Investors turn up the heat on Yahoo as business declines

SpringOwl Asset Management LLC, another investor, proposed a plan to reduce the number of Yahoo’s employees. Inc.is facing additional pressure from investors who are running out of patience to see results.

Despite Mayer’s efforts to jumpstart Yahoo’s Internet advertising business over the past three and a half years, the company has only lost ground to Google and Facebook.

Jackson’s fund, SpringOwl, isn’t a major shareholder in Yahoo. It’s a “complex transaction”, Yahoo said, and could take more than a year to complete, prolonging a turnaround plan under Chief Executive Officer Marissa Mayer that has failed so far to produce results.

Starboard originally agitated to have Yahoo sell its stake in Alibaba but then changed its view that the company should put its core business up for sale after the U.S. Internal Revenue Service in September denied a request for a ruling on whether the spinoff would be tax free.

Mayer’s total compensation, if she stays for a full five years at Yahoo, will be $365 million, Jackson says in his presentation, citing SEC filings.

SpringOwl, a NY hedge fund, has sent a 99-page presentation to Yahoo’s board that calls for the company to lay off 9,000 of its 10,700 workers and eliminate free food for employees to help save $2 billion annually.

The Wall Street Journal earlier reported on the Canyon Capital and SpringOwl letters. With cost cutting and improvements to profitability, he predicts it could eventually be acquired for more than $24 billion. He hopes to pressure Yahoo’s board publicly, using his 22,000 Twitter followers, but will also consider waging a proxy fight.

“We do not understand the Board’s continued support of the Company’s senior management team, given its track record, its failure to increase value for shareholders and the recent spate of executive departures from the Company”, wrote Canyon Capital Advisors in a December 11 letter to Yahoo’s board. As I wrote, the plan effectively means more of the same over the next year.

More shareholders are vocalizing their opposition to Yahoo’s latest reinvention strategy, signaling a battle ahead for seats on the struggling tech company’s board if they don’t get their way. The company’s “inaction to date has been startling”, the letter stated.

Canyon didn’t specify whether it would plan to take any action.

Canyon’s call reflects a previous campaign by activist investor Starboard which in November urged Yahoo to find a buyer for its company. However, last week, Chairman Maynard Webb said the board has not approved a sale process but it has “a fiduciary duty to entertain any offers”. Officials at SpringOwl could not immediately be reached for comment.