Eighteen months ago, I sounded the alarm that Yahoo! (YHOO) was going in a downward spiral with Marissa Mayer leading it. At the time, the reaction from most was to say the stock is up.
We know now that had nothing to do with her -- as I said at the time -- and everything to do with its stake in China-based ecommerce giant Alibaba (BABA). As described in Nicholas Carlson's book Marissa Mayer and the Fight to Save Yahoo!, I reached out to activist investor Starboard Value that summer and suggested that they take a position in Yahoo! to push for change. They did just a few months later. Now they're back, saying the board of directors should sell the core business and keep the Asian stakes.
Will the board sit up and do what Starboard wants? The Wall Street Journal says it will, as soon as this week, when the board meets. Kara Swisher of Re/code this morning says it won't because the board is made up of people Mayer picked.
I agree with Swisher. This board -- even though they are supposed to represent Yahoo! shareholders -- feels a sense of obligation to Mayer.
While there's obviously pressure on the board and Mayer to show results, it is going to be difficult for the board to agree with Starboard that the best course of action after overseeing a nuclear wasteland destruction of value in the core business under their watch is to now sell at the lows.
It would be as if a new CEO came in to run Groupon (GRPN) at $30 per share with a new board and then four years later put up a "for sale" sign at $2 per share. That's possible, and you can always argue that Groupon could go to $1, but is the board really going to be able to get onside with that plan?
I do agree with Swisher's assertion that Mayer will probably go out on her own terms. That's the big unknown. What does Mayer want to do? I don't think anyone knows for certain. It is clear that she is unfit to continue to serve as CEO. It was obvious in the summer of 2014; it's obvious now. Things don't get better when you put off inevitable decisions at Yahoo!.
Was it wise to keep an inflated headcount at the company when venture capitalist Marc Andreessen was telling Mayer to cut 10,000 people right away? Obviously not. Hard choices at Yahoo! are still waiting to be made.