Activist investor turns up heat on Yahoo, seeks leadership change

Starboard said the Board of Yahoo! must be able to assess and compare a stand-alone spin-off and restructuring of its core Search and Display advertising businesses, or the Core Business, versus the value that could be received through a competitive sale process resulting in a sale of the Core Business to a strategic or financial buyer.

The end of the Yahoo Screen is part of a purge being directed by CEO Marissa Mayer with hopes of generating greater profit elsewhere.

Yahoo was urged by activist shareholder Starboard Value LP to overhaul its management and board, saying that “significant changes” were needed at the company.

Smith said it is unfortunate that shareholders have no confidence in the Board and management to execute the proposed separation of Yahoo’s assets or improve the performance of its core business. But investors appear to have lost faith, sending the company’s stock down more than 30 percent past year.

Over the course of Ms. Mayer’s tenure, Yahoo’s core business has shrunk. In its earlier letter, the investor criticized management but stopped short of calling for a change at the top.

A key investor in Yahoo demanded Wednesday that the board of directors undertake a management change and warned it could push for a board shakeup if that did not happen.

Shares of Yahoo fell 0.4% to $32.07 in morning trading in NY. Three years after its original video production failed to meet customer expectations, the Internet company quietly shutdown Yahoo Screen.

Yahoo shares were down 0.7 percent at $31.98 in early trade Wednesday.

Some shareholders say they doubt whether Mayer has a robust plan to revive the struggling Internet media business.

“The current valuation of Yahoo implies either a massive tax liability on Yahoo’s minority equity interests in Alibaba and Yahoo Japan Corporation (“Yahoo Japan”) or that the remaining operating assets of Yahoo are worthless, or some combination of the two”, said Smith.

The plan to spin off the Alibaba stake hit a hurdle in September when the U.S. Internal Revenue Service did not make a decision on Yahoo’s request for a ruling on whether the transaction would be tax-free.

Mayer – the former Google executive who in 2012 was brought in to turn around Yahoo as it competes with Google, Facebook and others for ad sales – is the company’s fourth CEO since co-founder Jerry Yang stepped down as chief executive in 2008.