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http://www.bloombergview.com/articles/2015-12-02/yahoo-is-lo...

"But what is much more shameful is that the whole point of Yahoo as a company right now is to not pay taxes on Alibaba. I realize that seems a bit hyperbolic, but just look at those numbers. Those Alibaba taxes are worth at least two and a half times the value of Yahoo's entire business. If there was a way to avoid paying taxes on the Alibaba shares that involved burning all of Yahoo's actual businesses to the ground, Yahoo should do that all day long, and then do it again the next day. It would still add shareholder value."

If that's shameful, who should be ashamed?

- Yahoo's current management, for pretending there's anything to save?

- Yahoo's past management, for blowing their phenomenal brand equity?

- Yahoo's employees, for sticking around?

- Yahoo's investors, for owning this dog despite knowing the situation when they bought it?

- Congress, for having a braindead tax code?

- The press, for continuing to publish countless stories about a company that hasn't been relevant for at least a decade?

- Us, for continuing to read and comment on them?

- Someone else?

We could also blame everyone's parents for having the poor foresight of birthing the people responsible.

/s (because there's always that person without a sense of humor)

I'm really sick of "investors" thinking that trimming every little cost here and there is going to somehow fix things.

The investors aren't saying their plans would fix Yahoo. They are saying their plans would extract more dollars per share from Yahoo. I think they agree that their plans would lead to a dying Yahoo product.

Right. They basically want to run the company out and milk it for cash distributions.

Which is their right. Investors own the business. If you don't want to lose control, don't sell voting rights for money.

I totally agree, and a runout is probably higher in expected npv than their current strategy.

It's just weird, however, given they hired Marissa Mayer. She is, or at least is perceived to be, a product specialist; nothing about her, professionally or temperamentally, seems like she'd be good at being a ruthless cost cutter who operates run-outs.

First, the set of investors at the time Mayer was hired are not exactly the set of investors now, and second, the opinion of the investors now (even to the extent that they are the same investors) that Mayer -- or anyone else -- can turn around the Yahoo! product may not be the same as it was at the time she was hired.

I agree generally, but I don't think it's inconsistent from the investors' points of view. They could have hired her with hopes for a renaissance and then just lost patience. Mayer's performance might have disappointed them (in the sense that she's responsible for everything, not her personal performance). That's why she gets the big bucks -- she was expected to deliver results.

I actually take consolation in the fact that CEOs are under tremendous pressure to deliver results to shareholders. I would be much angrier if the board were enjoying the company jet and giving Mayer the benefit of every doubt while Yahoo! burned.

That type of look-the-other-way, cozy with the CEO type of board used to be more normal -- before activists, hedge funds, LBOs, etc. -- and there was a lot more disgusting behavior (I'm thinking specifically about Ross Johnson in Barbarians at the Gate -- flying his board to golf outings while he robbed RJR Nabisco blind).

Investors are the millions of individual share holders, not just the bunch of wall street hedge funds and holding companies.

If you're advocating that the hedge fund managers and pension funds accept a smaller return on investment in order to save Yahoo! engineers from layoffs -- that's a breach of fiduciary duty and against the law.

No. It is not against the law. I think it is only unlawful in the case where the company is actively up for sale.

Fiduciary duty applies to all agents acting on the behalf of principals, all the time. If an agent were to honestly believe that it was in the best interests of shareholders (financially) to keep Yahoo! jobs, it would be fine for him to vote that way. If an agent were to believe that layoffs were best for shareholder value, but voted otherwise in order to fulfill another objective, that's absolutely a breach of fiduciary duty, which is a legal duty.

> If an agent were to honestly believe

"Honest" or it's derivatives is the last word I would use in a sentence which includes Wall Street. Haven't Wall Street proven time and again that they are only interested in short term gains rather than a long term vision? I would be skeptical about any advice/opinion from a Wall Street firm.

Incorrect. It is actually against the law.

No it isn't. It's called value investing.

Fiduciary duty is in fact a legal duty, and it requires that agents act solely in the best interests of their principals. I have no idea what value investing has to do with this concept.

Sure, but what the parent comment suggested isn't a breach of fiduciary duty.

Sure it is.

I think investors could rightfully say that they "are sick of 'online commenters' thinking they know what Yahoo should do without having any skin in the game."

You cannot "aggressively refocus" without cutting something. For a company like Yahoo, resource allocation is a zero sum game. Moreover, if Yahoo sees iPhones and free food as the only things keeping an employee from leaving, aren't they doing themselves a favor by letting those employees quit at will?

Interestingly, these online comments would not exist were it not for Yahoo. Y Combinator would not exist. Every company that Y Combinator mentored may not exist.

Some might argue that "online commenters" probably have more skin in the game than investors, they just aren't as close to the money.

> Moreover, if Yahoo sees iPhones and free food as the only things keeping an employee from leaving, aren't they doing themselves a favor by letting those employees quit at will?

