EU Takes A Swipe At Google - But Why?

The EU Commission has a bit of a gripe with Google over its size and reach, and is currently in the throes of taking it to court on anti-trust grounds. But why? Other internet provision services exist, right?

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Yahoo and Alibaba's Share Deal: Is Stock Trading Part Of The New Business Plan?

The last time I wrote about Yahoo, they'd just got rid of scandalous CEO Scott Thompson and replaced him with an interim pending the board elections later this year. They'd also kissed and made up with Third Point's Daniel Loeb, who is now a director. Now they seem to be moving from patent trolling into stock dealing, having finalised a deal with Chinese ecommerce website Alibaba. How does this fit into Loeb's vision for the company?

Loeb's website detailing his plans for Yahoo has since been redirected to Yahoo's Finance section, so I had to go elsewhere to get the data I needed. Here, in a nutshell, was Loeb's assessment before he got onto the board:

The after-tax value of Yahoo’s Asian assets — Alibaba and Yahoo! Japan — currently constitutes $11 per share of its value (73%), with an additional $2 per share of net cash.

Central to our investment thesis is the hidden jewel in the Asian asset portfolio, and indeed in Yahoo itself: Yahoo’s 40% stake in Alibaba Group, the dominant e-commerce platform in China... with 49% market share... the #2 share of the Chinese online ad market (17%, behind Baidu at 28%). Particularly exciting is Alibaba’s share of China’s rapidly growing B2C market represented by Taobao Mall, or Tmall (recently renamed Tian Mao).

He believed it was a great little earner that needed to be developed as part of an overall strategy to build up Yahoo's portfolio of companies and therefore its value.

However, in a new development, Yahoo has made a rather convoluted buy and resell deal with the ecommerce giant to make a killing when it goes public later on this year.

The deal

1. Alibaba will buy up to one-half of Yahoo!'s stake in the company, or approximately 20% of Alibaba's fully-diluted shares.

2. Yahoo then buys the shares back after the IPO, making a profit on the difference between the pre-IPO and post-IPO share value.

3. This difference, about $2.1 billion, goes to the shareholders. Yahoo stands to make upwards of $4 billion overall, due to tax considerations.

At the minimum price and assuming the initial repurchase of the full 20% stake, Yahoo! would receive from Alibaba consideration of approximately US$7.1 billion, composed of at least US$6.3 billion in cash proceeds and up to US$800 million in newly-issued Alibaba preferred stock. - valuewalk.com

Shareholders shouldn't get too excited. The return of cash touted on Yahoo's press release does not mean they're getting a windfall: they'll be receiving some of their shares back from the sale as cash. This is known as a return of capital.

The deal also means that the actual owners of Alibaba are more clearly defined.

Lastly, the Alibaba voting rights for both Yahoo and SoftBank are much diminished in the new deal, according to sources, to under 50 percent.

Translation: Alibaba CEO Jack Ma is now in the driver’s seat completely. - All Things D

Yahoo and Alibaba had been quibbling over this for some time so finally it can focus on its core business of advertizing and content. Whether or not stock trading and patent trolling will continue to be part of the mix remains to be seen.

Confirmed: Yahoo's CEO Scott Thompson Has Resigned

Tech blog All Things D reports that embattled CEO Scott Thompson is to follow board member Patti Hart out of the revolving door at Yahoo. Update: Yahoo has officially confirmed this.

The difference between their exits is that Hart will not be seeking reelection to the board while Thompson has resigned. This comes in the wake of damning revelations by the ferocious Daniel Loeb of Third Point, who has been pushing for Yahoo to take members of his proposed slate onto the board. Executive Vice President and Head of Global Media  Ross Levinsohn is the interim CEO pending elections later on this year. Yahoo has also announced the cessation of hostilities with Third Point.

[Roy] Bostock, along with Patti Hart, VJ Joshi, Arthur Kern and Gary Wilson, all of whom previously disclosed their intentions not to stand for re-election, as well as Mr. Thompson, have decided to step down from the Board immediately. - Yahoo Press Release

Loeb's stunning success

Daniel Loeb's persistence appears to be paying off. He's been pushing for the role of CEO for himself and now he's on the board with two members of his proposed slate.

As a part of the settlement agreement, Third Point, which owns an aggregate of 70,545,400 shares, or 5.8% of Yahoo! common stock, has agreed to withdraw its previous Board nominations for consideration at the annual meeting and vote its shares in support of Yahoo!'s nominees. Yahoo!'s slate of director nominees for election or re-election at the 2012 annual meeting of stockholders will now include Fred Amoroso, John Hayes, Peter Liguori, Thomas McInerney, Maynard Webb, Sue James, David Kenny, Brad Smith, Daniel S. Loeb, Harry J. Wilson and Michael J. Wolf.

