* CEO Scott Thompson steps down after four months
* Yahoo media chief Ross Levinsohn to be interim CEO
* Loeb's Third Point gets three board seats
* Thompson has been diagnosed with thyroid cancer -WSJ
By Alexei Oreskovic
SAN FRANCISCO, May 14 Yahoo Inc is
replacing its CEO for the third time in as many years, and
giving three board seats to a hedge fund led by Daniel Loeb,
putting him in a strong position to influence strategy at the
struggling Internet company.
Chief Executive Scott Thompson stepped down on Sunday, 10
days after Loeb accused him of padding his biography by faking a
computer science degree. Loeb's Third Point LLC is one of
Yahoo's largest shareholders with a 5.8 percent stake.
Yahoo did not give a reason for Thompson's exit but said the
company's global media head, Ross Levinsohn, will be interim
CEO. It also said it had settled a proxy battle with Third Point
and will nominate three of the fund's slate of four candidates
to the board, including Loeb.
Separately, the Wall Street Journal reported on Monday that
before resigning as chief executive of Yahoo over the weekend,
Thompson disclosed to the company's board of directors and
several colleagues that he has been diagnosed with thyroid
cancer. The paper had sourced the report to people familiar with
The decision to step down from Yahoo was in part influenced
by Thompson's cancer diagnosis, a person told the Journal.
The diagnosis had occurred in recent days while the board
was investigating why the executive's academic record had
erroneously included a computer science degree, according to the
Thompson's departure after just four months on the job
throws into question the future of Yahoo as it struggles to
revive growth amid fierce competition from the likes of Google
Inc and Facebook Inc, and produce a long-term strategy
to convince investors to reverse its share slide.
Yahoo recently resumed negotiations to sell all or part of
its more than 40 percent stake in Chinese Internet and
e-commerce company Alibaba back to the Chinese company, after
torpedoing a previous plan to do a complex tax-free transaction.
"This is a big victory for Third Point. It strengthens their
argument that this board was dysfunctional, and it's going to
increase Third Point's ability to shape the direction of the
company," BGC analyst Colin Gillis said.
For months, the New York-based hedge fund has been demanding
that Yahoo revamp its board, which Loeb has blamed for a lagging
share price, loss of market share, and a failed sale to
Microsoft Corp in 2008. Loeb has also been credited for
sparking the resignation of co-founder Jerry Yang and former
Chairman Roy Bostock this year.
Third Point had said Levinsohn or Chief Financial Officer
Tim Morse should take the helm in the interim. Loeb could not be
reached on Sunday to comment on what he thinks Yahoo's future
strategic direction should take.
Loeb, and his other nominees Michael Wolf and Harry Wilson
will replace other board members.
"We are confident this Board will benefit from shareholder
representation, and we are committed to working with new
leadership to unlock Yahoo's significant potential and value,"
Loeb was quoted as saying in a statement from Yahoo.
Yahoo also named Fred Amoroso, an IBM veteran who joined the
board in February, as chairman. He is one of a slate of 11
directors that Yahoo said it would nominate for the 2012 annual
shareholders meeting, including Loeb's three.
Yahoo was a dominant player in the early days of the
Internet but has struggled for years to maintain its relevance
as social media, mobile computing and highly personalized
advertising have redefined the industry landscape.
While brands such as Yahoo News, Yahoo Sports and Yahoo
Finance remain among the most popular destinations on the Web, a
relentless industry-wide decline in display advertising prices
has made it difficult to make money on those assets and raised
questions about the long-term viability of an ad-based strategy.
Levinsohn, who made his name running News Corp's
Fox digital business, is often mentioned as a CEO contender but
the company went first with Carol Bartz in January 2009, fired
her in September last year, and then named Thompson, the former
president of eBay Inc division PayPal, in January.
"The disfunctionality of this company is relatively
unparalleled. Nothing they do seems to work," said Lawrence
Haverty, a fund manager with GAMCO Investors, which owns Yahoo
shares. "Right now I think a sale of the company is the best
option. We believe the assets are worth somewhere north of $20 a
share on a break up basis."
Yahoo shares closed at $15.19 on Nasdaq on Friday.
A media veteran, Levinsohn is popular among Yahoo's
rank-and-file and has credentials as a negotiator. He had helped
steer News Corp's acquisition of MySpace, and had started an
investment fund to buy interests in various digital and media
companies across the globe before joining Yahoo.
"He is well-respected in the Valley, Hollywood and on
Madison Avenue," said Jason Hirschhorn, a former MTV digital
executive. "Yahoo has to lean into media and he has the plan."
Levinsohn, who previously headed up Yahoo's Americas
business, holds a Bachelor of Arts in Communications from The
American University according to Yahoo's website.
"Importantly, today's announcements lay to rest the
unfortunate and serious distractions surrounding our senior
leadership and the composition of our Board going forward,"
Levinsohn wrote in a staff memo on Sunday. He added, "I believe
in the tremendous strength and value of our brand, and in our
relationship with our users and partners."
A HASTY EXIT
Yahoo acknowledged last week that Thompson does not have a
computer science degree despite what was stated in his official
company biography and in regulatory filings with the U.S.
Securities and Exchange Commission.
Emails sent to Thompson's official Yahoo email address were
already bouncing back on Sunday morning. He had only just began
to push through a new strategy that included layoffs of 2000
Thompson had indicated his intention to move the company
away from its dependence on display advertising and focus more
on data and personalization, but it is not clear if Levinsohn,
whose background is in advertising, would keep the plan intact.
"This company was struggling to find its path before any of
this happened, and the situation will make them lost in the
woods for that much longer," Macquarie Securities analyst Ben
Schacter said. "It is not an overstatement to say that Yahoo has
profound structural problems."
"The key question for shareholders remains how will they
monetize the Asia assets. The board and shareholders, not an
interim CEO, will need to figure it out," Schacter said.
Thompson's departure was reported earlier by the technology