This is the equivalent of VC's throwing out the companies founders and replacing them with someone else that the VC wants to run the company.
I think I've written the same comment about 4 times now, but Starboard is a PE firm that knows what they are doing here. Nothing in life is certain, but I doubt they would go activist in this way if they didn't have a very strong feeling that they would get the required votes.
Their position is that under Mayer all Yahoo has done is lose money, with their BABA position inflating their earnings to make YHOO look profitable.
I think most people believe that YHOO is now a walking zombie and will go bankrupt given enough time, Starboard is attempting to short circuit this and force a sale of the profitable assets, essentially returning money to shareholders before the company goes under.
I mean anyone want to try to make the point that Yahoo as it exists can turn around? I mean they've already tried layoffs, acquisitions, closing unprofitable business units. What's left to try?
That's kind of shitty if you are an employee but to be fair, I haven't heard anyone put out a believable plan that turns YHOO profitable and its hard to ask existing share holders to essentially pay for people to have jobs until their entire equity is gone.
Jerry tried to do that and the board removed him as fast a you can say buyback.
don't that raise eyebrows? investor claims they want their money back. interim ceo and founder start to suggest buyback to go private, investors promptly remove him and put a series of failures, so they can buy even more YHOO at rock bottom. now they claim giving them billions on BABA is they only way to give their money back.
Yahoo should be split up into lot's of possibly good companies and stop trying to be a weird unsuccessful monolith. Then it might have a change of growing.
For example, when I worked on the Yahoo! homepage we made about 20 or 30 amazing modules (including personally implementing half of Facebook's functionality in a module).
All of these modules were removed because people were actually using them and consequently the rest of the Yahoo! network didn't get the expected foot fall from the homepage.
Yahoo! as a company has been exploring a local maxima for a while and there is no way for them to get out of it until they accept some pretty huge short term losses. Artificial foot fall onto properties from the network prevents them needing to be the best of breed; just being on the Yahoo network allows them to be moderately successful businesses.
Wait, so Yahoo leadership was optimizing against user engagement? Sure, they may not be monetized as well as other parts of the network, but that seems like a ridiculously shortsighted decision. At this point, Yahoo's only growth case is if it starts to gain mindshare, not just reapportioning the eyeballs they already have...
the other teams probably made a point that by showing your emails on the front page the user would not have to click the ymail link and thus print two extra ads. hence losing money.
what they get instead is less users overtime and lose progressively more. but hey, someone did his job of driving ads up that quarter.
your argument is to weaken and possible kill 100 small units.
while Yahoo is now killing itself by having divisions fight for the same money, your argument will only make them die faster. as they will lose their only advantage.
what they need to do is to see the profit as a whole.
it's peanut butter manifest STILL.
another example is how the team showing native ads (click bait ads disguised as news items) is making a killing... buy they don't realise it is the exact money that left their regular ad business while costing them 1. maintaining yet another ad platform and sales 2. driving away users with words ads.
in the end, they probably gave lots of bonuses to the team in the new product that is making them lose money, and probably layd off a few people in the old ad business that's would keep giving them the exact same money without the new costs.
>>> your argument is to weaken and possible kill 100 small units.
Er, sink or swim?
>>> while Yahoo is now killing itself by having divisions fight for the same money, your argument will only make them die faster. as they will lose their only advantage.
They will never make their properties good enough while relying on network effects. They need organic traffic by being the best of breed not by being just another part of Yahoo!
>>> what they need to do is to see the profit as a whole.
I don't agree. Split them up and let each division stand on it's own or die. They can still live on Yahoo.com, just all profits and divisions are separate and smaller.
>>> it's peanut butter manifest STILL.
Years old, I can't even remember what this was about.
>>> another example is how the team showing native ads (click bait ads disguised as news items) is making a killing... buy they don't realise it is the exact money that left their regular ad business while costing them 1. maintaining yet another ad platform and sales 2. driving away users with words ads.
in the end, they probably gave lots of bonuses to the team in the new product that is making them lose money, and probably layd off a few people in the old ad business that's would keep giving them the exact same money without the new costs.