It's not that iPhones and free food keep people, it's the signal that even the little expenses are going to be penny pinched with no regard for employee morale. Which seems like a pretty good reason to get out IMO.

I think it would be more than right to say that investing does not inherently mean one has skin in the game. Or perhaps we have so diluted the concept of having skin in the game that, like free speech, we're going to say it equals spending money.

Didn't people used to complain about do-nothing managers looming over their pet projects and padding the payroll with their lackeys?

The investors aren't trying to fix Yahoo. By some estimates, the core business of Yahoo has a negative market value meaning they're not adding anything of value. Yahoo is a dying business and they don't really hold a competitive advantage in anything worthwhile. It may make sense to wind the company down and give back the capital and resources to more worthy ventures. Yahoo tried rebranding and hired a high profile CEO to no avail. It's nothing personal but if it were as easy as cutting a few projects, offering better perks and hiring good people, Yahoo would have done so already.

>> "By some estimates, the core business of Yahoo has a negative market value..."

I dislike those estimates. Yahoo is the Nth highest-traffic site in the English speaking world, where N is probably < 100. It strains credulity to imagine that a site with that much traction truly has negative value.

Edit: [0] claims that Yahoo is the 6th most popular site on the web.

[0] http://www.alexa.com/topsites

According to Wikipedia, Yahoo!'s 2014 net income was $7.52 billion. Do they get income from their stake in Alibaba?

They sold a lot of shares during the alibaba IPO in 2014 : https://investor.yahoo.net/secfiling.cfm?filingid=1193125-14... .

> Yahoo is the Nth highest-traffic site in the English speaking world, where N is probably > 100.

That's true of most sites in the English speaking world. If you remove the fuzziness of "probably", its true of all but 100.

> It strains credulity to imagine that a site with that much traction truly has negative value.

That only makes a little bit of sense if you flip the > to be a <.

But even then, traffic is a cost driver; its only worth something if you have an effective way of monetize it. "We lose money on every transaction, but make up for it in volume" is as much of a fallacy with web sites where the transactions are "visits" as it is for any other type of interaction.

Generating value for shareholders is different from generating value. Yahoo may be a fantastic charitable enterprise, making products users like well enough.

not growing does not equal dying.

> When's the last time you saw a commercial for Yahoo, or could even name what it is that they do?

A few weeks back there were still hundreds of yahoo ads all over san francisco. Albeit it didn't communicate on anything else than a logo, I am not too sure marketing is what yahoo needs to exit its technical mediocrity.

Same ads are running in Boston. Nothing except a yahoo logo.

Well for instance, if I see a commercial for something like Expedia I know immediately what Expedia is and how it can be used. I also know the web site name.

At the very least, Yahoo needs that type of thing: something to remind us who they are and why the hell you would visit their site.

Today, there is still a giant Yahoo billboard in SOMA. I drove past it this morning.

> I'm really sick of "investors" thinking that trimming every little cost here and there is going to somehow fix things.

Giving such control to investors is the least bad compromise for running companies. On the spectrum of: "let company survive because it should" to "let company survive because it is giving us as much in returns as we expect", Yahoo is towards the latter. People think they will lose money on Yahoo because they don't see a path for its growth. The end of the spectrum with "let company survive because it should" is terrible, just ask current and former socialist countries where many industries are/were government owned. An example is Air India, which is propped up the government as a showcase national carrier in spite of being massively loss making and a shitty carrier in the modern era of race-to-the-air-travel-experience-bottom.

Bluntly, it doesn't matter what the investors or managers do. They can piss off their employees, fire them, or do neither; they can cut products and staff or grow or both or neither; they can become two companies or three or 400; they can spend their $5 billion of cash on marketing or salaries or lawyers. Nothing is going to bring back "Yahoo's core business". Ever. It's dead. Dead dead dead. We're not even beating its bloody corpse because its corpse rotted into dust years ago.

Yahoo's investors should be focused on how they get as much as possible of the current market value of Yahoo's:

- Yahoo Japan shares - Alibabi shares - cash

Period. That's how they maximize total return. Not fretting over whether they pay for employees' phones and coffee. You're right that it isn't the problem. But neither is any of that other stuff you talked about.

It's dead, Jim. Move on.

"Fix things?" What are you talking about? yahoo is a profit delivery vehicle. They should have cranked out dividends if they didn't want this.

Plus, the brand is severely damaged, it's become the new aol and while it functions and could potentially make money, it's not going to be a darling again. Not to the people here. Some clever selling off of things could be interesting, yahoo fantasy sports should be played on Facebook, for example. There are other interesting things that could happen, if they don't make it toxic to the buyers but it's almost certain they will try to saddle the tax burden on it with tricky debt transaction or something.

For a mature public company like Yahoo, the investors are actually more likely to know what's best for the company than management, whose interests are highly misaligned. In this case, putting yahoo into runoff mode probably offers the best ROI.