Yahoo’s chairman and three of its board members will step down at the company’s next shareholder meeting as part of an extensive overhaul process Yahoo has been undertaking to please investors.
Yahoo has faced criticism from shareholders for some time. Years ago, its management refused a buyout offer from Microsoft that would have netted US$44.6 billion. More recently, growth has slowed and failed to keep apace with competitors such as Google and Facebook. Investors have also been frustrated with the company’s inability to close deals on Asian assets.
The board shakeup is part of a process the Yahoo began about six months ago to breathe new life into the company, according to ousted chairman Roy Bostock. Since then, the company’s appointed a new CEO to replace former chief Carol Bartz, shown the door to cofounder Jerry Yang, and undertaken a “structural review” of the business to determine whether the current board could continue to lead. Now, Bostock and three other board members — Vyomesh Joshi, Arthur Kern and Gary Wilson — will be replaced.
Replacement board members will include Alfred Amoroso, former CEO of Rovi; and Maynard Webb, Jr., former COO of eBay. A search is underway for more members. A new chairman will be named at a later date.
There’s no date set for the next shareholder meeting, when the members will officially step down. Yahoo did not respond to our requests for comment.
Out With the Old
Yahoo’s shakeup was met with mostly positive responses from investors. Shares opened with a small boost on Wednesday.
“This is a very welcome change,” Trip Chowdhry, senior analyst for Global Equities Research, told the E-Commerce Times. “They have got rid of the last people who were stuck in there from before, and the incompetent people have been asked to leave. It’s going to be interesting to see what they’re going to do. They’re probably going to continue to sustain their existing business, but with a new CEO, they might also be looking to do something very different with a new investment.”
The reinvigoration process, while applauded, doesn’t mean the company has a smooth road ahead, however.
“The entrenched board is gone, the investors made sure of that, because this board has been awful,” Brett Harriss, vice president of Gabelli & Company, told the E-Commerce Times. “They said no to the Microsoft bid, they couldn’t pick the right CEO, and they haven’t been able to grow, so this is good news for investors. They’re eager to get some fresh faces in there, and now they need to monetize the Asian assets, try to stop some of the decline in their core business in the U.S. and then turn to growth.”
Much of the transition on which investors want to focus involves capitalizing on some of the Asian assets that Yahoo holds, including Chinese e-commerce firm Alibaba and Yahoo Japan.
“The Asian assets are important,” said Harriss. “The market cap of the company is about $19 billion, and the Asian assets are probably worth $20 billion, so you’re essentially buying the assets and getting the cash, then getting the U.S. business for free.”
Those deals have been taking longer than expected, and Yahoo’s indicated that the offers weren’t something Yahoo shareholders would likely expect.
“Investors are wrong to focus entirely on China,” said Chowdhry. “It’s wishful thinking to think that’s all the answer. If they get something, they’re lucky, but investors should be focusing on something that Yahoo can control, and the industry is so fast-paced that they need to hone in their focus and execute a plan going forward that doesn’t necessarily include Chinese assets.”
Part of that plan, according to Chowdry, should include retreating in certain fields where companies like Facebook and Google clearly dominate and focusing instead on leading in the next phase of the Internet.
“Yahoo was the leader in the first phase of the Internet, which was websites,” Chowdry explained. “For the second phase, search, Google was the leader. In the third phase, social and new media, both Google and Facebook are leaders, and there is no way Yahoo is going to be able to compete. With the changes here and the new CEO, and getting rid of a cofounder and the board, they can have some fresh air and lead the fourth phase of the Internet, which will be mobile payment. It’s a trillion-dollar market, and only 4 percent of it has been touched. They’re in a place to do it.”