Billionaire makes $520m profit from sale of Yahoo! shares
Published 23/07/2013 | 09:39
Technology giant Yahoo! suffered a blow to its turnaround hopes after billionaire hedge fund manager Daniel Loeb sold out most of his stake in the company for $520m (€394m) just over a year after engineering a boardroom coup.
Yahoo! said it was buying back a 3.7pc stake from Mr Loeb’s fund Third Point, reducing its stake to below 2pc. The news rattled investor confidence and prompted a sell-off which pushed the shares down nearly 5pc in morning trading in New York.
Mr Loeb has also resigned from the company’s board in a move which signals his doubt that the company can ever return to full health. The activist investor, who is also targeting boardroom change at Sony, only took his seat a year ago after being instrumental in a wholesale clear-out of its top team and Marissa Mayer’s appointment as chief executive. Michael Wolf and Harry Wilson, who are associated with Third Point, also resigned from the board yesterday.
Mr Loeb has racked up an estimated $520m profit in the past 12 months, thanks to the steady rise in Yahoo!’s share price during the time he and Ms Mayer have had their hands on the tiller.
Third Point began building a stake in Yahoo! in 2011, amassing around 5pc at between $13 and $15 a share. He then used that muscle to lobby for a change of leadership at the company, which was once the darling of the stock market but had fallen behind newer technology companies such as Google and Facebook.
The result was a revolving door at the helm of Yahoo!, with four chief executives in as many years and a soap opera of public embarrassments as the company scrambled to restore its credibility. Carol Bartz was fired from the post in September 2011. Instead of going quietly, she memorably told staff she had been “f----- over” by a board of “doofuses” running scared from Wall Street”.
Mr Loeb then wrote to the board, asking them to follow her out of the door on account of their “woeful” performance. They did so, on a piecemeal basis, but not before they tried to placate him by installing PayPal chief executive Scott Thompson as Ms Bartz’s replacement.
Mr Loeb was unsatisfied with the choice, and exposed Mr Thompson for making false claims on his CV about having a computer science degree. Mr Thompson claimed the error was an innocent mistake but stepped down shortly afterwards, citing health reasons.
Third Point’s chief joined the Yahoo! board in July 2012, as the company lured Marissa Mayer from rival Google. Since then, Yahoo!’s share price has climbed more than 70pc, buoyed by renewed confidence among staff and the hope that Ms Mayer can go some way to refashioning Yahoo! in the image of her former employer, which was Yahoo!’s chief competitor.
She has also driven down costs, and embarked on a buying spree including the $1.1bn acquisition of blogging website Tumblr in May. However, if investors were wary that there is no silver bullet to help restore Yahoo! to the standing it enjoyed a decade ago, Mr Loeb’s departure will underscore those fears.