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Question of the Day
Thompson’s rapid downfall leaves Yahoo in turmoil amid a reorganization that had only just begun. Last month, Thompson laid off 2,000 employees, or 14 percent of the workforce, in the biggest payroll purge in the company’s history, and had started to identify about 50 services that he wanted to close or sell.
Now it falls to Levinsohn, whom Thompson had promoted to a more prominent role last week, to get Yahoo back on track. He joined Yahoo 18 months ago when the company was still being run by Carol Bartz, who was fired in September. Before coming to Yahoo, Levinsohn had won fans running Fox Interactive, the Internet arm of Rupert Murdoch’s media empire at News Corp.
“This may seem like a great deal of news to digest, but as you are all keenly aware, Yahoo is a dynamic, global company in a dynamic, global industry, so change _ sometimes unexpected and sometimes at lightning speed _ is something we will continue to live with and something we should embrace,” Levinsohn wrote to Yahoo employees Sunday in a memo provided to The Associated Press.
“It is very different to be CEO of a growth company, making choices between opportunities, and to be CEO of a company in turnaround mode, whose parts are declining or losing share,” Kirjner said.
Thompson’s inaccurate resume might have been more forgivable at a company that was posting big returns for its shareholders, said James Post, a management professor at Boston University. But it’s likely that Third Point was looking for an excuse to get rid of Thompson, Post said.
But Yahoo’s stock has been sagging since it squandered an opportunity to sell itself to Microsoft Corp. in May 2008 for $33 per share, or $47.5 billion. Yahoo’s stock hasn’t traded above $20 since September 2008. The shares ended last week at $15.19.
“Yahoo has been embattled for such a long time that there are a lot of people prepared to believe the worst about that company,” said Post, who specializes in corporate governance and professional ethics. . “When you’re angry at the management and the board, when nothing’s going right and you’re losing money, it’s understandable that shareholders would adopt an `off with their head’ attitude.”
Brian Wieser, a senior analyst at Pivotal Research, said he believes Thompson’s ouster will be a positive move, removing an overhanging distraction and adding board members with new perspectives. Wieser said employees he’d talked to believed Thompson was showing a lack of appreciation for some of Yahoo’s business units, and that morale had degenerated even more during his tenure. “It was bad,” Wieser said, “and went to worse.”
Wieser said that Third Point is “exactly the kind of investor every company should want,” since the hedge fund is apparently trying to heal Yahoo, not break it up. “There are no barbarians at the gate here,” Wieser said. “They’re actually trying to help.”
Liedtke reported from San Francisco.
By Andrew P. Napolitano
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