NEW YORK (TheStreet) -- Chegg (CHGG) CEO Dan Rosensweig was asked about Yahoo! (YHOO) while on CNBC Wednesday -- and he's a good guy to ask. Rosensweig was the successful COO there for many years under Terry Semel.
When asked about what CEO Marissa Mayer would buy with her cash pile, Rosensweig said, "The problem is: what can she bid on that would be great? Facebook (FB) , Google (GOOG) , and Apple (AAPL) can all outbid her."
Dan Primack from Fortune wrote a post Wednesday explaining why Rosensweig was wrong.
His argument is that Mayer could outbid these giants if only her board would unshackle her.
Instead of doing deals as she has done to date, involving many of her advisers and underlings, Primack argues that she should be more like Mark Zuckerberg. In other words, she should be given a blank check from the board and negotiate the deal one-on-one. This way, there would be no leaks to the press and one of the big guys couldn't swoop in and outbid her.
"To be sure, Mayer does not have the same structural clout at Yahoo! that Zuckerberg has at Facebook. She is not the company's founder, nor does she control anywhere near a majority of voting stock. But if the board really still believes in her vision for the company, then it should give her a defined checkbook and the flexibility to negotiate without interference....
"Yahoo! can still compete for big deals. But only if it gets out of its own way."
I think Primack is wrong that governance and procedure have held Mayer back from doing "transformational" deals.
Here's the problem.
1. Basic economics still apply.
Rosensweig is right that Yahoo! is still a minnow against any of those other companies he mentioned. The press keeps referring to the cash Yahoo! now has thanks to the Alibaba (BABA) IPO as if it could buy the world. It can't.