> >>> your argument is to weaken and possible kill 100 small units.
> Er, sink or swim?
i expressed badly. what i meant was no Yahoo piece can survive alone. splitting them will kill them all. it's like separating Gmail, search and ads from Google. all you gonna do is kill it.
read "kill all smaller units" on my original comment pls.
Yahoo only strength is it's size and what it can pull off because of it. which is not being used at all, because they keep running after their tail for month by month revenue.
now ask yourself: why investor would push so hard for month by month revenue on a stock that don't pay dividend?? doesn't it smell bad for you? it should. if they weren't trying to crash Yahoo, they would be 1. driving the company to make bold bets and win big on share valorization; or 2. accepting the buy back Jerry was driving a while ago.
but no, the investors want 3: crash and burn to get BABA free money.
> it's like separating Gmail, search and ads from Google. all you gonna do is kill it.
No, Gmail would almost certainly survive if split off from Google. Search and ads are basically the same product, so splitting those would weaken both but not kill either. Google search has some of the strongest engineers at Google and a near monopoly on the market, their engineers could easily build an ad system for search from scratch. Ads would be weakened but not killed - they also have some of the strongest engineers at Google; they still serve ads on mobile and AdWords.
I've seen this happen at a few companies organized as fiefdoms, each portion of the site under a different VP with a separate P&L report. Something good for one will get destroyed if it hurts another, whether or not the feature was net positive.
I was actually a huge fan of that page. It was quite configurable with (almost) everything I wanted to start my day. I set up my business stuff there. Now I am shitting bricks!
The competing activist investor hedge fund Spring Owl released a plan [0] in December with its vision to turn Yahoo! around and achieve a stock price of $113 (currently $35). The basic gist is to focus on Yahoo Finance and Yahoo Sports, kill most everything else, and handle the Alibaba tax situation (ha, as if they haven't already been trying to do that). Things could get really interesting if multiple activists are fighting for board seats over competing visions for the company.
For anyone interested in reading about a scenario like this, the book "barbarians at the gate" is very good.
Here's a question: all these big old companies are in the market for startups that they can buy to fix their business. Why not buy the big old company instead, build the product there, and keep more of the value generated? I think we'll see much more of this over the next few years: PE going after old guard tech cos like yahoo (or amd) OR going after old guard non-tech and automating everything.
I wonder how much money Yahoo spend on lobbying and political campaigns. As a citizen I'm not a fan, but the single best thing the company can achieve for its shareholders is giving them access to alibaba shares without a hefty tax bill.
not really. they bought shares that didn't offer dividends. what they SHOULD do is to sell all that now while high and invest back in the business.
with that money they can buy whatever premium content they want, give it free, and get more money back in ads. they can became the broadcast behemoth of the streaming era or whatever. (fun fact, they paid billions for broadcast.com)
yeah, the company will probably burn that money and achieve nothing... but well, sell your shares for something else you believe then.
the BABA shares are the only reason Yahoo is dieing.
investors see that as an easy sacrifice to get fast money.
and everyone is naive to believe that the third biggest online advertising company in the us (same market Google and Facebook) is worth zero dollars. really?
why those kind of investors even buy shares that are not going up nor pay dividends in the first place? and why recently you heard some twelve news about those investors trying to do that to Yahoo recently all of a sudden?
Umm, the BABA shares are the only reason why a lot of Yahoos still have jobs. Their "core" businesses are stagnant or shrinking. Wall Street values growth over everything else and Yahoo is on the wrong side of the curve (unlike Google and Facebook).
YHOO's 2015 revenue was the same as their 2012 revenue, but their cost of revenue was up 28%. They're buying traffic and making less money off it.
Meanwhile investors get no dividends while Yahoo spends their money with awful acquisitions. It's no wonder why Wall Street hates YHOO.
exactly. since the board and ceo does nothing than fight for BABA money.
and that's what those investors want.
