thinking long term. Loeb was mostly interested in short term profit.

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w1ntermute
Incidentally, Loeb has also been stirring up shit at Sony, as of late:
[http://www.theverge.com/2013/8/5/4592330/sony-ceo-kaz-
hirai-...](http://www.theverge.com/2013/8/5/4592330/sony-ceo-kaz-hirai-
rejects-third-point-entertainment-proposal)

~~~
protomyth
I think he's going to find that a much more difficult target. A foreigner
mucking with Sony is not going to go well.

~~~
ackfoo
Money has no country.

~~~
protomyth
In this case and that country, I would disagree.

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minimaxir
_" There was heartburn over Tumblr," the unprofitable micro-blogging service,
said one source._

The Board approved that decision, so I'm confused why there's buyer's remorse.

~~~
rhizome
You don't get rich by writing a lot of checks. Also, a hedgie-third of the
board just skipped town, so there's three guesses as to who the "one source"
is.

~~~
loceng
You do get rich if playing the long-game well ... which sometimes requires
writing cheques.

~~~
rhizome
Is Third Point known to have been going long with their Yahoo! shares?

~~~
loceng
I don't know

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kumarm
Could it be that he made his profit (With little upside from here) and looking
for a reason to exit?

When someone made profit of a Billion Dollars in less than 2 years, there is
more to it that what it looks outside.

~~~
loceng
Could be a publicity stunt for a 'valid reason' for the market's eyes for him
to leave "pissed off."

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SkyMarshal
_> “She quickly decided it did not make sense,” the source said. “She liked
being loved.”_

Quite the sexist smear, especially without supplying any relevant evidence. I
suspect her decision was a bit more complicated than that.

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rhizome
A hint as to who the unnamed sources in this story are:

 _As part of the deal, the three directors nominated by Third Point — Harry
Wilson, Michael J. Wolf and Loeb — agreed to step down on Wednesday._

