On the other hand, the activist fund Starboard Value was in favor of abandoning the Alibaba spinoff in favor of the current plan, but has been pressuring Yahoo management for various changes for much of the past year.
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The demands from SpringOwl Asset Management and Canyon Capital Advisors reflect shareholders’ frustration with Mayer’s inability to snap the company out of a financial funk after three-and-half years on the job.
SpringOwl, a NY hedge fund, has sent a 99-page presentation to Yahoo’s board that calls for the company to lay off 9,000 of its 10,700 workers and eliminate free food for employees to help save $2 billion annually.
If Yahoo proceeds with its reorganization, the implementation could take years, investors said. Mayer plans to discuss her strategy during the company’s fourth- quarter earnings call next month, which could include simplifying Yahoo’s structure or improving its expense discipline. Mayer also noted the move would give more “transparency” to the operations of Yahoo’s core businesses, and analysts believed that implied Yahoo would be selling itself off bit by bit.
Yahoo abandoned a long-held plan to shed its valuable stake in Chinese e-commerce provider Alibaba Group Holding Ltd., due to concerns about a high tax bill, and instead is now considering bundling the rest of its assets into a separate, standalone company.
In the presentation, SpringOwl also said it disagrees with shareholders who want Yahoo to sell its core Internet businesses, like email and online search, and would prefer instead to first turn the business around.
He added that Reses, who was formerly chief development officer at Yahoo and left for payment processor Square in the fall, is interesting because she is familiar with the company and also has a private equity background, having worked at Apax Partners before joining Yahoo.
A Yahoo spokeswoman declined to comment.
Yahoo scrapped the Alibaba spinoff after another shareholder, Starboard Value, threatened an attempt to overthrow the board if the company stuck to that plan.
The Wall Street Journal earlier reported on the Canyon Capital and SpringOwl letters.
A week after laying out a new strategic plan, Yahoo!
Canyon Capital said requiring shareholders to wait for definitive action for another year or more while Yahoo re-evaluates its decisions is “simply unacceptable”.
“We do not understand the board’s continued support of the company’s senior management team, given its track record”, Canyon Capital wrote. However, last week, Chairman Maynard Webb said the board has not approved a sale process but it has “a fiduciary duty to entertain any offers”.
SpringOwl’s sentiment contrasts with that of Starboard Value, the activist investor that prompted Yahoo to announce last week that it was pursuing a different course.
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Yahoo’s long-awaited turnaround could be taking another turn.