Yahoo still makes a huge profit. stagnant, yes. would Goldman Sachs tell anyone any other company with Yahoo profits is worth zero dollars? are you really naive to believe it?
the dirty fight for this money is what kills the company. it's a snowball. the more they fight the more stagnant the more people believe the fake evaluation the cheaper dirty investors can get their BABA money free proxy.
see it as the law put: they bought shares for a company that don't pay dividends. they choose the CEOs some twelve times. now they want dividends.
just let the ceo they elected, for what it's worth, invest company money in the company as it should have happened if the amount wasn't so big it literally started a greed war.
> Yahoo still makes a huge profit. stagnant, yes. would Goldman Sachs tell anyone any other company with Yahoo profits is worth zero dollars? are you really naive to believe it?
It's not stagnant (or profitable), it's declining and the prospects for the future are even worse. In 2015, their core businesses lost money every quarter. It would have some value separated from the valuable part of the company (BABA), but the fear is that management will continue to fuck it up and destroy any remaining value. Hence the current negative valuation.
But don't listen to me, if you believe in Yahoo go buy some shares. If you're right you'll make a ton of money.
> But don't listen to me, if you believe in Yahoo go buy some shares. If you're right you'll make a ton of money.
well, probably not because they are succeeding in crashing the company as it is.
Also, if you look at the "deal" those "activist investors" are pushing to get that money, it will pay only to shares acquired before date X. So even if i knew their scheme was going to pay off, they already made sure to rig the game.
> Also, if you look at the "deal" those "activist investors" are pushing to get that money, it will pay only to shares acquired before date X. So even if i knew their scheme was going to pay off, they already made sure to rig the game.
Umm, that would be illegal. If you own shares before a deal is announced you are definitely part of the deal. No exceptions.
Traditionally, yes. But the PE guys now have big enough funds that they need to broaden their thinking about what kinds of companies might be appropriate for their own special kind of love.
Also, the way PE finances are set up, the general partners collect big fees when deals are done, regardless of the outcome. The limited partners bear most of the risk of deals that don't work out. Since general partners call the shots, a 100% chance of getting deal fees plus a 20% chance of having the deal work out creates a deal with 120% upside. i'm oversimplifying slightly, but the key point is: Such deals get done.
"Their position is that under Mayer all Yahoo has done is lose money"
How is that any different under the last few leaders? And how would it be different under their leader (assuming the answer isn't the typical private equity answer of chop the company up and sell it for scrap, and leave the company with all the debt while you get all the $$$ from selling).
I am normally anti-activist investors (my own company has poison pills up the wazoo), but this seems like a sensible move for Yahoo. Their attempt to become a media company has mostly failed, and from all accounts they seem lost. Yahoo still has a number of valuable properties that could strive in the right environment, and strip mining it would perhaps not be the worst idea.
Starboard's lack of shame is both admirable and cringeworthy. They pursue these attacks like they're Carl Ichan or Steve Schwartzman, but they're nobodies with very little track record to speak of, and they don't even have a very large stake in Yahoo to begin with (1.5%).
That's not to say they cannot have a good plan or great ideas, but they haven't presented a viable plan yet, and they spend most of their efforts attacking Yahoo management with very little substance.
To be fair attacking Yahoo management isn't exactly difficult. If you open a lemonade stand and sell someone a cup for $0.25, you've already made more than Yahoo has in years.
ever since yahoo's activities concerning china and political dissenters [1] (though this isn't the only reason to dislike them), i've never engaged with their services. i admit to a bit of schadenfreude when coming across news of any troubles they face.
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[ 4.9 ms ] story [ 14.9 ms ] threadI think I've written the same comment about 4 times now, but Starboard is a PE firm that knows what they are doing here. Nothing in life is certain, but I doubt they would go activist in this way if they didn't have a very strong feeling that they would get the required votes.
Their position is that under Mayer all Yahoo has done is lose money, with their BABA position inflating their earnings to make YHOO look profitable.
