The billionaire founder of hedge fund Third Point startled many in entertainment today with the news that he has paid $1.1B for a 6.4% stake in Sony – and wants the company to create a stock for its movie, TV, and music businesses, selling as much as 20% to the public. But on Wall Street, where Daniel Loeb is an A-list celeb, the big surprises are that he showed any interest in showbiz — and that his language in the letter he sent to Sony was so polite. As a value investor managing more than $13B, Loeb, 51, likes to engage in deep research and then bet on relatively boring companies and assets that others overlook. Third Point’s most recent quarterly investor letter highlights its holdings in International Paper and mortgages, as well as John Malone’s European cable company Liberty Global. Although Loeb was raised in Los Angeles, the son of a lawyer and an historian, he’s known as a New Yorker. He earned an economics degree from Columbia University before he hit Wall Street. After working 12 years for firms including Citibank, Jefferies and Warburg Pincus, he founded Third Point in 1995 with about $3M from family and friends. READ MORE »
2ND UPDATE, 2:15 PM: Sony doesn’t slam the door on Third Point‘s proposal for it to sell up to a 20% stake in its entertainment assets — but doesn’t encourage the idea either. Sony “welcomes investment in the company,” SVP Corporate Communications Shiro Kambe says. But he adds: “We are focused on creating shareholder value by executing on our plan to revitalize and grow the electronics business, while further strengthening the stable business foundations of the entertainment and financial service businesses. As President and CEO Kazuo Hirai has said repeatedly, the entertainment businesses are important contributors to Sony’s growth and are not for sale, and we look forward to continuing a constructive dialogue with our shareholders as we pursue our strategy.”
UPDATE, 10:28 AM: The CBS speculation has taken on new life following this morning’s news that hedge fund Third Point wants the electronics company to create a public stock for its entertainment assets. Third Point proposed that Sony keep at least an 80% stake in the studio and music properties. Still, the plan “will concentrate investor attention” on the businesses and “the synergies that potential acquirers such as CBS might eventually realize,” says Pivotal Research Group’s Brian Wieser — who likes the idea. Sony shares are +10.5% in mid-day trading and CBS is +2.6%. Late last year Sony firmly rejected a sale after CBS’ Les Moonves mused that he “would want to look at them” if the properties were for sale. Sony execs might start to think differently if they take the movie, TV, and music assets public. The stock would give them a clearer sense of how much the properties are worth and, therefore, how much they could collect from a buyer. And Wiser believes that CBS could show that it would do a better job than Sony — which he says “has never bridged a significant cultural gap nor overcome its hierarchical bureaucracy to work better with the U.S.-centered operations.” CBS will be flush with cash soon as it prepares to sell and restructure its billboard ad properties.
UPDATE, 12:31 PM: The Wall Street Journal is reporting that Yahoo CEO Scott Thompson told the board over the weekend that he has been diagnosed with thyroid cancer. The WSJ says the disclosure might have impacted the company’s decision to accept Thompson’s resignation. The report adds that Thompson began telling colleagues as early as Friday that he was stepping down. Meanwhile, CNNMoney is reporting that Thompson could owe up to $7 million in upfront bonus money he received when he was hired in January.
PREVIOUS, SUNDAY PM: It’s official: Thompson’s four-month reign is over, following the disclosure that he misrepresented his bachelors’ degree. He “has left the Company,” Yahoo says — and the board has a deal with Third Point CEO Daniel Loeb, who has abandoned his proxy fight. Ross Levinsohn replaces Thompson as interim chief executive “effective immediately.” Roy Bostock has stepped down as Non-Executive Chairman, replaced by Fred Amoroso. In addition, hedge fund manager Loeb and two allies — media consultant Michael Wolf and restructuring expert Harry Wilson — will join the board on Wednesday. Former NBCUniversal CEO Jeff Zucker won’t be with them. With only three board seats going to Loeb’s group, Zucker says he agreed to step aside “to quickly facilitate a settlement.”
Here’s the announcement:
Third Point CEO Daniel Loeb, who controls 5.8% of Yahoo’s shares, continues to punch away at the Yahoo board — which seems to already be on the ropes following the disclosure that Thompson misrepresented his bachelor’s degree. This morning Loeb sent directors a letter urging them to place himself and three colleagues (including former NBCUniversal chief Jeff Zucker) on Yahoo’s board. He wants them to name an interim CEO to replace Thompson. And he wants one of his allies, media consultant Michael Wolf, to chair a search committee to find a full time replacement. “Third Point has over $1 billion invested in Yahoo! and we take no joy in witnessing this carnage,” Loeb writes. “This Board’s unchecked value destruction must stop once and for all.”
