DealBook: Activist Investor to Step Down From Yahoo Board

Steve Marcus/ReutersDaniel S. Loeb, founder of Third Point, at a conference in Las Vegas last year.

2:09 p.m. | Updated To add Third Point’s earnings from its investment in Yahoo and include Yahoo’s afternoon share price.

The activist investor Daniel S. Loeb is parting ways with Yahoo.

Mr. Loeb, whose campaign to change Yahoo culminated in the appointment last year of Marissa Mayer as the company’s chief executive, has submitted his resignation from the board, Yahoo said Monday.

Two other directors originally nominated by Mr. Loeb’s firm, Harry J. Wilson and Michael J. Wolf, are also stepping down. The resignations, effective July 31, will leave Yahoo with a seven-member board, the company said.

In addition, Yahoo has agreed to buy 40 million shares of its stock from Mr. Loeb’s firm, Third Point, at a price of $29.11 a share, the closing price on Friday. That will leave Third Point with about 20 million Yahoo shares, or less than 2 percent of the common stock outstanding.

Third Point, which initially disclosed a 5.15 percent stake in Yahoo in September 2011, more than doubled its investment in less than two years. It initially paid about $509 million for 40 million shares, which it sold on Monday for $1.16 billion.

Yahoo’s stock fell more than 4 percent in trading on Monday, dipping below $28 a share in afternoon trading.

The hiring of Ms. Mayer from Google last July was considered a coup for Yahoo, an aging technology company in need of a fresh direction. She has overseen a string of acquisitions since then, including the $1.1 billion deal for Tumblr in May.

“Since our board’s rigorous search led us to hire Marissa Mayer as C.E.O., Yahoo’s stock price has nearly doubled, delivering significant value for shareholders,” Mr. Loeb said in a statement.

Ms. Mayer’s appointment came after a hard-fought campaign by Mr. Loeb that led to the ouster of the previous chief executive, Scott Thompson, in May of last year.

Yahoo said Monday that Max Levchin, a co-founder of PayPal, would remain on the board. His appointment in December was supported by both Third Point and the board.

The share repurchase plan announced Monday is part of Yahoo’s previously announced plan to buy $1.9 billion of stock, the company said.

“Daniel Loeb had the vision to see Yahoo for its immense potential — the potential to return to greatness as a company and the potential to deliver significant shareholder value,” Ms. Mayer said in a statement. “While there’s still a lot of work ahead, they’ve given us a great foundation.”

DealBook: Icahn, Outspoken Investor, Takes to Twitter

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DealBook: Sony Pondering Spinoff Proposal From a Big Investor

Kimimasa Mayama/European Pressphoto AgencyKazuo Hirai, chief of Sony, at a corporate strategy presentation in Tokyo on Wednesday.

TOKYO — Sony said on Wednesday that its board was considering a proposal from the hedge fund Third Point to spin off part of its entertainment business, but it emphasized that the discussions were preliminary and that it had not set a time to respond.

Sony, under pressure from Third Point, one of its top investors, to unlock more value from its lucrative entertainment divisions, also said it was on track to return its electronics business to profitability this year.

“We will engage in thorough discussions at the board level to decide on Sony’s response,” Kazuo Hirai, the chief executive, said in response to questions at a corporate strategy presentation. “It is an important matter that relates to Sony’s core businesses and management, so the board must hold ample discussions.”

Mr. Hirai said board members were already discussing the proposal, though some of them will be replaced after Sony’s annual investor meeting in June. He declined to say when Sony might respond or to give his views on the proposal, saying the matter was for the board to judge.

“We are still in early stages,” Mr. Hirai said. “But we intend to engage positively with our investors.”

Phil McCarten/ReutersDaniel S. Loeb of Third Point.

It is unclear whether Sony will seriously consider the proposal from Third Point’s manager, Daniel S. Loeb, who is pressing the company to spin off part of its entertainment arm, which includes one of the biggest film studios in Hollywood and one of the largest music labels in the world.