I think most people believe that YHOO is now a walking zombie and will go bankrupt given enough time, Starboard is attempting to short circuit this and force a sale of the profitable assets, essentially returning money to shareholders before the company goes under.
I mean anyone want to try to make the point that Yahoo as it exists can turn around? I mean they've already tried layoffs, acquisitions, closing unprofitable business units. What's left to try?
That's kind of shitty if you are an employee but to be fair, I haven't heard anyone put out a believable plan that turns YHOO profitable and its hard to ask existing share holders to essentially pay for people to have jobs until their entire equity is gone.
Jerry tried to do that and the board removed him as fast a you can say buyback.
don't that raise eyebrows? investor claims they want their money back. interim ceo and founder start to suggest buyback to go private, investors promptly remove him and put a series of failures, so they can buy even more YHOO at rock bottom. now they claim giving them billions on BABA is they only way to give their money back.
really?
For example, when I worked on the Yahoo! homepage we made about 20 or 30 amazing modules (including personally implementing half of Facebook's functionality in a module).
All of these modules were removed because people were actually using them and consequently the rest of the Yahoo! network didn't get the expected foot fall from the homepage.
Yahoo! as a company has been exploring a local maxima for a while and there is no way for them to get out of it until they accept some pretty huge short term losses. Artificial foot fall onto properties from the network prevents them needing to be the best of breed; just being on the Yahoo network allows them to be moderately successful businesses.
Wait, so Yahoo leadership was optimizing against user engagement? Sure, they may not be monetized as well as other parts of the network, but that seems like a ridiculously shortsighted decision. At this point, Yahoo's only growth case is if it starts to gain mindshare, not just reapportioning the eyeballs they already have...
what they get instead is less users overtime and lose progressively more. but hey, someone did his job of driving ads up that quarter.
while Yahoo is now killing itself by having divisions fight for the same money, your argument will only make them die faster. as they will lose their only advantage.
what they need to do is to see the profit as a whole.
it's peanut butter manifest STILL.
another example is how the team showing native ads (click bait ads disguised as news items) is making a killing... buy they don't realise it is the exact money that left their regular ad business while costing them 1. maintaining yet another ad platform and sales 2. driving away users with words ads.
in the end, they probably gave lots of bonuses to the team in the new product that is making them lose money, and probably layd off a few people in the old ad business that's would keep giving them the exact same money without the new costs.
Er, sink or swim?
>>> while Yahoo is now killing itself by having divisions fight for the same money, your argument will only make them die faster. as they will lose their only advantage.
They will never make their properties good enough while relying on network effects. They need organic traffic by being the best of breed not by being just another part of Yahoo!
>>> what they need to do is to see the profit as a whole.
I don't agree. Split them up and let each division stand on it's own or die. They can still live on Yahoo.com, just all profits and divisions are separate and smaller.
>>> it's peanut butter manifest STILL.
Years old, I can't even remember what this was about.
>>> another example is how the team showing native ads (click bait ads disguised as news items) is making a killing... buy they don't realise it is the exact money that left their regular ad business while costing them 1. maintaining yet another ad platform and sales 2. driving away users with words ads. in the end, they probably gave lots of bonuses to the team in the new product that is making them lose money, and probably layd off a few people in the old ad business that's would keep giving them the exact same money without the new costs.
Not sure about any of this?
> Er, sink or swim?
i expressed badly. what i meant was no Yahoo piece can survive alone. splitting them will kill them all. it's like separating Gmail, search and ads from Google. all you gonna do is kill it.
read "kill all smaller units" on my original comment pls.
Yahoo only strength is it's size and what it can pull off because of it. which is not being used at all, because they keep running after their tail for month by month revenue.
now ask yourself: why investor would push so hard for month by month revenue on a stock that don't pay dividend?? doesn't it smell bad for you? it should. if they weren't trying to crash Yahoo, they would be 1. driving the company to make bold bets and win big on share valorization; or 2. accepting the buy back Jerry was driving a while ago.
but no, the investors want 3: crash and burn to get BABA free money.
