Starboard Value Letter to Yahoo $YHOO and CEO Marissa Mayer (video)

UPDATE 9 Dec 2015: Yahoo $YHOO Update: Reverse Spin Off Planned, Webcast Replay

UPDATE 24 Nov 2015: Yahoo CEO Marissa Mayer Faces Morale Challenge - WSJ: "When the Ms. Mayer is forced to deliver bad news, she employs what she calls a “jiu-jitsu move”—trying to create a diversion by producing tantalizing information, according to people who have worked closely with her. For example, Ms. Mayer created an accounting metric called “Mavens” designed to spotlight the growing parts of Yahoo. The grouping includes revenue from mobile, video, native and social ads but excludes Yahoo’s largest portion of revenue—its shrinking business of display ads on desktop computers."

UPDATES 20 Nov 2015:

• Yet Another Top Yahoo Media Exec Departs | Re/code: "...Barrett came to the Silicon Valley Internet giant in 2011 after a long and varied career in interactive media, including at the Los Angeles Times, ABC and Time Inc. He has most recently reported to Martha Nelson, the SVP of all of Yahoo Media. More pertinently, Barrett has been part of a major exodus of talent from Yahoo, which is still struggling under the leadership of CEO Marissa Mayer. Another top media exec, Ken Fuchs, also departed recently, as well as media head and CMO Kathy Savitt. Pressure on the former Google exec (Mayer) is increasing as press and also investors are calling attention to Mayer’s management and strategy for making the company relevant again..."


• Forbes gives the details of the ongoing disaster at Yahoo: The Last Days Of Marissa Mayer? - Forbes: "... most say a confused strategy and mismanagement, specifically from Mayer, has undermined any attempts at a turnaround. Yes, she originally brought hope, a badly needed focus on products and a keen understanding of technology. But as pressure to deliver results has mounted, there’s widespread belief, as reflected in that employee survey, that she’s no longer up to the task. The past few months have seen a mass exodus..." (emphasis added) - See also: SunTrust stock analyst Bob Peck to Yahoo directors: Time to fire CEO Marissa Mayer? - Silicon Valley Business Journal - BTW: When did Marissa Mayer become Yahoo CEO? Answer: July 17, 2012.

It has become increasingly clear that Marissa Mayer is not only grossly overpaid, but is way over her head as CEO of Yahoo. After disastrous moves that have cost Yahoo (NASDAQ: YHOO) shareholders hundreds of millions of dollars, activist investor shareholder Starboard Value has launched a new tack in a letter sent to Yahoo (pdf), sell Yahoo's core business and have the Yahoo corporate entity continue to hold its current shares in Alibaba (NYSE:BABA) and Yahoo! Japan (Tokyo Stock Exchange: Yahoo Japan Corporation) instead of the announced spin-off of those investments to Aabaco Holdings which risks unfavorable tax treatment:

"... we believe selling the Core Business now is the best outcome for Yahoo shareholders. We urge you to change direction and do the right thing for shareholders. As we have expressed to you, we expect the shareholders’ interest to remain of paramount importance and will look to make significant changes to the Board if you continue to make decisions that destroy shareholder value." (empasis added)

Principal domain names of companies referenced:
Yahoo - yahoo.com
Starboard Value -  starboardvalue.com
Alibaba - alibabagroup.com  /  alibaba.com
Yahoo Japan - yahoo.co.jp

For further reading:

• Starboard Value's Jeff Smith: The investor CEOs fear most - Fortune
• A Primer on Starboard, the Activist That Pushed for a Staples-Office Depot Merger - The New York Times
• Yahoo Plans Spin-off Of Alibaba Shares To Aabaco Holdings In 2015 | DomainMondo.com
• Yahoo Pressured to Keep Alibaba Stake and Sell Core Business - The New York Times
• Can Marissa Mayer Turn Around Her Turnaround of Yahoo or Is the “End Game Near"? | Re/code
• An NYU professor just said Marissa Mayer’s pregnancy is the only thing preserving her job - Quartz
• Marissa Mayer’s Convoluted Yahoo Strategy | Re/code
• Yahoo Hires McKinsey to Mull Reorg, as Mayer Demands Exec Pledge to Stay | Re/code

NYU Professor: Yahoo Should Be Euthanized, and Marissa Mayer Is the Most Overpaid CEO in History - Bloomberg Business (video below):

Allow video to load after clicking play. If video does not play on your device go to link above.


