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Yahoo! Shareholders Should Be Heeded, Not Attacked

Shareholders are not always right, of course. Every argument’s merits should be considered on its own.  But I tend to weight the opinions of a shareholder more than a non-shareholder and will continue to do so. 

It’s silly to suggest that being critical is “attacking.”  The use of that word implies that it’s unfair and shouldn’t be done. Is that the world we want to live in?  Where we have to blindly salute to a CEO without criticism?  That’s nonsense. It’s perfectly fair to point out concerns and mistakes.  Others are free to discuss these points of view and whether they are correct or not.

You can disagree with my points about Yahoo!, but don’t tell me I don’t have the right to air them or that I’m just trying to manipulate the stock price.

So as to the points of the argument which the ex-Yahoo! employee, Minich, disagreed with, I’d like to respond:

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The Tax Efficiency of Selling Yahoo! to Alibaba or SoftBank. Minich seems to believe that if Yahoo! agreed to be acquired for “another 30-40%” higher than the current price, it would be “short-sighted” because “long-term shareholder interests are better served by leaving the company in the hands of Marissa.” I don’t see why the one result should affect the other. If either Alibaba or SoftBank acquired Yahoo! and agreed to keep Yahoo! core separate -- and they believed in Mayer’s long-term plan -- they could encourage her to stay on as CEO and see that plan through, either as a private or a public entity. 

My original point in arguing for a sale to either of these entities is that Yahoo! will be on the hook for at least a $17 or $18 billion tax bill when they sell their stakes in Yahoo! Japan and Alibaba.  Why not save a substantial amount of those taxes and share them with their shareholders as well as Alibaba and SoftBank? It’s picking up a dollar on the street. It has nothing to do with Mayer’s strategy -- unless her only reason not to sell is because she likes to be the CEO of a $37 billion company vs. a $5 billion company.  But that is not her decision; it is the decision of Yahoo!’s shareholders.

Minich believes Mayer made a conscious decision to turn her back on Yahoo!’s legacy display business in favor of building up native ads. Why would any CEO turn her back on a profitable business just to let it go into free fall while building up some new type of business?  If Minich is correct, Mayer was incredibly reckless and naive in doing so.  If he’s wrong, and the business just died out of bumbling the sales leadership and general neglect, it doesn’t reflect well on Mayer either.  There’s no reason she couldn’t have sustained the existing business as much as possible while working at getting native ads going.  This brings me to the next point.

Minich believes I’m giving up on Mayer “a quarter too soon” – “a classic example of Wall Street short-term thinking.” His optimism is that, in the Yahoo! second-quarter report, the number of ads sold increased 24% year over year and now native ads are 40% of impressions sold.  He believes that Yahoo!’s sales organization is better today because (A) Yahoo! isn’t dependent on “the whims of a few agencies and large advertisers” and (B) they now have a more “diversified customer base” of “many thousands of large and small advertisers.” 

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