Yahoo!- Are the Parts Greater than the Sum?

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Excerpts

MARISSA’S MANEUVERS

Marissa, a Google top executive, joined Yahoo! in July 2012. She was Google’s 20th employee and had played an instrumental role in designing Google’s web services. Marissa had been responsible for several of Google’s successful products like Google Maps, Google Earth, Street View, Google News, and Gmail. Marissa described Yahoo's position in online display and search advertising as ‘strong’ and hoped to “inject some innovation and some new ways of advertising” into its business model. From late 2012, Yahoo! went on an acquisition spree (Refer to Exhibit I for Yahoo’s Acquisitions under Marissa). The first acquisition in October 2012 was a mobile app named Stamped which allowed users to share things or places with their friends. “We’re looking for smaller-scale acquisitions that align well overall with our businesses,” Marissa had said at a shareholder conference call. By the end of 2013 there were 37 acquisitions and aqui-hires .

or or PayPal (11 USD)

MAXIMIZING SHAREHOLDER VALUE

In early 2015, the Yahoo! Board authorized a tax-efficient plan to pursue the spin-off of all remaining holdings in the Alibaba Group, then valued at $32 billion, which was a 15% stake. Yahoo! had previously sold $10 billion in Alibaba shares, taking a tax hit of $3 billion. Being a US company, Yahoo! faced a federal tax bill of about 35% when it sold stock in other enterprises for cash....

STARBOARD’S PROPOSITION

The letter came in the wake of Yahoo!’s Board being indecisive about the Alibaba spin-off due to the tax risk. Instead, the company announced that it would explore the reverse spin-off of Yahoo!’s assets and liabilities other than the Alibaba and Yahoo! Japan stake, which would then trade as separate companies....

SPRING OWL PROPOSITION

Spring Owl was against this proposal and came out with its own suggestions. The Spring Owl proposition was not a letter but a 99-page, exhaustive presentation titled as “A better plan for Yahoo! shareholders” which it shared in December 2015....

THE RECOURSE

A week after Yahoo! released its 4th quarter and full year 2015 results, things weren’t the same at Yahoo!’s Sunnyvale headquarters. In accordance with the announcement that 15% of the Yahoo! workforce would be laid off, Marissa announced lay-off Wednesdays, wherein employees would be laid off in tranches with effect from April 2016....

EXHIBITS

Exhibit I:Yahoo Acquisitions Since 2012

Exhibit II:Yahoo! Valuation Math (March 2016)

Exhibit III: How Yahoo! is Tracking Alibaba

Exhibit IV: Stock Price Chart of Yahoo!

Exhibit V:Net Search Ad Revenues – Worldwide