Corporations in Japan, including Sony, have a history of ignoring letters from shareholders calling for overhauls, a former top investor in Sony said.

Mr. Loeb’s hedge fund has acquired roughly a 6.5 percent stake in Sony, making it one of the biggest shareholders. In a letter that was made public, he has proposed that Sony use the money raised from a spinoff to reinvest in its ailing electronics business.

Mr. Hirai, who became chief executive in April 2012, emphasized that even without such a move, Sony was on track to bring its electronics business back into profitability this fiscal year, which runs through next March.

He said Sony still expected sales of 6 trillion yen ($58.3 billion) from electronics and an overall 5 percent operating profit margin, adding that the company hoped its televisions would turn a profit for the first time in a decade.

“The No. 1 mission assigned to me is to bring change to Sony and to revive our electronics business,” Mr. Hirai said. “We are on the offensive.”

Bits Blog: Tech Investor Files Defamation Suit Against Rape Accuser

Araya Diaz/Getty Images, for TechCrunch Michael Arrington, the founder of the TechCrunch news site and now an investor in start-ups.

1:37 p.m. | Updated with link to Valleywag, which first reported news of the suit.

Michael Arrington, the founder of the TechCrunch news site and now an investor in start-ups, has filed a lawsuit against a former girlfriend who has for several weeks alleged in various online forums that Mr. Arrington raped and threatened to kill her.

Mr. Arrington’s lawsuit, filed on Tuesday in federal court in Seattle, alleges that the former girlfriend, Jennifer Allen, has made repeated defamatory, false statements about Mr. Arrington “to smear the plaintiff’s name on the Internet, to destroy his reputation, and to deter third persons from associating with him.” The lawsuit alleges that Ms. Allen, who lives in San Francisco, was motivated by her frustration over her “intermittent romantic involvement” with Mr. Arrington.

Mr. Arrington’s suit doesn’t specify the amount of damages he is seeking, though it said the figure is over $75,000. A letter that Mr. Arrington’s attorney sent to Ms. Allen last month, in which he threatened to sue her if she did not retract her statements, said that Mr. Arrington has pledged to donate any damages to charity.

Ms. Allen didn’t respond to a message sent to her through Facebook. Valleywag, Gawker’s tech industry gossip site, first reported news of the lawsuit.

Mr. Arrington, who now lives in Washington State, is a well-known figure throughout the technology industry. He founded TechCrunch, a news site that he turned into an influential chronicler of the start-up scene. He sold the site to AOL in 2010 for $30 million. He left the next year amid a controversy over potential conflicts of interest stemming from his plan to start a venture capital fund.

Mr. Arrington’s lawsuit notes that his problems with Ms. Allen began March 29, with a post on her Facebook page in which she said she had known him for more than eight years and that it “hurts when you love someone borderline and they can’t feel anything at all for you, and threaten to murder you if you told anyone about the physical abuse — all for keeping his reputation.”

The lawsuit also alleges that Ms. Allen later accused him more explicitly of raping her through posts in the comments section of the Gawker Web site and on her Twitter account. It also alleges that Ms. Allen in various posts on the matter said that the assaults occurred on different dates in March 2012, which she seemed to acknowledge when she referred to the disparity as an “unintentional date mixup.”

DealBook: Investor Group Buys BMC for $6.9 Billion

Jon Simon/Feature Photo Service for BMC SoftwareShamoun Murtza of BMC Software demonstrates a new mobile application.

BMC Software Inc. agreed on Monday to sell itself to a group of investors led by Bain Capital and Golden Gate Capital for about $6.9 billion, completing a campaign by an activist hedge fund to push the company into a deal.

Under the deal terms, the buyers’ group, which includes the Government of Singapore Investment Corporation and Insight Venture Partners, will pay $46.25 a share in cash.

