Yahoo is a Disaster
Here’s a prime example of a company that can’t do anything right. There’s an asset that has millions of visitors every day, Yahoo is my homepage, yet they can’t figure out how to monetize it. This has to be one of the most inept boards out there right now. You have an activist investor in Dan Loeb that is trying to affect change at Yahoo yet the board spends their time attacking him. This is the same board that is on their third CEO in just a short time. They fired their last CEO Carol Bartz via a phone call because it was going to leak and they wanted her to find out from them. The next CEO turns out to be embellishing his resume with a degree in Computer Science that he didn’t get. In such a high profile position it is amazing that he hasn’t been fired yet. This kind of public embarrassment will make his credibility with Wall Street nil. My favorite item about this is the board member who led the search for the new CEO got paid $15k to do so. Dan Loeb wants her to return the money and says if they replace board members with his slate one of his members will do this for free. In reality there are a few basic responsibilities of the board and one of them is determining who will steer the ship. I would presume that means one of their basic duties is to hire a CEO when needed. I find it odd that a board member being paid handsomely to be on said board with plenty of cash and stock options, would require an additional $15k to do something she should be doing anyway.
Investing Lesson
What I’ve taken from all this nonsense lately is that unless you have a really transformative CEO such as Steve Jobs, don’t be relying on management quality in your investment thesis. With what we’ve seen recently with companies such as Chesapeake, Yahoo, Avon, and many others is that Peter Lynch was right.
There is no shortage of village idiots running companies today.