Third Point: Gunning for Yahoo's board of directors
While Yahoo's beleaguered CEO waits for someone to get his back, Third Point has a bigger target in its sights.
The activist shareholder gunning for Yahoo's board is about to ratchet up the pressure.
Daniel Loeb, who heads the hedge fund Third Point, seized on the revelation this week that Yahoo's CEO had lied on his resume to demand thatby noon EDT Monday.
And what happens if, at 12:01, Yahoo decides to maintain radio silence? For Third Point, it would signal the start of an escalating power struggle for control over a company in crisis.
"Isn't everyone a fan of the 1952 western 'High Noon?'" a source close to Third Point deadpanned as we tossed around possible Yahoo scenarios.
Earlier this week, Thompson, who may be the most lonesome CEO in techdom right now, was found to have falsely claimed to hold a computing science degree from Stonehill College near Boston. Thompson's fib gave new life to Loeb's campaign to convince shareholders that Yahoo's board is in immediate need of a shakeup.
Yahoo has so far rejected Loeb's proposed slate of directors to the board, a list that includes him along with former NBC Universal head Jeff Zucker; Michael Wolf, the former MTV Networks executive; and turnaround expert Harry Wilson. (You can examine Loeb's pitch on a Web site he set up, here.)
Before "resumegate" erupted, most of the attention had been on whether the board had installed a CEO who knew what he was doing. Since taking over in January, Thompson has ordered a controversial patent lawsuit against Facebook as well as a big layoff, without articulating how Yahoo plans to reverse its decline. But Thompson's dissembling provided Third Point with the opening it needed to press its argument that Yahoo's board of directors is not up to the job.
"This board needs new blood, new processes, and best practices of corporate governance," the source said.
Indeed, from Third Point's perspective, Thompson turns out to be less relevant to the Yahoo novella than the competency of the board. "The resume issue is just the latest in a long line of catastrophes that show this board is not the right one to lead Yahoo."
Third Point believes it can be patient and that it has "a range of options" at its disposal. While it waits for Yahoo's next step, Third Point can afford to be patient while keeping the focus on the board and its processes. That's essentially the same goal Third Point has pursued since sending its first letter to Yahoo in September 2011.
Meanwhile, Thompson must be wondering whether anybody has his back.
"The fact that (Thompson) slightly embellished his resume is not good. But when there's no constituency standing up for him inside or outside Yahoo, [that] isn't good at all," says another source familiar with Yahoo's thinking. "Where's the board? He's not been able to make friends with them yet."
The only word out of the board was a hardly resounding brief statement that it is "reviewing" the matter. Interesting aside: On Thursday former Yahoo board member Eric Hippeau tweeted, "The hapless company: Yahoo goes from mishap to catastrophe, all self-inflicted."