That represents a 14 percent premium to BMC’s share price on May 11, 2012, the last business day before the company disclosed that Elliott Management had taken a big stake – now up to about 9.6 percent – and was urging a sale. After initially resisting Elliott, the two sides reached a compromise, with Elliott gaining two board seats and BMC beginning to explore a sale last fall.

A number of buyout firms emerged during the auction process over recent months, though by last week the Bain and Golden Gate consortium took the lead.

“After a thorough review of strategic alternatives, the BMC board of directors is pleased to reach this agreement, which provides shareholders with immediate and substantial cash value, as well as a premium to our unaffected share price,” Robert E. Beauchamp, BMC’s chairman and chief executive, said in a statement.

Jesse Cohn, the Elliott portfolio manager who led the firm’s campaign, added: “Elliott applauds the BMC Software board and executive leadership for delivering this value-maximizing outcome for stockholders, which both contains a go-shop provision and reflects what we believe is a substantial premium to BMC’s unaffected stock price.”

As part of the deal, BMC will have 30 days to try to find higher bids.

Credit Suisse, the Royal Bank of Canada and Barclays will provide debt financing.

BMC was advised by Morgan Stanley, Bank of America Merrill Lynch and the law firm Wachtell, Lipton, Rosen & Katz. The investors received financial advice from Qatalyst Partners, the boutique bank run by Frank P. Quattrone; Credit Suisse; RBC Capital Markets; and Barclays.

The investor group was counseled by Kirkland & Ellis and PricewaterhouseCoopers. The the Government of Singapore Investment Corporation was also advised by Sidley Austin, while Insight Venture Partners was also advised by Willkie Farr & Gallagher.

Tom Wheeler, Telecom Investor, Is F.C.C. Nominee

WASHINGTON — Tom Wheeler, President Obama’s pick to be the next chairman of the Federal Communications Commission, knows all about the most advanced telecommunications systems — of the 19th century.

In his 2008 book “Mr. Lincoln’s T-Mails: How Abraham Lincoln Used the Telegraph to Win the Civil War,” Mr. Wheeler, an investor in start-up technology and communications companies, documents how Lincoln was an “early adopter” of what has been called “the Victorian Internet.”

Lincoln’s championing and advancement of popular uses of the telegraph are not unlike the challenges Mr. Wheeler is likely to face as chairman of the F.C.C., which is waging an intense battle to keep Internet service free of commercial roadblocks and widely available in its most affordable, up-to-date capabilities.

Mr. Wheeler’s qualifications for “one of the toughest jobs in Washington,” Mr. Obama said, include a long history “at the forefront of some of the very dramatic changes that we’ve seen in the way we communicate and how we live our lives.”

“He was one of the leaders of a company that helped create thousands of good, high-tech jobs,” Mr. Obama said, referring to Core Capital Partners, the Washington investment firm where Mr. Wheeler is a managing director. “He’s in charge of the group that advises the F.C.C. on the latest technology issues,” adding that “he’s helped give American consumers more choices and better products.”

Mr. Obama announced the nomination Wednesday in the State Dining Room at the White House. Mr. Wheeler would replace Julius Genachowski, who resigned in March after four years as chairman.

Mr. Obama also appointed Mignon Clyburn, a member of the commission, interim chairwoman, to oversee the agency until Mr. Wheeler is confirmed by the Senate, as is expected, and sworn in.

Several media groups had expressed hopes that the president would name a woman to the top post full time, something that has never happened in the commission’s 80 years.

Once he takes office, Mr. Wheeler, 67, will be under pressure not only to demonstrate that he understands rapidly changing technologies, but also to make clear that his previous work as a top lobbyist for the cellphone and cable television industries will not prejudice his F.C.C. decision-making.

Mr. Wheeler will have to confront several issues almost immediately upon Senate confirmation and being sworn in. The commission is preparing for a complicated auction next year of bands of spectrum — the electromagnetic airwaves over which television, radio and cellphone signals travel.

