Scott Thompson Resigns His Position After Resume Flap
The answer to the question "Will Scott Thompson be able to turn around Yahoo!" will never be answered, as Thompson has been removed as the CEO of the company after just a scant few months on the job.
Scott Thompson, who was hired as the CEO of Yahoo! after spending time as the President of Paypal, came under fire after it was revealed that his accounting/computer science degree was really just an accounting degree. This revelation came to light after Daniel Loeb (and his Third Point LLC hedge fund) did some due diligence on Thompson's background, and they found out that the college that Thompson attended (Stonehill College) didn't offer any sort of a computer science degree until years after Thompson had left the school.
Given Thompson's position as CEO of a major technology company, this oversight/lie/misunderstanding was seen as being a fairly important gaffe for somebody who was looking to try and turn around a multi-billion dollar company.
Third Point LLC, which is a major hedge fund that frequently takes activist positions, is agitating for some major change at Yahoo! They believe that Yahoo! has plenty of value that could be unlocked to shareholders, but that the current board of directors and members of Yahoo's leadership team aren't interested in doing so.
So, Third Point LLC is helping to enact change themselves by looking into the backgrounds of every important person who is currently associated with Yahoo!, including Scott Thompson.
When the revelation about Thompson's resume was revealed, Yahoo! at first didn't seem too interested in re-evaluating their hire of Thompson (they said that the resume issue was the result of an "inadvertent error"), or their hiring procedure in general. It was only after an outcry from some of Yahoo's shareholders that Yahoo! decided to launch a review into the Scott Thompson hire.
As soon as that was announced, Thompson's fate was sealed. How could a company which is currently dealing with a massive number of problems continue on with a CEO who claimed to have a computer science degree but didn't? How could a company that has a major credibility problem possibly endure more slings and arrows and keep Thompson as their CEO?
No, as soon as Yahoo! launched a review, Thompson's days were numbered. His hiring/firing will just go down as another embarrassing chapter in Yahoo's short history.
Everybody is looking to pass the blame, but the facts are:
1) Thompson should have made sure that his profile on both Paypal and Yahoo! was accurate. At some point over the past few years, he had to have read his profile on Paypal or Yahoo! and said "Hey, that's not right." He never did, or he never got it changed. Either way, he goofed.
2) Yahoo! should have vetted Thompson much more thoroughly. You are hiring somebody to lead a multi-billion dollar company, and you are not going to ensure that his background history is accurate? Let's say that the resume that lay in front of Yahoo's CEO hiring committee contained Thompson's accurate degree - wouldn't somebody from the committee lean forward and ask "Hey, why does your Paypal profile say that you have an accounting/computer science degree when you don't?"
Of course, Yahoo's supporters will want to point the finger of blame at Third Point LLC and say that their meddling cost the company a great CEO. This is, of course, total BS. The blame lies solely on the shoulders of Scott Thompson and Yahoo's hiring committee. Third Point LLC has millions of dollars invested in Yahoo!, and there is absolutely nothing wrong with them doing as many background checks as they please.
Yahoo! continues to bungle and stumble and disappoint. Is anybody really surprised that this happened to Yahoo! I'm not.
Not to belabor the point that many people have already made over the past weeks/months/years, but all of this embarrassment for Yahoo! could have been avoided if they had accepted Microsoft's buyout offer.
Filed under: General Market News