Marissa Mayer's First Big Bungle at Yahoo!

NEW YORK ( TheStreet) -- Being a Yahoo! ( YHOO) shareholder sometimes feels like being a punching bag.

With the surprise hiring a few weeks ago of ex- Google ( GOOG) executive Marissa Mayer, it seemed like shareholders had finally caught a break.

Although there wasn't an immediate pop in the stock price, it steadily started moving up from $15 to near the important technical level of $16.35 late last week.

And then Yahoo! released an 8-K saying the company was reserving the right to not share substantially all of the proceeds from the $7.1 billion sale of its Alibaba stake with shareholders when the deal closes by November. Since then, Yahoo!'s stock has dropped from more than $16 to $14.70.

The coverage since that announcement has been interesting. Shareholders who have a vested interest in seeing the stock go up have been understandably disappointed by the move -- as they, rightly, worry that some M&A spree will quickly vaporize all that incoming cash.

Yet, many in the business or tech media have been supportive of Mayer's move, saying that, if Yahoo! is going to recreate itself, it needs to rebuild itself, and acquisitions are going to be more helpful to do that than financial engineering like buybacks or dividends.

I think that's right to some degree. Personally, I've always been most supportive of a combination of buybacks and M&A as a use of cash for monetizing the Alibaba and Yahoo! Japan stakes.

However, most of these media folks are being a little naive when they applaud Mayer for having the courage to do the right thing in the long term by rebuilding Yahoo! through acquisition. And don't forget: Probably none of these commentators own Yahoo! stock.

As a longtime Yahoo! shareholder, I've heard Yahoo!'s management and board promise that they are doing things to increase "long-term shareholder value" for more than six years! But if they keep destroying shareholder value, they should just say, "Be patient... we need more time!"

The truth is that Yahoo! can make dumb capital allocations if management thinks from purely a financial engineering perspective (like doing a special dividend a la Microsoft ( MSFT)) or from a long-term growth perspective (like M&A). But management can also make wise choices.

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