Yahoo investor Starboard wants Marissa Mayer gone, threatens board fight

Starboard Value, the activist investor that has been on Yahoo’s case for a while, is calling for a management and board overhaul at the Sunnyvale company.

In a letter dated Wednesday, Starboard basically says “current management” has run out of time to implement its turnaround plan and that “dramatically different thinking is required.” The investor, which owns less than 1 percent of Yahoo shares, also says that unless the board supports its call to change management — read: fire CEO Marissa Mayer — it should go, too.

“If the Board is unwilling to accept the need for significant change, then an election contest may very well be needed so that shareholders can replace a majority of the Board with directors who will represent their best interests and approach the situation with an open mind and a fresh perspective,” Jeff Smith, Starboard’s managing member.

This is Starboard’s somewhat delayed response to the plan Yahoo rolled out last month, which was to cancel the spinoff of its valuable Alibaba stake (after pressure from Starboard) and say it will spin off the core Internet business instead — suggesting that the moves would take about a year. Yahoo Chairman Maynard Webb also pledged support for Mayer and said the company isn’t for sale.

In today’s letter, Starboard expressed “extreme” frustration about it all, and accused Webb of ignoring “inbound interest” from potential buyers of the Internet business. That business, by the way, should be fixable by people other than those who are in charge of it now, according to Smith. All they have to do is choose different priorities, concentrate on what’s making money and cut costs, the letter says.

Yahoo insists today that it’s doing what it can, and that it’s regularly talking to shareholders.

“Yahoo is in the midst of a multiyear transformation. We attract more than a billion people every month and we’ve built a profitable, billion dollar business in mobile, video, native and social that we expect will drive sustainable growth,” a company spokeswoman said in an email. She said the company will share “additional plans for a more focused Yahoo” during its fourth-quarter earnings call, which should come at the end of the month.

Mayer — the former Google executive who in 2012 was brought in to turn around Yahoo as it competes with Google, Facebook and others for ad sales — is the company’s fourth CEO since co-founder Jerry Yang stepped down as chief executive in 2008.

Starboard’s letter comes after a Reuters report this week that other investors want Yahoo to sell its core business now, before it further deteriorates in value.

Updated above with Yahoo comment.

 

Photo: Yahoo CEO Marissa Mayer speaks at the company’s first mobile developer conference at Nob Hill Masonic Center in San Francisco, Calif., on Feb. 19, 2015. Investors including Starboard Value want Mayer replaced. (John Green/Bay Area News Group)

 

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  • hoapres

    Mayer is PROUDLY WORKING together training her Indian h1b replacement to send her job to Bangalore.

    • Cheap & Nothing Wasted

      LOL!

  • Livegreen

    Just when you thought Yahoo wasn’t getting enough good publicity, along comes Starboard and makes it worse. Replacing CEO after CEO isn’t going to help any investment. And rushing for a sale isn’t going to increase the selling process. I’m not sure about Mayer, but it does take years to turn around a company with as many problems as Yahoo. I am sure about Starboard’s non-stop bad publicity. Makes one wonder if they’re not working for a competitor?

  • Cheap & Nothing Wasted

    Mayer’s problems are that she’s a micro-manager & never ran an entire company before.

    She’s made a mess out of Yahoo mail by obsessing over colors, while at the same time, her other changes caused it to not work very well at times.
    She’s wasted millions on parties, but I disagree with Starboard that free food for employees is a waste. If they stay in the buildings, they don’t go out & drink, which causes serious problems that end up costing far more money. In addition, they end up working a bit more & are far happier than if they paid for their own food. It’s a cheap way to give the employees something akin to a pay raise & it can be written off as an expense on Yahoo’s tax returns.

  • hoapres

    I had a dream.
    Yahoo, A Microsoft Company
    AND
    Yang blew it.

 
 
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