(By Manikandan) Well, it is official. Scott Thompson, chief executive officer of Yahoo, Inc.
) resigned after serving little more than seven months following allegations of a discrepancy in the educational records of the former Paypal executive.
Thompson, who reportedly disclosed that he had been diagnosed with thyroid cancer, would be succeeded by Ross Levinsohn on an interim basis, effective immediately. Levinsohn, an internet veteran, is also the executive vice president and head of global media of Yahoo.Yahoo lost its fourth CEO in five years and second in less than a year, also named Fred Amoroso as Chairman of the Board of Directors, replacing Roy Bostock, who has stepped down from his role as Non-Executive Chairman.
The ongoing top management changes at Yahoo are considered a victory for Daniel Loeb, whose Third Point LLC holds a 5.8 percent stake in Yahoo and has been waging a proxy battle with the Yahoo board for several months.
Yahoo entered a truce with Loeb and offered board seats to Loeb and his nominees Harry Wilson and Michael Wolf. All the three will join the Yahoo board, effective May 16, 2012. On the other hand, Bostock, along with Patti Hart, VJ Joshi, Arthur Kern and Gary Wilson, will not stand for re-election.
Earlier this month, Third Point had raised the issue over Thompson's education qualifications through a regulatory filing. Third Point found that Thompson received a degree in accounting, but not computer science as shown in Yahoo's filings.
"If Mr. Thompson embellished his academic credentials we think that it 1) undermines his credibility as a technology expert and 2) reflects poorly on the character of the CEO who has been tasked with leading Yahoo! at this critical juncture. Now more than ever Yahoo! investors need a trustworthy CEO," Loeb said in a regulatory filing.
Loeb has also alleged that Patti Hart, who was the chairman of the Search Committee and the Nominating and Corporate Governance Committee, has completed only a degree in Business Administration, where as various corporate filings shows she holds a Bachelor's degree in marketing and economics from Illinois State University.
Loeb has been pushing for a change in Yahoo's board and its leadership since September and has been extremely critical of the board's mishandling of the Microsoft share offer in 2008.Investors as well as Loeb criticized that it was a grave mistake on the part of Yahoo to decline a $33 a share takeover bid from the software giant that valued the internet company around $47.5 billion.
Currently, Yahoo shares are trading in the $15 range with a market cap of $19 billion.
Asian Assets The company is also under pressure to make a decision on its Asian assets. Now, with a new board at the helm, investors hope that Yahoo makes a decision on the asset sale of Alibaba to reinvent itself by investing in new growth areas besides unlocking shareholders value.
The e-commerce interests housed under the Alibaba Group umbrella hold a dominant position in the "B2B" industry. Alibaba Group's Taobao business is essentially Ebay and Amazon on steroids in terms of market share and revenue growth.
According to Goldman Sachs, the Chinese e-commerce market was $75 billion in 2010, with a 3 year forward compound annual growth rate of 43 percent compared to the $193 billion U.S. market with compound annual growth of 14 percent over the same period.
In September, Loeb said he estimates a pre-tax value for Alibaba Group of $25 billion. Given Alibaba Group's growth potential and market share, it is entirely conceivable that Yahoo's 40 percent fully diluted stake in Alibaba Group could double in value over the next 2-3 years, highlighting its tremendous value.
Yahoo had a tough time for the past four years following the failed Microsoft sale negotiations, a subsequent bungled and disappointing search deal with Microsoft, a series of misguided CEO selections, and the Alipay debacle.
California-based Yahoo lost its search engine and display ad market share to Google, Inc.
), whose search share has been steady at 65 percent, while Yahoo's share has been about 15 percent. Even, Facebook, which is expected to go public this Friday, is emerging as a significant threat to Yahoo's business.