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

May 14, 2012, 4:16 PM UTC

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.

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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.

These weren’t character traits she developed at Yahoo. In fact, Bartz’s demeanor may have originally been part of her appeal. If that’s the case, the strategy backfired on Yahoo when then-chairman Roy Bostock fired Bartz via phone call, and she immediately beamed an angry email to employees from her iPad, and then dropped some F-bombs to the press about her dismissal.

Yahoo went on a talent search that eventually led them to then-Paypal CEO Scott Thompson. They gave him the top spot this past January. Thompson was going to make big dramatic changes, he said after the company’s first-quarter earnings announcement. He was going to slash thousands of jobs and shift the company’s focus towards e-commerce: in a statement on April 10, Thompson suggested to employees that Yahoo was going to make it easier for users to spend via Yahoo’s site, bringing advertisers closer to targeted customers.

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By that time, Yahoo had already landed yet another aggressive personality, Loeb and his hedge fund Third Point, which had bought a stake in Yahoo in late 2011. Loeb has a history of joining boards and starting proxy fights to get value out of struggling companies. Yahoo should have known who it was dealing with.

Companies spar with activist investors all the time without as much spite. Take AOL (AOL). Yahoo and AOL are different, no doubt, but both have lost steam since their 1990s halcyon days and are trying to glean value from their many promising assets. In 2011, AOL took on activist hedge fund Starboard Value, which now owns 5.3% of AOL’s outstanding shares. The company and the hedge fund have publicly gone back and forth over the company’s leadership strategy, yet AOL has somehow managed to handle the discussion quietly, and has even thrived from it: AOL’s share price has increased by 70% to about $26 per-share since the beginning of the year.

AOL certainly still has its problems. The pressure is on for CEO Tim Armstrong to pull off a tricky turnaround strategy that involves changing the company into a high-quality content generator. But flaws aside, AOL’s relationship with Starboard has looked like a stern discussion compared to Yahoo’s firefight.

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Unfortunately for shareholders, Yahoo must go on the CEO search yet again. In a memo to Yahoo employees, interim CEO Levinsohn said of Thompson leaving the company, “….today’s announcements really boil down to this:  following these changes, a transformation and renewal at the Board level that began in August of last year is now complete.” Let’s hope that stabilizing the board will take some of the sting out of every decision Yahoo makes, especially given that the decisions themselves aren’t that radical. Yahoo declined to comment beyond the statement it issued Sunday.

A CEO doesn’t necessarily need to be a crusader, and working with a hedge fund doesn’t have to degenerate into name-calling. You might do well, Yahoo, to settle down, make some choices, and stop scaring the crap out of your employees. This is a corporate turnaround, not a cage match.