Major Investors Pushing For Changes at Yahoo!
The "honeymoon" period is clearly over for Marissa Mayer as the former "golden child" is now under pressure to either make significant changes to her leadership strategy or step down altogether at Yahoo!
At first glance, Mayer being under pressure at Yahoo! would seem ridiculous given the performance of the shares of the company since she took over in July of 2012. After all, shares of the company are up roughly 160% since the summer of 2012.
The problem for Mayer, however, is that practically all of this gain (or all of the gain, depending on who you talk to) has come as a result of Yahoo's significant ownership stake in Alibaba, the Chinese e-commerce giant which just recently went public. Yahoo has already sold 140 million shares of its stake in Alibaba, raising an estimated $9.4 billion for the company, while it still holds another 383.5 million shares worth $33 billion.
The problem, according to prominent Yahoo! investors such as Starboard Value, is that there is not much confidence in Mayer's "aggressive acquisition strategy". This strategy has seen the company make a large number of purchases since Mayer took over the reins, and reportedly Yahoo! is close to closing on an advantage in Snapchat that would value the company at $10 billion. These acquisitions have been largely panned by investors in the company.
The fact is that a number of prominent investors don't trust Mayer to properly invest the mountain of cash that Alibaba has helped to raise. There have been a couple of proposals in recent weeks that would see Yahoo! merge with the likes of Softbank or AOL. In the case of the proposed Softbank merger, Softbank's chairman, Masayoshi Son, would lead the combined company.
There is certainly an issue with Yahoo! as the company is currently valued at $40.81 billion. So, according to the market, the value is Yahoo's core business is worth roughly zero. This is seen as Mayer's failing, as she is seen as having bungled the stewardship of Yahoo! over the past 26 months, and that the success of Alibaba (Yahoo! held shares of Alibaba BEFORE Mayer signed on to run the company) is shielding Mayer's failings.
It will be interesting to see how this all plays out. Does Mayer have the support of enough of Yahoo's investors to fend off these new challenges? We'll see.
Filed under: General Market News