In 2008, Microsoft offered to buy Yahoo. This is what so-called, “activist shareholder,” Carl Ichan wanted all along, not to rescue the company or turn the company around, but to make a quick profit by selling it. Of course, those members of Yahoo’s board who had own shares much longer than Mr. Icahn, and those who truly cared about the company wanted no part of what they saw as a low bid from a bigger company just because Yahoo was down on its luck. When Mr. Ichan didn’t get his way, he sold his shares and moved on, no longer caring about the company.
This is hardly what I would call an activist. Typically, an activist works for the greater good, and typically for the long-term greater good. Mr. Ichan, in this case at least, was nothing more than a big shareholder not an activist one. All he wanted was to be able to flip his relatively short-term investment in Yahoo into a profit. Calling him an activist is like calling someone trying to flip a house a neighborhood activist for wanting higher prices. It just doesn’t add up.
Previously, one could only assume Mr. Ichan was right. Yahoo seemed to be circling the drain and went through dozens of bumbling CEOs. Only the pathetic board at HP could lay claim to a worse success rate.
Ironically, a new “activist shareholder,” Daniel Loeb may ultimately get the credit for saving Yahoo and providing Ichan wrong. When Yahoo went looking for a new CEO, again, Loeb advocated for an unusual, but potentially brilliant move. Loeb sought not a CEO with Wall Street credentials, nor someone who had a previous turnaround under their belt, but rather for a rock star CEO. However, this rock star CEO wasn’t a Wall Street rock star, or big business rock star, but rather a technology rock star.
Marissa Meyer was well known in technology and internet circles as one of the first Google employees, and an instrumental part of its success. Her hiring as Yahoo CEO was considered something of a coup for the company and the share price has gone nowhere but up ever since.
Yes, Yahoo’s turnaround has been slow, and yes there are still many hurdles to overcome. But, so far, Meyer has certainly had the most success of any Yahoo CEO since the days of the internet bubble.
Which brings us to the final irony. After the Microsoft takeover of Yahoo failed, the company grasped for a way to appease those shareholders who agitated so loudly for a buyout. It settled on a partnership with Microsoft. Since the day it was signed, Yahoo has indicated that it made more money on its own than with the partnership it was pressured into by those shareholders. That deal still drags on Yahoo today.
But, those shareholders?
They’re long gone.
Maybe the long-term holders of shares of stock should be given more voice than those who scoop up large volumes of shares hoping for a quick profit, regardless of its impact on the company or its loyal shareholders. But, that isn’t really how Wall Street works. Either way, investors and the media would be wise to remember that just because someone has a bunch of shares they want to earn a profit on, doesn’t make them right.
We’ll see if Meyer is able to make Yahoo into an internet powerhouse again, or even just a consistently profitable money maker. Either one looks to be a better long-term move for the company and its shareholders than having been unceremoniously folded into Microsoft five years ago.