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NEW YORK (Reuters Breakingviews) - Yahoo (YHOO.O) needs more than a revolution at the top. The dysfunctional internet firm is much like a failing country. It has been mismanaged and suffers from bureaucracy and an increasingly uncompetitive business model. It even had, until recently, a dictator for life in founder Jerry Yang. Third Point's successful shareholder revolt promises a fresh start, but fixing Yahoo won't be simple. The firm is plagued by many ills.
To be sure, the $18.5 billion group can now try to move on after the departure of chief executive Scott Thompson, who admitted to embellishing his resume with a non-existent computer science degree and is also reported to be suffering from cancer. Moreover, there's finally promise that Yahoo may address a core problem: its complacent board. It is replacing its chairman, too, and three directors including Third Point chief Dan Loeb will join the board.
Interim CEO Ross Levinsohn can likely reverse many of the changes sought under the short reign of his predecessor Thompson. A radical about-face would see the former head of News Corporation's Fox digital arm focus on Yahoo's media business instead of pushing into transactions and ambiguous fee-generating services.
But reinvigorating Yahoo won't be easy. The firm has had five CEOs over the past five years, and largely missed the social and mobile revolutions overwhelming the Internet. Many of its best employees have emigrated to greener pastures elsewhere. This changing of the guard gives Yahoo a fresh start, but it will be a long, hard march back to relevance.
- On May 11, Yahoo appointed Ross Levinsohn as interim chief executive officer and Fred Amoroso as chairman. It also announced it had reached an agreement with the hedge fund Third Point to settle a proxy contest. Three Third Point nominees - Daniel S. Loeb, Harry J. Wilson, and Michael J. Wolf - will join the Yahoo board effective May 16.
- Scott Thompson, who had been chief executive, had been called out by Third Point for a resume inaccuracy. He claimed to have graduated with degrees in computer science and accounting. The company admitted that he had not studied computer science.
- Roy Bostock, who had been serving as chairman, will step down immediately from the board, along with Thompson, Patti Hart, VJ Joshi, Arthur Kern and Gary Wilson, all of whom previously disclosed their intentions not to stand for re-election.
- Yahoo statement: link.reuters.com/hus28s
(The author is a Reuters Breakingviews columnist. The opinions expressed are his own)
(Editing by Rob Cox and David Evans)