Mayer has made some high profile moves since coming over from Google, buying dozens of startups to bring in more engineering expertise, and overhauled Yahoo’s apps for weather, sports, Flickr and email.
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Yahoo’s board members have planned a series of meetings later this week where they will be discussing the future of the company.
Starboard said that even if Yahoo were to split off its Alibaba shares, the company’s remaining Internet services would still have little or no value.
Mayer is also working on a major overhaul that will jettison an unspecified number of unprofitable Yahoo services and could lay off hundreds of workers.
Sources reckon one, the other, or both options may eventually happen in order to save Yahoo from its disappointing financial results as shares slid after the company’s October quarterly earnings announcement. Yahoo had been planning to spin off its holdings of Alibaba for some time, though the plan has been delayed due to tax concerns.
Sources says private equity firms are likely to be counted among the entities looking into Yahoo’s core business, though nothing official has been stated at this point.
Richard Holway, tech analyst at U.K.-based TechMarketView, said Mayer has “failed in her role” because she hasn’t succeeded in monetizing much of the company’s content.
Under Mayer’s tenure, the company struggled to grow its advertising business to compete with market leaders Google and Facebook. Mayer’s main project in her turnaround strategy was to push mobile, video, native and social media ads – an initiative called Mavens introduced in 2014 – but it hasn’t been able to turn around the company’s revenue erosion.
The Yahoo board could also consider selling the company’s stake in China’s online retailer Alibaba.
A separation of Yahoo’s Alibaba Group and Yahoo Japan stakes from the core business would unlock immediate value for shareholders and allow Yahoo’s core business to better recruit and retain talent, according to Starboard Value. In 2008, activist investor Carl Icahn took a stake in Yahoo and tried to convince the board to sell to Microsoft. Less than half of its market cap is attributable to Yahoo’s own business, according to a Thomson Reuters Breakingviews calculator.
Yahoo’s 15 percent stake in Alibaba is worth about $32 billion (£21.4 billion), the Journal report said.
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Cowen’s John Blackledge pegs the value of Yahoo’s search and display advertising business at $3.84 billion.
