Proxy battle turns up the heat on Yahoo board

Asian asset sales falter and activist investors declare war.

By Minyanville Feb 15, 2012 5:07PM
By Vincent Trivett

The board of former Internet giant Yahoo (YHOO) is under attack from angry activist investors amid a breakdown of talks on selling off the firm’s profitable Asian assets.

Yesterday, Daniel Loeb of Third Point Capital LLC, a hedge fund with $8.7 billion under management, nominated himself and three others for Yahoo’s board in a proxy filing submitted to the Securities and Exchange Commission.

Just one week earlier, four directors, including Chairman Roy Bostock, whom investors blame for the breakdown of talks with Microsoft (MSFT), said that they would not stand for re-election. This isn’t enough for Loeb.

"Installing the hand-picked choices of the current board does nothing to allay investor fears that Yahoo is poised to repeat the errors of its past,"  Third Point wrote.
  
Third Point clearly aims to bring Yahoo back to the content business.

"Recent press reports indicate that the board’s current strategic direction is to emphasize the technology aspects of the issuer’s business at the expense of advertising and media, which accounts for the vast majority of the issuer’s revenues," the filing says.

Third Point minces no words when it says that taking the emphasis off of media puts Yahoo's "core revenue generating capability at substantial risk, fails to recognize the tremendous growth opportunity in video, and directly results from a dearth of essential expertise in media and entertainment at the board level."

Aside from Loeb, two other nominees for the board of directors listed in the proxy are media figures. Jeffrey Zucker, former CEO of NBC Universal, and Michael J. Wolf, former COO of MTV Networks (VIA) are also nominated. 

Yahoo has been declining for years, thanks to competition from the likes of Google (GOOG). In 2008, Yahoo spurned a $44.6 billion takeover bid from Microsoft. Today, the company is valued at less than $19 billion. The current CEO, Scott Thompson, is ruffling many a feather.  

In a desperate bid to satisfy angry investors, Yahoo sought to sell its share in Chinese e-commerce juggernaut Alibaba and Japan’s Softbank, a mobile phone provider. Yahoo was looking to get $17 billion in cash out of the deals, but disagreements over valuation led to an impasse yesterday. 
 
Dealbreaker notes that Loeb has chosen Valentine’s Day to launch three previous proxy wars. Loeb seems to have been planning this, having purchased more than 12 million shares of Yahoo in the past few weeks, according to the filing.

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