The pressure
on Yahoo! Inc. (YHOO) Chief Executive Officer Marissa Mayer has just ramped up.
Activist
investor Starboard Value LP yesterday sent a letter to Mayer urging her to
consider strategic alternatives to “unlock value” at the Web portal, including
a combination with AOL Inc. (AOL) Starboard CEO Jeffrey Smith also recommended
to Mayer that she cut costs and stop making new acquisitions that she has been
undertaking to boost the Sunnyvale, California-based company’s growth.
The letter’s
timing was no surprise. Starboard sent its missive a little more than a week
after Yahoo sold about a quarter of its stake in Alibaba Group Holding Ltd.
(BABA) during the Chinese e-commerce company’s initial public offering. The
divestiture was a key step in reducing ties with Alibaba, which had helped buoy
Yahoo’s stock.
Since
Alibaba’s IPO, the true value of Yahoo’s core business has been laid bare --
and its worth has been shown to be minimal. Mayer, who arrived at Yahoo in
2012, has so far been unable to rev up the company’s growth as it faces
pressure from rivals such as Google Inc. and Facebook Inc. She also hasn’t
clearly laid out what she intends to do with the money she’s receiving from the
Alibaba stake, or how she’ll avoid taxes when she sells off more shares.
Marissa
Mayer has been working to turn around Yahoo since she joined the Web portal
in... Read More
“The reality
is that the core business has not turned around,” said Ben Schachter, an
analyst at Macquarie Securities USA Inc.
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