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Yahoo Plans Spin-off Of Alibaba Shares To Aabaco Holdings In 2015

Above: One year stock chart of Alibaba Group shares (NYSE: BABA) (source: google.com)

 SEC Filing: Form 8-K (July 17, 2015) "... Under the spin-off plan announced on January 27, 2015, Yahoo plans to distribute all of the outstanding shares of Aabaco Holdings pro rata to its shareholders. Immediately after the spin-off, Aabaco Holdings will own approximately 384 million shares of Alibaba Group, representing an ownership interest of approximately 15% in Alibaba Group, and a 100% ownership interest in a newly formed entity which will own Yahoo Small Business..."

The spin-off of Yahoo's shares in Alibaba ($BABA) now planned to be completed in 2015:

"On September 8, 2015, Yahoo! Inc. (“Yahoo” or the “Company”) filed a Current Report on Form 8-K (the “September 8 Form 8-K”) disclosing, among other things, that the Internal Revenue Service (“IRS”) had notified Yahoo’s counsel that it had determined, in the exercise of its discretion and without ruling adversely, not to grant Yahoo’s request for a private letter ruling regarding certain aspects of its previously announced plan for a spin-off to Yahoo’s stockholders of all of the stock of Aabaco Holdings, Inc. (“Aabaco”), a newly formed independent registered investment company, which will hold all of Yahoo’s remaining holdings in Alibaba Group Holding Limited (“Alibaba”) and Aabaco Small Business, LLC (a newly formed entity which will own Yahoo Small Business). Yahoo further disclosed in the September 8 Form 8-K that work was proceeding on the Aabaco spin-off plan, and that Yahoo’s Board of Directors would continue to carefully consider the Company’s options, including proceeding with the spin-off transaction on the basis of an opinion of counsel.

"On September 14, 2015, the IRS issued a formal “no-rule” policy with respect to certain transactions similar to the Aabaco spin-off and, in a notice released on the same day, indicated that the IRS and U.S. Department of the Treasury are studying the possibility of promulgating new guidance with respect to such transactions in the future. Neither this ongoing guidance project nor the IRS’s decision not to rule with respect to the Aabaco spin-off transaction changes the current law applicable to the proposed spin-off. In addition, on September 19, 2015, an IRS official indicated in a public statement that any future guidance issued as part of the project would not apply retroactively to transactions completed prior to the issuance of such guidance.

"On September 23, 2015, Yahoo’s Board of Directors authorized the Company to continue to pursue the plan for the Aabaco spin-off transaction as previously disclosed, except that completion of the spin-off will not be conditioned upon receipt of a favorable ruling from the IRS. The spin-off transaction will continue to be subject to certain other conditions, including final approval by Yahoo’s Board of Directors, receipt of a legal opinion with respect to the tax-free treatment of the transaction under U.S. federal tax laws and regulations, the effectiveness of an applicable registration statement filed with the Securities and Exchange Commission (“SEC”) and compliance with the requirements under the Investment Company Act of 1940, and other customary conditions, each of which conditions may be waived, in whole or in part (to the extent permitted by law), by Yahoo in its sole discretion.

"On September 28, 2015, Aabaco filed Amendment No.1 to its Registration Statement on Form N-2 which is available on the SEC’s website at www.sec.gov using the name Aabaco Holdings, Inc.
Completion of the transaction is expected to occur in the fourth quarter of 2015, subject to the conditions described above." (emphasis added) source: SEC Form 8-K (Sept 28, 2015)

Aabaco Amendment No. 1, Form N-2 (September 28, 2015): "... Following the Spin-Off, the Fund will be an independent, publicly traded, non-diversified, closed-end management investment company registered under the Investment Company Act of 1940 (the “1940 Act”). Immediately after the Spin-Off, the Fund’s investment assets will consist of 383,565,416 ordinary shares, par value US $0.000025 per share (the “Ordinary Shares”), of Alibaba Group Holding Limited (“Alibaba”), representing as of the date of this information statement an approximate 15 percent ownership interest in Alibaba, and a 100 percent ownership interest in Aabaco Small Business, LLC, which was formed by the Fund in connection with the Spin-Off and, prior to the Spin-Off, will acquire those assets and assume those liabilities that exclusively relate to the business that has historically been operated by Yahoo under the name “Yahoo Small Business.” We sometimes refer to Alibaba’s Ordinary Shares and Alibaba’s American Depositary Shares (the “Alibaba ADS”) collectively as the “Alibaba Shares.”..."

Domain names:

• yahoo.com
• investor.yahoo.net - (Yahoo investors relations) stock symbol: YHOO
• alibabagroup.com
• alibaba.com

See also on Domain Mondo:

• Yahoo Withdraws Request for IRS Ruling on Spinoff of Alibaba Shares
• Yahoo Q2 2015 Earnings, LIVE Webcast, 5pm ET July 21 Replay
• Domain Mondo posts on YHOO

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