Yahoo is facing pressure from investor groups against giving CEO Marissa Mayer more time to show progress on the company’s turnaround, reports the Wall Street Journal.
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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.
The call by investment fund SpringOwl, which did not disclose the size of its Yahoo stake, came amid unease among shareholders after the tech firm retreated from its plan to spin off its multibillion-dollar stake in Chinese online colossus Alibaba.
With the company openly shopping around its core search and ad business after deciding not to spin off its massively valuable shares in Alibaba, the rumor mill is swirling that Marissa will be fired before any kind of sale goes through. Such a plan would take over a year to complete.
A Yahoo spokeswoman declined to comment.
Since the afternoon the Yahoo reverse plan was first reported on CNBC as the newest step under contemplation, the stock has sunk almost 6 percent.
“I disagree with this notion that Yahoo can’t be fixed”, said Eric Jackson, managing director of SpringOwl, which has $300 million in assets under management, including an unspecified stake in Yahoo.
He proposes cutting as much as US$2 billion in annual costs by laying off 9,000 of Yahoo’s 11,900 employees and contractors, eliminating perks like free food, selling its iconic headquarters and leasing back only the office space it needs.
His presentation is also a warning shot that Yahoo should not sell its core business right now.
Canyon Capital wants Yahoo to sell its Internet business instead of spinning it off. He predicted that with cost-cutting and profitability improvements, the core businesses could even amount to at least $24 billion.
Yahoo management should be “re-cast”, according to SpringOwl.
Yahoo scrapped the Alibaba spin-off after another shareholder, Starboard Value, threatened an attempt to overthrow the board if the company stuck to that plan.
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.
Maynard Webb, Yahoo’s chairman, told investors last week that the board hasn’t approved a sale process.
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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If Yahoo proceeds with its reorganization, the implementation could take years, investors said.