The auction depends on the F.C.C. convincing television broadcasters to either sell their licenses to use spectrum in exchange for some of the auction proceeds or to willingly move to another spot on the dial, so that the F.C.C. can package and sell contiguous bands of airwaves.

Mr. Wheeler and the commission will also have to decide the extent to which various companies will be eligible to bid for the bands of spectrum. Some consumer advocates say they believe that AT&T and Verizon already control too much of the wireless phone market — roughly 70 percent — and should not be allowed to lock up more spectrum.

The companies, some members of Congress and others, however, want the F.C.C. to maximize revenue from the spectrum auction — which would mean allowing AT&T and Verizon to buy as much as they want.

In 2011, Mr. Wheeler wrote admiringly on his personal blog, Mobile Musings, about the lobbying agility of the National Association of Broadcasters, which had worked to scuttle what looked like a sure-to-pass auction plan then before Congress.

“Suddenly, when a spectrum sale seemed a fait accompli as a payment on the debt, it vanished,” Mr. Wheeler wrote. “No one is talking about it, but these things don’t happen by accident.”

Mr. Wheeler served from 1992 to 2004 as the chief executive of the Cellular Telecommunications and Internet Association, the cellphone industry trade group, and from 1979 to 1984 was chief executive of the National Cable Television Association. That has led some telecommunications watchdog groups to worry that he might favor those businesses over consumers.

But Mr. Wheeler at times has voiced proregulatory sentiments. In another 2011 column, he said that the government could have used the proposed merger of AT&T and T-Mobile to assert more regulatory influence over the wireless industry.

Instead, he wrote, “the regulatory oversight of wireless carriers will continue to atrophy as the digital nature of the wireless business separates it from the legal nexus with traditional analog telecom regulation.”

The commission also is awaiting the outcome of a case before a federal appeals court that could decide whether the F.C.C. has the authority to make sure companies that offer broadband Internet access treat all users equally, rather than favoring some content over others.

That concept, known as open Internet or net neutrality, is a central pillar of Mr. Obama’s technology policy. When the F.C.C. approved its open Internet guidelines in 2011, Verizon sued to overturn them, almost before the ink was dry on the documents.

On Wednesday, Verizon congratulated Mr. Wheeler on his nomination and said it “looks forward to working with him and the commission to shape proconsumer and proinnovation policies in the communications marketplace.”

Ron Conway, Tech Investor, Turns Focus to Hometown

He stayed longer than expected at a political fund-raiser with President Obama at a hedge-fund billionaire’s home in Sea Cliff, on this city’s northwest edge, because of the president’s security requirements and a missing valet. Unable to find his car, he would not make it across town to the Embarcadero for an event hosted by sf.citi, the civic organization he founded 14 months ago to unite tech companies, harness their political influence and, perhaps, change San Francisco.

Later that evening, after finding his car and his way home, he said: “The tech community is a closely knit group, which is why it’s so powerful. All of these companies have an affinity for each other, even if they compete with each other.”

Speaking at his home overlooking the city, with his blue blazer tossed on a couch and his wife, Gayle, and son Topher sitting around a large kitchen island, he said, “You need a catalyst, so I’m a catalyst.”

Having amassed a fortune by investing early in Google, Facebook, Twitter and other start-ups, Mr. Conway has become, in two short years, one of San Francisco’s power brokers, using his wealth and network to pursue his vision of a business-friendly, tech-driven city with single-minded clarity.

Mr. Conway, 62, lobbied successfully for tax changes favoring tech start-ups and helped elect Mayor Edwin M. Lee. He is the face and force behind sf.citi, or the San Francisco Citizens Initiative for Technology and Innovation, which champions tech companies’ interests and is also creating and financing new technology to improve city policing and transportation.

The mayor and Mr. Conway are, by all accounts, very close, appearing often together in public here and recently going to Paris on a business trip.

