Yahoo shares up slightly amid CEO speculation

1 Dec 2015 | Author: | No comments yet »

And The Next CEO Of Yahoo Could Be….

SunTrust Robinson Humphreys Internet equity analyst Robert Peck, in a report issued Monday, said the investment banking firm had discussions with tech industry people and investors about the situation. It’s no secret that Yahoo (YHOO) CEO Marissa Mayer faces challenges to retain talent amid the company’s slow turnaround, as a number of top executives have left and she is under pressure from activist investor Starboard Value.SAN FRANCISCO — Marissa Mayer’s nearly four-year attempt to turn around Yahoo needs a turnaround itself, repeating a pattern of futility that has hobbled one of the Internet’s best-known companies for the past decade.

SAN FRANCISCO — Yahoo has starred in a decadelong soap opera during which it’s run through five CEOs, fended off a hostile-takeover bid from Microsoft and sparred (often unsuccessfully) with activist investors who muscled their way on to the Internet company’s board. SunTrust’s Robert Peck, who previously speculated Mayer may be gone in a year,has a new note out Monday, handicapping who might be best for the top spot if Mayer leaves, and what attributes a new CEO should have. 1) Public CEO experience; 2) Familiarity with Yahoo, its core business, unique challenges and opportunities; 3) Media background; 4) Technology experience; and 5) Turnaround executions or strong operational experience. Like her predecessors as Yahoo CEO, Mayer has been unable to snap the company out of a financial funk, despite spending billions on acquisitions and new projects.

Investors may be getting tired of waiting for the turnaround initiatives to take as questions about the health of the company’s core business begin to swirl. The most frequently mentioned were Scout Media chairman Ross Levinsohn, a former Yahoo interim CEO, and Chegg CEO Dan Rosensweig, a former Yahoo COO. “Most of the people that mentioned their names cited not only their public CEO leadership, media and technology acumen, but also their deep intimacy with Yahoo’s inner workings,” Peck wrote. “Much as Jack Dorsey was seen as uniquely qualified to be Twitter’s CEO for his intimate knowledge of Twitter, many point to Mr Levinsohn and Mr. As for his top ten candidates, he scored a list of 40 possible CEOs on the aforementioned five characteristics and came up with this list (in no particular order): Ross Levinsohn, Chegg’s (CHGG) Dan Rosensweig, Facebook’s (FB) Sheryl Sandberg, CBS Interactive’s Jim Lanzone, David Rosenblatt, Margo Georgiadis, YouTube’s (GOOGL) Susan Wojcicki, General Electric’s (GE) Beth Comstock, NBCUniversal’s Linda Yaccarino, and Jason Kilar. Activist investor Jeffrey Smith, of hedge fund Starboard Value, is urging Mayer to abandon a spinoff of the Yahoo’s most valuable asset — a $30 billion stake in Chinese e-commerce giant Alibaba Group — and sell the company’s Internet business instead. Of course, as Peck writes, there’s no promise that Mayer will step down in the future, or executives from firms like Facebook, Google and GE would be willing to make the change.

If Mayer continues down her current course, Smith is threatening to lead a shareholder mutiny aimed at overthrowing Yahoo’s board next year — a rebellion that, if successful, could lead to her ouster. She has pledged that Yahoo’s revenue will eventually increase at the same clip as overall digital-advertising revenue, something the company hasn’t come close to doing yet. The research firm noted a few important characteristics to evaluate the potential CEO on, based on its discussion with investors and industry experts. It still might happen if Mayer’s big bets on mobile applications and online video pay off and Yahoo gets the all-clear from the feds to use Google’s search technology to attract more traffic and sell more advertising. After conversations with some of the industry’s top participants, he considered what attributes would be needed in a candidate if Yahoo decides to dump Mayer and named ten of the top potential candidates.

According to several industry experts, the company should be led by an individual with a good public CEO experience, and a particular focus on the internet space that could lead Yahoo toward long term growth. Other names on the “not likely” to be interested list: AOL CEO Tim Armstrong, Ariana Huffington and Softbank COO and former Google executive Nikesh Arora.

Mayer’s approval rating among those who posted on the employer-review website Glassdoor.com has fallen to 73 percent from 99 percent after her July 2012 hiring. Some unsubstantiated reports suggest that Yahoo plans to unveil a digital assistant to compete against Apple’s Siri, Google Now and Microsoft’s Cortana. Now Mayer is drawing up plans for another major shake-up, one likely to eliminate hundreds of jobs as Yahoo sharpens its focus on “fewer products with higher quality,” as she said in October.

The big purge: Many investors believe Yahoo remains bloated, given that its net revenue has fallen from $5.4 billion in 2008 to a projected $4 billion this year. The third and fourth are having a media background and technology experience, and the fifth is “strong operational experience” or solid turnaround executions. In an apparent attempt to placate Wall Street, Mayer plans to jettison an unspecified number of services that have either been losing money or are barely making money. Peck emphasized that it’s unclear for now what Yahoo’s board of directors might do and that he and his team only compiled the list to respond to investor questions.

He sees the next big catalysts as being a notice about the convertible bonds, a “will” letter from Skadden Arps, and possibly a response from Yahoo to Starboard’s suggestions. The SunTrust analyst continues to rate Yahoo as a Buy with a $40 per share price target, assuming that the spinoff of Aabaco is tax-free, as it is expected to be. Analysts at SunTrust have maintained its Buy rating on the stock along with a price target of $40, based on the belief that any response to Starboard’s letter could act as a catalyst for the stock. Mayer bought dozens of startups to bring in more engineering expertise in mobile devices and overhauled Yahoo’s apps for weather, sports, Flickr and email. She made big splashes by hiring former NBC News anchor Katie Couric to handle online-video reports and acquired the trendy blogging service Tumblr for $1.1 billion.

National Association of Realtors (NAR), the firm that reveals monthly housing index, announced that pending home sales for October represents an increase of 3.9% from an year-ago period. That holding — in retrospect, Yahoo’s best investment ever — soared in value as Alibaba’s e-commerce bazaar boomed, prompting investors to snap up Yahoo shares in order to profit while Alibaba was still privately held. In a press release, NAR chief economist, Lawrence Yun announced that major contributors for sales growth were recorded in the West and Northeast region “which hasn’t seen much of the drastic price appreciation and supply constraints that are occurring in other parts of the country.” Competitive metro regions, especially in South and MidWest weighed down the growth in contracts signing in October due to increased housing prices and low inventory concerns. However, the overall house buying activity is on an upward track as existing home sales have been pushed up by more than 5 million for eight consecutive months.

Kessler likens Mayer’s plight to a star quarterback who signs with a National Football League franchise that’s in the doldrums. “When the quarterback starts out, people get very excited about the potential and opportunities,” he says. “But when the performance on the field turns out to be less than stellar, people are understandably going to blame the quarterback that came in with so much fanfare.” Geron is a clinical stage biopharmaceutical company, which focuses on the development of imetelstat – a telomerase inhibitor – in hematologic myeloid malignancies.

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