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MISSION:INTANGIBLE, the blog of the Intangible Asset Finance Society, offers critical comments on intangible asset, corporate reputation, and finance; supplemented by quantitative reputation metrics. Intangible assets include business processes, patents, trademarks; reputations for ethics and integrity; quality, safety, sustainability, security, and resilience; and comprise 70% of the average company's value. MISSION:INTANGIBLE is a registered trademark of the Intangible Asset Finance Society.

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Yahoo: Doofuses in the house?

C. HUYGENS - Friday, September 09, 2011
Earlier this week, Yahoo’s (NASDAQ:YHOO) board fired CEO Carol Bartz and appointed CFO Tim Morse as interim CEO. That makes 4 CEOs in 4 years and casts a shadow on the board of directors, among whose duties are the selection and oversight of the CEO.

According to the Associated Press (8 Sept, Liedtke), “Carol Bartz's firing as Yahoo Inc.'s CEO isn't going to be enough to placate a loudening chorus of shareholders who believe Chairman Roy Bostock and his fellow board members also should be ousted after years of questionable choices that raised doubts about their competence."

Turning to the numbers, the Steel City Re Corporate Reputation Index shows a steady decline in Yahoo’s reputation ranking over the trailing twelve months relative to its 104 peers in the Internet Services and Software sector. On 3 September 2010, Yahoo ranked in the 89th percentile; yesterday they ranked in the 70th percentile. The 19 point decrease has been associated with an increase in Yahoo’s reputational volatility. Over the trailing six months, the exponentially weighted moving average reputational ranking volatility has climbed from around 10% to 49.4%. The trailing twelve week reputational vector and velocities are reading in at -9.4% and -7% respectively. It is therefore not surprising that the company is underperforming the median its peers over the trailing twelve months by 6.64%.
More globally, the entire sector appears to be rising ever so slightly reputationally relative to the broad market. The sector's median ranking has been edging up from the 40th percentile over the trailing 12 months. Within the sector, however, variance is relatively high reading in at 28% on 8 Sept. Last, looking specifically at Yahoo’s intangible asset fraction, it has dropped recently from around 60% to the low to mid 50%; the median fraction among the peer group is in excess of 80%.

Activist investors are taking note. So are long time stakeholders. The AP story quotes Darren Chervitz, co-manager of the Jacob Internet Fund, a longtime Yahoo shareholder, this way: "This board has presided over some of the worst decisions made by any company in recent history." Bartz frames it more colorfully in a profanity laced interview with Fortune magazine. "The board was so spooked by being cast as the worst board in the country. Now they're trying to show that they're not the doofuses that they are."

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