Yahoo must take essential decision once again
Yahoo, more than any other investor, should have benefited from the public market debut last week of Alibaba, the Chinese e-commerce giant.
The company sold Alibaba shares worth $6 billion after taxes, and its remaining stake is valued at $36 billion. Yet Yahoo’s shares have tumbled more than 8 percent since then, highlighting the peculiarly difficult crossroad that now confronts Yahoo and its chief executive, Marissa Mayer.
Yahoo could use the proceeds from the Alibaba share sale to go on an acquisition spree to help reinvent itself and regain relevance.
But many investors and analysts have been underwhelmed by previous takeover efforts, including the $1.1 billion purchase of the blog network Tumblr, which have yielded few obvious gains. Now restive shareholders are clamoring to receive the bulk of the cash from the Alibaba stake sale, potentially limiting Ms. Mayer’s ability to pursue acquisitions.
Once the public was able to buy Alibaba shares directly, however, the need for Yahoo as a proxy disappeared.
The company has steadily lost ground in mainstay businesses like selling display and search advertisements as competitors like Facebook, Twitter and automated ad buying systems have risen. Its email offering retains nearly 300 million users but has ceded its crown to Google’s Gmail.
One deal maker, a Silicon Valley adviser who was not authorized to speak publicly, put it more succinctly: “The company has to be fundamentally rewired.”
Source: NYT- Yahoo must take essential decision once again
