This morning, a couple of articles appeared speculating about who could potentially succeed Yahoo CEO Marissa Mayer. The hypothetical candidates included Facebook’s Sheryl Sandberg, Google/YouTube’s Susan Wojcicki and former interim Yahoo CEO Ross Levinsohn.
Then the Wall Street Journal this afternoon reported that the Yahoo board is going to consider this week whether to sell some or all of the company:
The fate of troubled Internet portal Yahoo Inc. may be decided in a marathon series of board meetings this week. Yahoo’s board plans to weigh a potential sale of the company’s core business during a series of meetings beginning Wednesday and continuing through Friday, people familiar with the matter said. The board is expected to discuss whether to proceed with a plan to spin off more than $30 billion in shares of Alibaba Holding Group Ltd., find a buyer for Yahoo’s core business of Web properties, or both, the people said.
In the wake of the $4+ billion acquisition of AOL by Verizon, some institutional investors are urging a hard look at a sale of the core business. Starboard Value LP, in particular, has been critical of Marissa Mayer’s progress in turning around Yahoo’s performance and had previously made the misguided suggestion of a merger between AOL and Yahoo.
While there may have been missteps, Mayer has probably done as good (or better) a job at bringing the company back from decrepitude as any chief executive could have, given structural pressure the company faces from Google and Facebook. On the one side, Google owns the search market, and on the other, Facebook has usurped Yahoo’s place as the preeminent display advertising platform/property.
Given her star status, expectations have always been very high for Mayer, and that may be part of the challenge she has faced. Mayer has made solid investments in mobile, video, native advertising and more recently, bold investments in paid search, undoing some of the damage and poor decisions of her predecessors, most notably Carol Bartz.
However, meaningful revenue growth has been elusive, and institutional investors are now feeling impatient. According to the WSJ article, “Private equity firms are expected to be among those taking a look at Yahoo’s core business, people familiar with the matter said.”
In total, Yahoo is a much more valuable property than AOL. The company is currently worth about $31 billion. That’s based in part on Yahoo’s remaining 15 percent interest in Alibaba and its minority stake in Yahoo Japan, worth nearly $9 billion.
Putting aside these assets, and about $6 billion in cash and cash equivalents, financial analysts have pegged the “core business” at roughly $4 billion (like AOL). Yet it remains one of the largest properties online (200+ million visitors) and one of the few true brands on the internet. It only ranks behind its two biggest competitors, Google and Facebook.
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