Yahoo! Inc. shares jumped after Third Point LLC bought a 5.2 percent stake and urged the board to resign, saying directors erred in spurning takeover bids and hired a chief executive officer who wasn’t up to the job.
“Yahoo’s current board of directors has made a number of decisions that have directly harmed the company and resulted in a stock price far below the company’s intrinsic value,” Third Point, a New York investment firm, said today in a filing.
Yahoo Chairman Roy Bostock fired CEO Carol Bartz by telephone on Sept. 6, a decision that left investors and analysts questioning the company’s future strategy. Bartz was hired to help Yahoo reinvigorate the Web portal’s sales growth and stock price, following a decision in 2008 to reject a $47.5 billion offer from Microsoft Corp. (MSFT)
“Investors don’t trust in the board to make the right moves,” said Colin Gillis, an analyst at BGC Partners in New York. He has a “hold” rating on Yahoo and doesn’t own the stock. “Concern over the board’s dismal performance is an overhang on the name.”
The board “made a serious misjudgment in approving the hiring of Carol Bartz,” Third Point said in the filing. The company also committed a “gross error” by turning down the Microsoft takeover offer, the firm said.
Elissa Doyle, a spokeswoman for Third Point, declined to elaborate on the statement. Charles Sipkins, a spokesman for Sunnyvale, California-based Yahoo, also declined to comment.
Bartz, who took over as CEO in January 2009, failed to keep Google Inc. (GOOG) and Facebook Inc. from siphoning off Internet users and advertising revenue. Bartz, 63, also rankled investors with her handling of assets in Asia, including a stake in Alibaba Group Holding Ltd. and Yahoo Japan Corp. She feuded publicly with Alibaba Group CEO Jack Ma, who spooked Yahoo investors when he spun off one of his company’s most valuable assets, the payment tool Alipay, without compensating Yahoo shareholders.
During Bartz’s tenure, Yahoo’s stock gained 6.7 percent, compared with a 34 percent increase for the Standard & Poor’s 500 Index. Since Bartz was fired, the shares have climbed almost 12 percent. Today, Yahoo’s stock rose 83 cents to $14.44 on the Nasdaq Stock Market.
In an interview with Fortune published today, Bartz said Yahoo’s board “f---ed me over” and that its directors were “spooked by being cast as the worst board in the country” after they were criticized for turning down a deal to sell the company to Microsoft. “Now they’re trying to show that they’re not the doofuses that they are,” she said.
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