The wide variance between the proposals put forth by Canyon Capital, SpringOwl and Starboard Value LP, the activist investor who has pressured Yahoo over the past year, highlights the different directions the Internet business could go if it chooses to abandon Ms. Mayer’s turnaround.
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The details of the reorganization are supposed to be announced next month when the Sunnyvale, California, company releases its fourth-quarter earnings.
A defense by CEO Marissa Mayer clearly failed to convince some investors that a possible sale of the core business would be a better move.
A Yahoo spokeswoman declined to comment.
SpringOwl also said that Yahoo must “aggressively cut costs” to get the most out of the company, including selling the company’s headquarters and eliminating employee perks like free food and company iPhones.
Another investor, NY hedge fund SpringOwl Asset Management, has proposed slashing the company’s workforce by 75 per cent while replacing Ms Mayer with an operations-focused chief executive. SpringOwl is only a $300 million fund. But his plan is to round up major shareholders to rally around his plan. It sent a letter to Yahoo on Friday calling for immediate action, according to the Wall Street Journal. To really send a message that the era of Mayer is over, he is also pushing for Yahoo to revert to its old logo. With cost cutting and improvements to profitability, he predicts it could eventually be acquired for more than $24 billion. He hopes to pressure Yahoo’s board publicly, using his 22,000 Twitter followers, but will also consider waging a proxy fight. As I wrote, the plan effectively means more of the same over the next year. In its December 11 letter to Yahoo’s board, Canyon Capital, which owns about 10 million shares, or 1.1% of the company, criticized directors for failing to prepare a backup plan to the Alibaba spinoff.
Starboard Value and other shareholders are unlikely to share the board’s patience and have have written letters to the Yahoo board, voicing their opposition to the company’s current path.
Yahoo shelved plans to spin off its stake in Chinese e-commerce giant Alibaba Group Holding Ltd last Wednesday, under pressure from investors – including activist Starboard Value – anxious about billions of dollars in tax liabilities that could weigh on the value of the entity. Last week, Yahoo Chairman Maynard Webb said the company’s board “has complete confidence in the management team and the leadership” of the company.
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Many analysts and observers have commented that Mayer took on an impossible task of turning around Yahoo, which was already a lost cause by the time she became CEO.
