Another CEO Bites The Dust At Yahoo Amid Resumegate
Yahoo (NASDAQ:YHOO) has been in a mess since the beginning of 2012, and its quite close to coming apart at the seams. After a massive restructuring initiative involving thousands of layoffs, Yahoo finally seemed to be on the right track, focusing on its core businesses while cutting off other businesses which were diverting it from its core competence. However, just as its troops seemed to be rallying around its new leader, Scott Thompson, it seems that he may be on his way out after a major Yahoo activist shareholder discovered that the CEO misrepresented his academic credentials, stating that he had a degree in computer science when in fact, he had only an accounting degree. After a roller coaster week full of speculation, it seems that Yahoo’s CEO Scott Thompson has stepped down from his job. [1]
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Yahoo has named Ross Levinsohn as the interim CEO while it figures out what to do next, and Fred Amoroso as the Chairman of the Board of Directors. Ross Levinsohn was the Executive VP and head of global media at Yahoo, where he led strategy, engineering and content creation. He has also held senior positions at News Corp, AltaVista, CBS Sportsline and HBO Inc. For now, he seems to be as good a choice as any. Yahoo’s management also seems to have reach an agreement with Daniel Loeb of Third Point, and has conceded three board seats to it, putting an end to the proxy fight.
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Hopefully, for Yahoo, this is the end of it. Yahoo has seen a host of CEOs in the last 5 years, and this last resume scandal happened at a crucial time when Yahoo should be focusing on getting back in the online advertising game against the likes of Google and Facebook, instead of fighting internal fires. Yahoo is also supposed to be in discussions to sell part of its stake in Alibaba to raise cash to fund its other businesses, which makes this the worst possible time for it to be worrying about anything else.
While all these controversies don’t really change much about Yahoo’s long-term growth prospects, which by the way still seems a bit bleak, they have weighed significantly on Yahoo’s stock price, which stands well below its fair value in our view.
We currently have a $18 Trefis price estimate for Yahoo, which stands nearly 20% above its market price. Yahoo competes primarily with Google (NASDAQ:GOOG), Microsoft (NASDAQ:MSFT) and Facebook in the online advertising market.
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