Activist investors

Yahoo: Chill, it's time to get down to business

May 14, 2012: 12:16 PM ET

Companies spar with activist investors all the time without as much spite. It's time for Yahoo to put aside the theatrics and focus on pulling off a turnaround.

FORTUNE -- Perhaps Yahoo! has been cursed by the exclamation point in its name. The company just can't stop yelling, attracting headlines for all the wrong reasons. And sure, the tech giant has had its troubles, but for a company as rich in assets and poor in market-shattering innovation as it is, Yahoo has been following a pretty predictable turnaround pattern. It's the leadership soap opera, not their strategy, that's the problem.

In the latest in a series of awkward events, Yahoo (YHOO) announced Sunday that former CEO Scott Thompson would resign, amid revelations that his resume included a bachelor's degree in computer science he never actually earned. The company's head of global media, Ross B. Levinsohn, will serve as interim CEO until Yahoo launches yet another talent search.

Yahoo also capitulated to Daniel Loeb, the activist shareholder at Third Point, which owns a 5.8% stake in the company. Loeb first demanded in February that Yahoo appoint him and some of his other Third Point colleagues to Yahoo's board. Yahoo denied his request, which triggered a chain of angry responses from Third Point. The big crescendo happened last week, when Third Point announced that it had discovered falsities on Thompson's resume, and subsequently called for his head.

MORE: Jamie Dimon failed Crisis Management 101

It was all very ugly and public. But this episode is one in a long line of fiascos for Yahoo. The company has been a drama magnet for quite some time. Just look back to 2009, when Yahoo hired Carol Bartz as CEO. During her time at the company, Bartz may not have boosted revenue, but she did cut costs and improve profit margins -- both solid management moves. That was all overshadowed by her loud personality: Bartz apparently cussed like a sailor and was tough to work with. More

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