The search engine company recently appointed two new director without the consent of hedge fund activist StarBoard Value.
Amid the transitional phase that Yahoo! Inc. currently in, the search engine organization announced yesterday that they have just appointment two new directors to its board. The bold move by the internet company clearly avows how fixated it is to battle investor activists.
The new additions to the Yahoo family include Catherine Friedman who is a former managing director of Morgan Stanley, along with Eric Brandt, who is the former finance chief of Broadcom Corp, a semiconductor company. In the past few months, two of Yahoo’s board members Max Levchin and Charles Schwab had resigned due to other professional commitments but with the addition of these two members, the count comes back to nine members.
As for current CEO Marissa Mayer, she is working hard on keeping her job. According to a recent interview on the ‘Charlie Ross Show, Ms. Mayer mentioned the sale of the company and added that she hopes that this strategic alternative still leaves a play for her in the internet company and furthermore said that even if the company is privatized and acquired by a private equity firm, they would still honor the commitments of their shareholders.
However, the activist hedge fund Starboard Value LP has been quite critical of Mayer’s efforts throughout as they believe that she failed to live up to her promises of turning around the core business of the company and most her plans failed to deliver. Furthermore, they believe that she did not manage to restore growth and generate enough returns for the investors.
People familiar with the matter stated that there is a potential proxy fight on its way which could possibly lead to Starboard Value completely restructuring the board with new directors. However, the CEO has expressed her faith in the latest turnaround plan. She believes that the success is on its way and might take as much as five and seven years; and also believes that the company’s core business going private can serve as an opportunity for her as well as the search engine giant as it will be away from the public eye and at least they will not have to worry about maintaining a good public image, for a while.
The turnaround plan includes cost cutting strategies so that the organization can put its resources and investments to better use such as investing in better opportunities to drive efficiency. These cut costing strategies could lead to more job cuts. On Friday, the company also announced that it will be shutting down its messaging service, LiveText as well by the end of the month.
Yahoo stock is currently at $33.81 up by 3.02% while the market capitalization of the search engine company is at $32.30 billion.
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