This is the next shoe to drop after the board didn’t go along with the demand by Third Point chief Daniel Loeb to fire Yahoo CEO Scott Thompson by noon ET today. The hedge fund manager. who controls 5.8% of Yahoo shares, says that Delaware General Corporation Law entitles him to inspect books and records beginning September 1 tied to the board’s decision to hire Thompson, as well as other material that would shed light on the naming of directors Patti Hart, Peter Liguori, John Hayes, Thomas McInerney, Maynard Webb Jr, and Fred Amoroso. The dissident shareholder has hired law firms Willkie Farr & Gallagher and Bouchard Margules & Friedlander to conduct the inspection on his behalf.
UPDATE, 12:45 PM: Here’s Yahoo’s response to Daniel Loeb: “As we have previously said, the board is reviewing this matter and, upon completion of its review, will make an appropriate disclosure to shareholders.”
PREVIOUS, 12:11 PM: Third Point CEO Daniel Loeb, who owns 5.8% of Yahoo‘s stock, made his demand following the revelation yesterday that the company’s proxy and web site inaccurately described Thompson’s college credential. Yahoo said that he had a bachelor’s degree in accounting and computer science from Stonehill College. But it acknowledged that it made an “inadvertent error” after Loeb checked and discovered that the school didn’t offer a computer science major when Thompson graduated. Loeb says today, in a letter to the board, that the company’s response was “the height of arrogance” — belittling the likelihood that Thompson misrepresented his qualifications, and that the board didn’t double check his information. “Mr. Thompson and the Board should make no mistake: this is a big deal,” Loeb says. “CEOs have been terminated for less at other companies.” He wants the board to fire Thompson “for cause immediately given his demonstrable unsuitability to remain Chief Executive Officer and a director of Yahoo!” If that’s not done by noon ET on Monday,
This isn’t a huge scandal, but it does provide Third Point CEO Daniel Loeb — who owns 5.8% of Yahoo shares — with some fodder for his campaign to shake up the company’s board. It seems that Yahoo’s draft proxy statement and web site say that CEO Scott Thompson earned a bachelor’s degree from Stonehill College in “accounting and computer science.” But Loeb says in a letter today to the board that when he checked, ”Stonehill College informed us that it did not begin awarding computer science degrees until 1983 — four years after Mr. Thompson graduated.” Loeb adds that if Thompson “embellished his academic credentials we think that it 1) undermines his credibility as a technology expert and 2) reflects poorly on the character of the CEO who has been tasked with leading Yahoo! at this critical juncture.”
Yahoo admits that “there was an inadvertent error that stated Mr. Thompson also holds a degree in computer science.” His degree is in business administration with a major in accounting. “This in no way alters that fact that Mr. Thompson is a highly qualified executive with a successful track record leading large consumer technology companies,” Yahoo says.
Hedge fund Third Point, which owns 5.8% of Yahoo’s shares, chided CEO Scott Thompson for failing to lay out his strategic plan before he fired about 2,000 employees today. The fund, run by Daniel Loeb, says …
Third Point’s planned proxy fight for four seats on Yahoo’s board grows more interesting by the day. Today the hedge fund’s CEO, Daniel Loeb, fired back at the company for refusing to accept two members of his dissident slate — media consultant Michael Wolf, and former NBCUniversal CEO Jeff Zucker — and especially Loeb himself. “You told me that the Board felt my experience and knowledge ‘would not be additive to the Board’ and that as Yahoo!’s largest outside shareholder, I would be ‘conflicted’ as a Director,” Loeb said in a letter to CEO Scott Thompson. Loeb says: “Only in an illogical Alice-in-Wonderland world” would that be said of someone who owns 5.8% of Yahoo’s voting shares, equal to about $1B. He notes that Thompson said Loeb might be too interested in policies that would generate a quick payoff. “This theory appears, seemingly like many of the Board’s conclusions, to have been arrived at by whimsy and emotion,” Loeb writes. “I have never been asked about this alleged short-term bias nor was there any evidence to indicate that our investment model is predicated on short-term trading…. In any event, this ‘long-term vs. short-term’ excuse is a canard and particularly inapt in the case of Yahoo!. If there ever was a company in need of a sense of urgency, it is this one.”
Hedge fund Third Point seems to have struck a nerve at Yahoo with its new campaign to elect four of its own candidates — including former NBCU chief Jeff Zucker — to the board. The Internet company …
Dissident Yahoo shareholder Daniel Loeb of the hedge fund Third Point plans to nominate four boardmembers including himself, Bloomberg reports. Loeb and Third Point contend the recent overall at Yahoo including the exit of co-founder Jerry Yang and the …