Without going into the boring details of Yahoo’s (YHOO - Analyst Report) sale plans (that investors must know by heart now), let’s jump straight to the question of new board members.
Yahoo appointed two new directors to its board just before a crucial meeting with activist investor Starboard Value. The two positions have been vacant since last year when Max Levchin and Charles Schwab resigned from their positions. Starboard had been pushing for a board seat, which now looks unlikely without a proxy fight (all Yahoo directors are up for re-election later this year and nominations for the new positions are to be filed by Mar 26).
Levchin and Schwab are being replaced with Catherine Friedman and Eric Brandt.
Catherine Friedman: She went from West Coast Health Care to co-head Morgan Stanley's biotech practice, where she also dealt with mergers and acquisitions for about 22 years. She is a serving member of six public company boards (including Yahoo).
One objection to her appointment is with respect to the number of boards on which she serves. Proxy-advisory firms generally frown upon a person serving on more than six boards, so she is just about safe in this respect. But the WSJ reports that “Institutional Shareholder Services will urge the defeat of any non-CEO director with more than five boards, starting in 2017”. Some of Yahoo’s institutional investors also oppose her appointment on this count.
Eric Brandt: He is the former CFO of Broadcom before it merged into Avago. Since Broadcom had been a highly successful acquirer of other companies (it did 50+ acquisitions pre-merger), Brandt has experience in the field. He is a chemical engineer with experience in the pharmaceutical industry (before Broadcom where he served as CFO for eight years).
It’s apparent that biotech and pharmaceutical aren’t exactly technology, but let’s weigh this against Yahoo CEO Marissa Mayer’s own background: Mayer joined Stanford University to become a doctor and later changed her major to symbolic systems, which was a program to combine computer science, psychology, linguistics and philosophy to determine how computers can be made to mimic human thought. Mayer picked up bachelor's and master's degrees from Stanford University focused on artificial intelligence and has to her credit some patents in AI and interface design.
Now consider that if Yahoo goes on sale, Mayer could easily become one of the buyers along with a number of private investors to steer the battered Internet giant on the course of artificial intelligence.
I know this is a highly speculative theory, but one that seems plausible given the circumstances.
Most investors, analysts, the market and Yahoo employees seem to be as angry as ever, but note that Starboard has reserved comment since its private meeting with Yahoo’s board.
Here are some of the choice comments from all over:
What The Market Says
Eric Jackson, managing director of SpringOwl Asset Management: “It's like they are giving the middle finger to Starboard”.
Former Yahoo executive who declined to be named: “When you’re outgunned, outmanned, outspent and out engineered, why would you want to fight that fight?”
Earlier in Feb, SpringOwl Asset Management LLC: “We believe the strategic plan does not fully address the core issues which have destroyed shareholder value — poor capital allocation, bad strategic partnerships, out of control spending and a bloated workforce.” And, “We are committed to continuing to push for moves that will fundamentally turn the company around and result in a higher stock price and value creation for all shareholders.”
What Analysts Say
SunTrust Robinson Humphrey analyst Robert Peck: "We are unclear why the company would make such a move before impending discussions reportedly this week to take place with Starboard." And, "We take this news as negative, as it likely means the company is gearing up for a proxy contest."
Earlier in Feb, Susquehanna Financial Group analyst Shyam Patil: “If you look at what the activist (shareholders) wanted, Yahoo probably checked off all the boxes.” And, “The question is how serious are they about these areas.”
Earlier in Feb, Mizuho Securities analyst Neil Doshi: Yahoo should consider offers from interested buyers of its Internet properties — quickly. The sale of those properties, which attract more than 1 billion monthly active users, could fetch $5 billion to $8 billion. There’s definitely a risk it might lose some value the longer they wait.”
What Yahoo Says
Yahoo didn’t make any of its directors available for interviews. But in a company press release, chairman of the board, Maynard Webb called Friedman and Brandt "highly, respected, experienced practitioners in their fields," and added, "Today we are at an important juncture in Yahoo's transformation, as we execute our refined strategy and explore strategic alternatives for the company”.
Yahoo has reportedly approached or is in the process of approaching 40 companies and private equity firms for a sale.
Mayer said, earlier in Feb, “A simplified Yahoo will yield better focus, execution and ultimately increase shareholder value”.
Webb said in a statement earlier in Feb that Yahoo would consider “additional strategic alternatives,” and “engage on qualified strategic proposals.”
Bottom Line
While stakeholders contribute to the conversation and discuss the pros and cons of Yahoo’s future, users like me that love Yahoo’s core platforms like mail, finance, etc wait, watch and hope that they won’t kill off these things.
By: Sejuti Banerjea.
Review: Emerging Market Formulations &
Research Unit, Flagship Records.
For The #FacebookTeam