NEW YORK ( TheStreet) -- Even though hedge fund heavyweight Dan Loeb doesn't yet have representation on the Yahoo! ( YHOO) board, the activist investor is at least seeing some of the changes he wants at the troubled Internet giant. Yahoo!, for example, announced 2,000 job cuts on Wednesday. In a statement, Yahoo! said that it's "intensifying our efforts on our core businesses and redeploying resources to our most urgent priorities." Music to Loeb's ears? Quite possibly.
Loeb, who owned 68.9 million shares of the Sunnyvale, Calif.-based company as of the fourth-quarter, has been pushing for change at Yahoo!, even setting up a website, ValueYahoo.com, to get his message out to investors. Loeb's fund, Third Point, is Yahoo!'s largest shareholder. Yahoo! CEO Scott Thompson, who came from PayPal, a unit of eBay ( EBAY) has reportedly rebuffed Loeb on a variety of issues, but focusing on Yahoo!'s core value appears to be one issue where the duo are in lockstep. Loeb called for Yahoo! to "simplify the organization" and "focus Yahoo!'s investment in the highest priority areas." This is code for cutting jobs, something which is now happening. The layoffs announced on Wednesday will save the company $375 million annually, according to a statement released by Yahoo!. Other Yahoo! investors, such as Ironfire Capital's Eric Jackson expect there will be additional cuts to Yahoo!'s workforce, which is approaching 20,000 when factoring in contractors. Loeb nonetheless remains a major thorn in the side of Yahoo!'s board, and a proxy battle is looming between the two companies. Yahoo!, for example, appointed three members to its board last month, just days after Loeb's Third Point attempted to clinch four seats on the company's board. Third Point subsequently attacked Yahoo!'s board, saying it had made the wrong move. "Sadly for shareholders - who will once more bear the costs - the consequence of the Board's refusal to accept Third Point's shareholder-friendly proposals will be a time-consuming and distracting proxy contest that the Company can ill-afford," the company explained, in a press release.
Loeb's biggest gripe with Yahoo!, however, appears to be its handling of its Asian assets, most notably the 40% stake in Alibaba and the roughly 34% stake in Yahoo! Japan. Loeb believes Alibaba is worth $35 billion based on prior investments, and the market is not factoring that into Yahoo!'s share price. The Yahoo! board, led by Chairman Roy Bostock, tried to unlock the value by selling its stake back to Alibaba in a cash-rich split, but the negotiations failed. Loeb still wants to see "complex financial transactions
that could help realize the true value of Yahoo!'s investment in Alibaba for the benefit of all shareholders." Yahoo! is still evaluating its options for unlocking the value of its Asian assets, but has not communicated anything publicly in recent weeks. As public pressure by Loeb continues to mount on Yahoo! and a proxy fight ensues, one thing is for certain, "Mr. Pink" (as Loeb was known on Internet message boards) will not go down without a fight, and may in fact get the change he demands from Sunnyvale. It just may take much longer than he anticipated. See a list of other famous hedge funds who own Yahoo!. Third Point had no comment for this story. Shares of Yahoo! are off 0.72% to $15.09 in Wednesday trading. Interested in more on Yahoo!? See TheStreet Ratings' report card for this stock. Check out our new tech blog, Tech Trends. Follow TheStreet Tech on your wireless devices. -- Written by Chris Ciaccia in New York >To follow the writer on Twitter, go to http://twitter.com/commodity_bull. >To submit a news tip, send an email to: email@example.com