Yahoo’s newest road map could be drawn in disappearing ink

One of my best friends in high school, one of the smartest people I knew, was so careful driving that she would only leave one busy spot by making right turns until she ended up at a light for a safe left. It’s not a stretch to see why thinking about the new Yahoo(s yhoo) board made me think of her. Lots of bright people driving 50 mph in the fast lane to avoid their predecessors’ pileups.
That’s why the annual shareholders meeting Thursday sounded a tad off key. (Sounded because the company that brags about its video views only webcast the audio for the Santa Clara, Calif., event.) Listening to interim CEO Ross Levinsohn talk about a road map he may not be there to chart or navigate rang a little hollow. Not his fault — Levinsohn is at heart a salesman who knows when to pitch and how to gauge answers.
But knowing that the 11 board members elected for a full term at the meeting have yet to agree on a CEO — and that the entire process might wind up as nothing more than an elaborate exercise — makes it hard to take as a real sign of where Yahoo is headed.
Ten of the board members were on hand for the meeting led by Chairman Fred Amoroso, who stressed the differences between this version and the last one: All of the board members are independent and eight of the 11 joined in the last five months. (Weather Channel CEO David Kenny, one of the holdovers between the two boards, couldn’t make it.)
Amoroso referred only obliquely to the pressures that got some of them there, saying that there wasn’t anyone on the board he didn’t want to work with. That was an implicit reference to activist investor Dan Loeb, head of Third Point, who acquired enough stock, uncovered CEO Scott Thompson’s claim of a degree he didn’t have in computer science, and made enough noise (and sense) to force a showdown with the board. The settlement resulted in Thompson’s ouster, Levinsohn’s interim appointment and put Loeb on along with Harry Wilson and Michael Wolf. His fourth candidate, former NBCU CEO Jeff Zucker, withdrew as part of the agreement.
The annual shareholders’ meeting came two months after that deal was struck and a formal search began for yet another CEO. To be fair, as far as I know the board never promised publicly to end the search by a certain date. That pressure is coming from other sources (including folks like me, to be sure), but mostly from those inside and out who think the best shot lies with the candidate who’s already doing the job.
Actions gave credence to Levinsohn as frontrunner, including the way he has been allowed to make senior hires like Chief Revenue Officer Michael Barrett and unwind Thompson’s reorg, as well as the approval of complicated deals like the agreement that ended the Facebook patent dispute started by Thompson with board approval or the resolution of long-standing differences over Alibaba. (Amoroso, the former CEO of Rovi, was seen as one of the backers of that aggressive patent strategy.) The person some perceived as his top competition, Jason Kilar, “graciously” declined to be considered last Friday, seeming to set the stage for an announcement. As one source told AllThingsD:

We’re going to make sure that we have looked at every strong candidate possible. … This is a CEO selection the board cannot afford to be wrong on.

Levinsohn gave the management presentation during the hour-long meeting, describing a road map for now based on content, technology and realizing value from Alibaba. He also took questions from some shareholders. One of the first: “What role Yahoo has in the future? Where are we going to focus?” Levinsohn replied:

“We have really put our energy against being this tech-powered media company. If you want to be in the tech and media business you need to be in both very aggressively.”

That means leveraging the scale of 700 million monthly unique users with “compelling experiences for viewer.” He added later, “We also need to market and program our sites better than we have in the past.”
He spoke of balancing algorithms with human editors on the front page. “We blend technology and human touch. That’s a unique proposition for somebody the size of Yahoo.” It’s also, he said, an amazing white space for Yahoo to own as a massive distributor, a creator and curator of content, and a creator of technology.” No stats yet on recently launched ad-data project Genome.
And after bragging that because of the ABC News deal and other moves, more than half of news videos watched in May were from Yahoo, he heard from a shareholder who raved about Yahoo Sports and Levinsohn’s own background in sports, but complained that the Yahoo video experience was so bad, he looks for the same videos on YouTube. I’m not sure what his technical issues were but one very non-technical message came through loud and clear: “Your problem is simple. One word: Execute.”
Levinsohn picked up on the theme later when he acknowledged the need to deliver on the products and initiatives being mentioned, “If we don’t execute, none of it matters. … My leadership team that’s currently in place will focus on that every day.”
And that’s the rub. As job auditions go, it went well. Whether any of it turns out to be meaningful in the long run, is up to the board. It’s not often that an exec ends a meeting with the usual “we look forward to seeing you all again next year” and you wonder whether he’ll be there.

Analyst weighs in

The lack of clarity about the CEO job runs the risk of blurring what has been accomplished and putting off a real plan even longer. S&P analyst Scott Kessler’s brief client note on the meeting included this:

We think Levinsohn is a very strong candidate for the position and that YHOO would benefit from his appointment sooner rather than later.

He repeated his strong buy opinion for the stock and didn’t say whether it would be affected by a prolonged delay in this CEO search.
The CEO search isn’t the only aspect being watched closely by analysts. Yahoo reports second quarter earnings Tuesday. Those results will matter a lot more than anything that happened at the annual meeting. And in that case, the “interim” may help Levinsohn remind people the Q2 numbers reflect Thompson’s Yahoo more than his. If he gets the job, though, from here out it’s all his.

Speaking of execution

One issue that didn’t come up during the questions: how did Yahoo let a file with 400,000 user passwords get stolen?
The file dates back a couple of years to the acquisition of Associated Content, now known as the Yahoo Contributor Network, and includes other companies’ logins as well. You could read plenty about it while the meeting was going on and after but anyone looking for info on Yahoo’s corporate blog or in its press releases was out of luck. Yahoo said fewer than 5 percent of the stolen Yahoo passwords were valid.
Credit: Levinsohn photo courtesy of Yahoo Advertising