Yahoo board strife as Dan Loeb splits from board(nypost.com)
nypost.com
Yahoo board strife as Dan Loeb splits from board
http://www.nypost.com/p/news/business/monster_mayer_VrobE7ww2asDBvpN9Uw6pJ
10 comments
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.
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.
Loeb made more than a billion dollar (over 100% return) in 2 years.
http://www.forbes.com/sites/nathanvardi/2013/07/22/billionai...
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://www.forbes.com/sites/nathanvardi/2013/07/22/billionai...
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...
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
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
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.
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.
The sad thing is that this particular one seems to be almost good, though IMO the long term solution is fixing executive recruiting.
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.
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.
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.
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.
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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> Firing 12,000 people would have been devastating for morale of the company
Yes, especially since that would mean firing every employee of the company:)
I can see that being a bad day for moral....
All joking aside, I think your point is pretty solid. Getting rid of a 1/3 of the work force was not going to send a positive message to the rest of the employee's.
Yes, especially since that would mean firing every employee of the company:)
I can see that being a bad day for moral....
All joking aside, I think your point is pretty solid. Getting rid of a 1/3 of the work force was not going to send a positive message to the rest of the employee's.
Honestly the Meyer hire alone sent the stock price up before she did a single thing as CEO, so this move can also easily be seen as what could have easily been a short term stock price inflation move.
"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.
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.
“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.
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.
[deleted]
The unauthorized biography
http://www.businessinsider.com/marissa-mayer-biography-2013-...
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.
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.
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-...
"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.
The Board approved that decision, so I'm confused why there's buyer's remorse.
Additionally, the article cites Yahoo!'s threatened display-ad model. Aside from the intangibles of grabbing all of the users of a property that is not only large, but young, vital, and growing, -Tumblr creates content. Yahoo! Places ads on content. Tumbler made sense on a few different levels at least.
If it wasn't a unanimous board approval, it's no surprise the losers of the vote would be kvetching to the press about it.
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.
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.
When someone made profit of a Billion Dollars in less than 2 years, there is more to it that what it looks outside.
Could be a publicity stunt for a 'valid reason' for the market's eyes for him to leave "pissed off."
>“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.
Quite the sexist smear, especially without supplying any relevant evidence. I suspect her decision was a bit more complicated than that.
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.
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.
http://www.thedecisiongroup.nl/wp-content/uploads/2013/03/Ca...
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.