Loeb Nominee Jeff Zucker has stepped aside. In a statement on the Yahoo press release he said, "I have been supportive of Third Point's efforts since Daniel asked me to join the slate... When I became aware of Yahoo!'s offer of three board seats to Third Point, I approached Daniel and let him know that I would be happy to step aside to quickly facilitate a settlement." - Yahoo Press Release

Meanwhile, patent warfare enthusiast and recently added director Fred Amoroso has been named Chairman of the Board.

This is catastrophic for Scott Thompson, who tried to push the blame for his "inadvertent error" onto the head-hunters Heidrick & Struggles, which has denied a claim by Yahoo CEO Scott Thompson that the executive-search firm is at fault for a bio with incorrect information about Thompson's alleged college degree. It seems that the error was made by none other than Thompson himself.

Kara Swisher's sources

Towards the end of her article, Kara Swisher revealed:

Internal message boards at Yahoo lit up all last week, with staffers largely rejecting his explanations. In addition, a number of top execs and engineers approached the board calling for Thompson’s firing.

While that’s not precisely what happened here, it’s close enough to describe Thompson’s departure as inevitable. Sources said, though, that he will say the leaving is due to an illness Thompson recently discovered he had.

Kara Swisher was right on the money and broke the news before Yahoo posted the press release.

Fibs And Foibles: Yahoo's CEO Woes

We've all done it; stretched the truth a bit on our CVs to impress a prospective employer. The trick is to not be too obvious about it or you could be found out. If you're in a high-profile job and your fib was particularly egregious, you're stuffed, as Yahoo CEO Scott Thompson discovered. Pressure is mounting on the internet giant to oust him, but will it be enough to remove him, and what will happen after that?

What happened?

You have to see this in context:

Daniel S. Loeb, the founder of the hedge fund Third Point, wants to take over as CEO of Yahoo, and has made available online his plan for the company. On Thursday May 3rd, he sent a letter to the board in which he asserted that Yahoo’s chief executive, Scott Thompson, had added a degree in computer science to his résumé that he couldn't possibly have earned because

Stonehill College... did not begin awarding computer science degrees until 1983 — four years after Mr. Thompson graduated.  We inquired whether Mr. Thompson had taken a large number of computer science courses, perhaps allowing him to justify to himself that he had "earned" such a degree.  Instead, we learned that during Mr. Thompson's tenure at Stonehill only one such course was even offered – Intro to Computer Science. 

Oh, dear. And there's more: he's also accused another board member, Patti S. Hart, of having “received a degree in neither marketing nor economics," but offered no proof to back up that statement as with Mr. Thompson.

What will happen next?

At his first earnings call last month, Scott Thompson talked about reducing Yahoo's size and becoming more focused on its core business. He remarked that Yahoo! would be "doing away with everything that does not contribute to its core business of profit-driving ads and e-commerce."

Thompson also wants to find new revenue by aggressively licensing Yahoo's intellectual property, a plan he put into place in March by suing Facebook for alleged patent violations. Patents aren't mentioned at all on Loeb's website. - ReadWriteWeb

Patent-trolling Facebook appears to be an attempt at opening another income stream but it appears to be failing so far because Facebook has a stronger case.

Meanwhile, Mr. Loeb's plan is to

        Focus Yahoo!’s investments in the highest priority areas and simplify the organization: Determine which platform investments are strategic and essential to Yahoo!’s future, then reposition investment around growth initiatives and product innovation.

    Re-commit to a Yahoo! open to innovation, both internally and externally: Yahoo!’s resources, reach and insight into user interests should be aggressively leveraged by internal and external developers who are passionate about delivering rewarding user experiences.

    Attract the best media, advertising and technology talent who can create innovative experiences and implement these initiatives. This will involve a deep commitment to fundamental change in the way Yahoo! is managed and its historical approach to innovation.  

So it seems he's not a carpetbagger out to strip its assets and sell them off to the highest bidder. He's also interested in Alibaba, a Chinese ecommerce company owned by Yahoo that connects Chinese manufacturers to companies around the world looking for suppliers.

Mr. Thompson has apologised, saying

We have all been working very hard to move the company forward, and this has had the opposite effect.  For that, I take full responsibility, and I want to apologize to you. - Wall Street Journal

It remains to be seen whether or not Yahoo will replace their CEO, but since Mr. Thompson has neither confirmed nor denied adding the fake degree to his CV, it seems likely that they will. The question now is, who will they replace him with and will the patent trolling continue?

Sharks Surround The Sinking Yahoo Ship

The recent sacking of former president and CEO of Yahoo Carol Bartz has revealed deep weaknesses in the internet giant.