In an era when authenticity and complete transparency rule, Yahoo (YHOO) is failing miserably, and shareholders are not happy. The company is currently engaged in a battle for eyeballs with Google (GOOG) and a tussle for corporate control with the hedge fund Third Point. The hedge fund's vocal leader, Daniel Loeb, has been on a tear lately as he asserts his company's 5.8% ownership of Yahoo to empower change within the organization.
Loeb's latest ammunition comes by way of recent findings that suggest that Yahoo's CEO, Scott Thompson, grossly misrepresented himself in company documents that detail his educational background. In response, Yahoo has admitted that it may have misstated the educational background of its new CEO. Yahoo attributed the discrepancy to an "inadvertent error." This news would barely make a ripple if Yahoo was on a tear, but that is not the case. If anything, Yahoo has been in a holding pattern trying to figure out its next move, and the stock is down a few percentage points this week while flirting with a dip below $15 per share. Certainly the company did not imagine its ideal next step as a PR rebuttal to cover its collective behinds.
In past weeks, Loeb was nothing more than a bully shooting spitballs through a straw at Yahoo, but armed with new data, Loeb's little spitballs are now grenades. Citing falsified documents in which the current Yahoo CEO claimed educational accolades that were never achieved, Loeb's voice of discontent is certainly louder than it's ever been.
Finding out that Yahoo's CEO is nothing more than a glorified accountant from a small college rather than a dual threat computer science genius is sour news to Yahoo shareholders that are trying to be optimistic about the future. Loeb's hedge fund, Third Point LLC, is circling the wagons and calling for the immediate termination of Scott Thompson. Yahoo investors that may have been sitting on the sidelines are now certainly going to look elsewhere for a more honest turnaround story.
Speaking of honesty, Third Point is also requesting the immediate termination of Yahoo director Patti Hart, as her claimed degree in marketing and economics from Illinois State University has come under scrutiny as well. While Ms. Hart's creative resume details are not as flagrant as Mr. Thompson's, they are nonetheless falsified a bit, as Ms. Hart actually holds a business administration degree with specialties in marketing and economics.
Let's clear up a couple issues real quick. I personally graduated from The Ohio State University (a decade or so ago) with a Bachelors in English Literature and an MBA from the Fisher College of Business. I too, claim specialties in marketing and public relations, and to do this, I only had to take one official class in each subject. One class and it was deemed appropriate to list these intricate subjects as specialties. Maybe this is more of a rant on a clarification of the world "specialty," but we have much bigger problems to discuss in this forum.
For starters, many tech investors have gotten used to seeing power players on corporate boards - power players from pedigreed institutions from the likes of Harvard, Stanford, MIT and others. Beyond the bogus educational accolades by these Yahoo leaders - shouldn't we also question the fact that these falsified documents come from universities that don't even make the conversation regarding our country's top schools for the majors in question?
Back to the battle in question, Yahoo is desperately searching for a turnaround and Thompson, who was just recently appointed CEO in January, is supposed to lead this charge. Third Point has been trying desperately to shake up Yahoo's board and ultimately appoint its nominees to right this ship.
Yahoo's stock is off 14% over the past year, and while the competition marches ahead, claiming leadership in online advertising, local listings and social media, Yahoo has clung to its core content offerings. While Yahoo continues to cede ground to Google in the online advertising space, the company is also losing its local listing dominance as Yelp (YELP) continues to ramp up. Let's not forget that AOL (AOL) is still out there planting flags across various media, although their relevancy is weak at best.
Before Yahoo investors rip all their hair out, I do have some positive news that is actually quite a pleasant surprise. Much like the world champion boxer that bites his opponent's ear only to draw attention away from other matters - Yahoo might have a pretty clever trick up its sleeve. Just recently the company announced the launch of Yahoo Marketing Dashboard. While the launch has been extremely quiet, the gist is that this free tool helps small business owners monitor their online marketing results, online reputations and performance all in a simple user interface in one place.
I have just started playing with the new dashboard this week, and so far, I have been very impressed. While Google touts its new cloud storage and integration with other, somewhat dated Google business tools - it makes perfect sense that Yahoo could do a stealthy little end around to release an absolute breakthrough focused on the small business resource market. If it can make this move while the world is focused on the CEO scandal - oh what a great story that would make next month.
Before you scoff at the merit of a little dashboard like this, you should know that the tool itself has the ability to replace what once took at least 10 other sites and thousands of dollars to accomplish. From directory listings to tracking all the social media sites to key website analytics, this new dashboard can do it all. It even pulls in information from Google Analytics, if that is more your speed. Add in a little 24/7 in-house, free customer support for all these small business owners looking for the next big thing and we might just have something. If nothing else, Yahoo has my attention, and it's not focused on who the next CEO might be.