In an interview, the mayor said he smiles when he is accused of being too cozy with Mr. Conway. “I feel pretty comfortable with getting close to people whose values benefit the city,” he said. “Ten more Ron Conways would be helpful.”

Other industries like health care and tourism contribute more to the city treasury, but they have been overshadowed by tech’s rapid growth here. Tech start-ups disappeared from the city with the bursting of the dot-com bubble in the early 2000s, but a new generation of companies, especially in social media, has established roots. Sf.citi has about 500 member companies, accounting for 90 percent of the tech industry in the city, according to the organization.

“He’s really been able to unite what historically has been a politically nonengaged sector,” said Corey Cook, an associate professor of politics at the University of San Francisco.

Mr. Conway was not widely known outside the tech industry. But in Silicon Valley, he was a godfather or an elder statesman, said Marc Benioff, the chief executive of Salesforce.com, a software company and the biggest tech business based here.

“He brings a level of maturity to the industry that it badly needs,” Mr. Benioff said, adding that he was surprised at how deeply engaged Mr. Conway had become in civic affairs. “Ron is a force of nature. Whatever he focuses on, he creates.”

After achieving success in the computer industry in the 1990s, Mr. Conway became an angel investor, taking early stakes in promising start-ups, mostly in Silicon Valley. In 2004, Mr. Conway, who was born in San Francisco, moved back to the city with his wife after the youngest of his three sons went to college.

It was in 2010, Mr. Conway said, when he first got to know city officials through his involvement in helping pass a city law that made it illegal to sit or lie on sidewalks in San Francisco for most of the day. He was the biggest donor to the campaign behind the law, which was supported by the city and business associations but was opposed by advocates for the homeless.

He began backing Mr. Lee after he, as interim mayor in 2011, passed a tax exemption for Twitter, which had been considering leaving the city. Enlisting the assistance of many tech heavyweights, Mr. Conway later formed an outside group that helped elect Mr. Lee to a full term.

Last fall, sf.citi scored its first big political success when voters approved a payroll tax change that benefits tech start-ups. Mr. Lee said the new payroll tax and other policy changes favorable to the tech industry would create jobs. But critics speak of favoritism.

“Ron Conway seems to be more interested in whatever political payoff comes for his industry instead of what’s in the best interest of the city he claims to care about,” said Art Agnos, a former mayor.

Others say the rising influence of Mr. Conway and the tech industry signals a fundamental change in the city’s character. The breaks given to his industry have attracted tech companies and highly paid tech workers, who in turn have contributed to rising rents and living costs.

“That’s really made it difficult for San Franciscans who have been here generations to survive,” said John Avalos, a city supervisor and a leading voice for the city’s progressive movement. “There’s a lot of displacement going on, mostly because people have been priced out of their housing as part of the tech boom. I don’t think Ron Conway considers these changes that we are seeing as important.”

Mr. Conway rejects the criticism, pointing to the jobs created by tech companies.

With the exception of an immigration overhaul, a perennial demand of the tech industry, Mr. Conway said he had little interest in national affairs until the massacre at Sandy Hook Elementary School in Newtown, Conn. The shooting occurred while the Conways were hosting a Christmas party whose guests included Gabrielle Giffords, the former Arizona congresswoman who was shot in Tucson in 2011.

Seeing her presence as “a sign,” Mr. Conway has thrown himself into the battle for greater gun control. Working with Sandy Hook Promise, a group of Newtown parents, Mr. Conway has started a campaign with other venture capitalists to encourage the development of gun safety technology. He has been attending Democratic and Republican fund-raisers to press for stricter gun laws, though he was unsure whether his efforts would have the impact his local ones have enjoyed.

“I really don’t have a lot of interest in national politics, and it’s because I’m a skeptic,” he said. “I think you can accomplish a lot more locally. I don’t want to spin the wheels and not get anything done.”