No, Gmail would almost certainly survive if split off from Google. Search and ads are basically the same product, so splitting those would weaken both but not kill either. Google search has some of the strongest engineers at Google and a near monopoly on the market, their engineers could easily build an ad system for search from scratch. Ads would be weakened but not killed - they also have some of the strongest engineers at Google; they still serve ads on mobile and AdWords.
Sure, Gmail could sell customer segment information, but there's likely a loss of information.
[0]: http://www.wsj.com/public/resources/documents/yahoopresentat...
Here's a question: all these big old companies are in the market for startups that they can buy to fix their business. Why not buy the big old company instead, build the product there, and keep more of the value generated? I think we'll see much more of this over the next few years: PE going after old guard tech cos like yahoo (or amd) OR going after old guard non-tech and automating everything.
with that money they can buy whatever premium content they want, give it free, and get more money back in ads. they can became the broadcast behemoth of the streaming era or whatever. (fun fact, they paid billions for broadcast.com)
yeah, the company will probably burn that money and achieve nothing... but well, sell your shares for something else you believe then.
investors see that as an easy sacrifice to get fast money.
and everyone is naive to believe that the third biggest online advertising company in the us (same market Google and Facebook) is worth zero dollars. really?
why those kind of investors even buy shares that are not going up nor pay dividends in the first place? and why recently you heard some twelve news about those investors trying to do that to Yahoo recently all of a sudden?
it's easy money. if you can get a little dirty
YHOO's 2015 revenue was the same as their 2012 revenue, but their cost of revenue was up 28%. They're buying traffic and making less money off it.
Meanwhile investors get no dividends while Yahoo spends their money with awful acquisitions. It's no wonder why Wall Street hates YHOO.
and that's what those investors want.
Yahoo still makes a huge profit. stagnant, yes. would Goldman Sachs tell anyone any other company with Yahoo profits is worth zero dollars? are you really naive to believe it?
the dirty fight for this money is what kills the company. it's a snowball. the more they fight the more stagnant the more people believe the fake evaluation the cheaper dirty investors can get their BABA money free proxy.
see it as the law put: they bought shares for a company that don't pay dividends. they choose the CEOs some twelve times. now they want dividends.
just let the ceo they elected, for what it's worth, invest company money in the company as it should have happened if the amount wasn't so big it literally started a greed war.
It's not stagnant (or profitable), it's declining and the prospects for the future are even worse. In 2015, their core businesses lost money every quarter. It would have some value separated from the valuable part of the company (BABA), but the fear is that management will continue to fuck it up and destroy any remaining value. Hence the current negative valuation.
But don't listen to me, if you believe in Yahoo go buy some shares. If you're right you'll make a ton of money.
well, probably not because they are succeeding in crashing the company as it is.
Also, if you look at the "deal" those "activist investors" are pushing to get that money, it will pay only to shares acquired before date X. So even if i knew their scheme was going to pay off, they already made sure to rig the game.
Umm, that would be illegal. If you own shares before a deal is announced you are definitely part of the deal. No exceptions.
Also, the way PE finances are set up, the general partners collect big fees when deals are done, regardless of the outcome. The limited partners bear most of the risk of deals that don't work out. Since general partners call the shots, a 100% chance of getting deal fees plus a 20% chance of having the deal work out creates a deal with 120% upside. i'm oversimplifying slightly, but the key point is: Such deals get done.
How is that any different under the last few leaders? And how would it be different under their leader (assuming the answer isn't the typical private equity answer of chop the company up and sell it for scrap, and leave the company with all the debt while you get all the $$$ from selling).
That's not to say they cannot have a good plan or great ideas, but they haven't presented a viable plan yet, and they spend most of their efforts attacking Yahoo management with very little substance.
[1] https://en.wikipedia.org/wiki/Criticism_of_Yahoo!#Outing_of_...