Activist investor Starboard Value LP on Wednesday ramped up pressure on Yahoo Inc, taking aim at Chief Executive Officer Marissa Mayer and her leadership team and raising the prospect that a proxy battle is approaching.
Starboard in a letter to the board of directors implied that Mayer and her officers needed to go, without naming her specifically.
"To be successful, dramatically different thinking is required, together with significant changes across all aspects of the business starting at the board level, and including executive leadership," Starboard CEO Jeffrey Smith said in the letter on Wednesday.
Starboard, which owns about 0.75 percent of Yahoo, has been pushing for changes at the Internet company since 2014, urging it to separate its Asian assets and auction off the core business.
But Yahoo is resisting, instead pursuing a tax-free spinoff of the core business, which could take at least a year.
Some analysts think board upheaval may be in the works.
"If the board is sufficiently confident that their current management team has the right plan, then the board needs to prepare to be replaced because that's probably going to happen," said Pivotal Research Group analyst Brian Wieser, who recommends holding the stock. "I don't think many shareholders will get into the way of an activist slate."
Yahoo is scheduled to report quarterly earnings on Jan. 26. The deadline for shareholders to nominate directors for the anticipated May annual meeting is expected to be in late February through March 26.
MARKET VALUE HAS "COLLAPSED"
Smith said in the letter he is confident that buyers are expressing interest in Yahoo's core business, but the company is not pursuing the suitors.
Verizon Communications is among the technology, media and telecommunications companies seen as potential buyers of Yahoo's core business. Verizon's chief financial officer said in December such a sale could make sense though it was premature to discuss.
After heading Yahoo for more than three years, Mayer has been unable to revive growth in its revenues and faces stiff competition from the likes of Facebook Inc and Alphabet Inc's Google unit.
Some shareholders said they doubt whether Mayer has a robust plan to revive the struggling Internet media business.
They have criticized her for a series of ineffective acquisitions and being unable to stem a continued decline in the value of the Internet business, citing them as reasons to replace her.
In the letter Smith claimed Yahoo's market value, without its Alibaba shares, "has collapsed and is currently trading near zero."
The Alibaba stake, worth more than $30 billion, accounts for the bulk of Yahoo's market value, while its 35 percent stake in Yahoo Japan is worth $8.5 billion.
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