Analyst von Sun trust schickt Brief an Yahoo Verwaltungsrat....
Zusammengefasst: Macht euren Job und schmeisst endlich Mayer raus.
www.bizjournals.com/sanjose/news/2015/11/...ceo.html?ana=yahoo
To the Board,
Since we published our note on the 3-year review of the CEO's tenure, we have received a growing list of inquiries from investors. The concerns from investors have centered around 3 main areas: the lack of progress in turning the core around; the potential risks of the Alibaba spin not being tax free; and the stability and direction of management. Investors are asking how engaged the board is and what it needs to see to enact change. We have faith in the board honoring its fiduciary responsibility, and would expect some publicly visible demonstration in strategy, asset rationalization, or management.
On Core Turnaround.
Investors remain concerned that after almost 3.5 years and ~$7 billion in spending (acquisitions and R&D), that the management has been unable to show meaningful progress in the core turnaround. In fact, since 2012 the reported revenues and EBITDA have declined 9% and 45% respectively. What is more, the trend appears to be worsening, with the recent quarter's reported revenues and EBITDA declining 8% and 20% year over year. Further, while investors are well aware that the turnaround would not be quick, the metrics and goals that the management team has laid out have also not shown material progress. Lack of tangible progress in: People, Product, Traffic and Revenue has been a cause for concern (we detail below). The same lack of tangible progress is evident in the company's MaVeNS (mobile, video, native and social) strategy. Lastly, it doesn't look likely that there is any near term reason for these metrics to inflect positive.
On Spin Taxes.
While investors applaud the company's efforts to unlock value by spinning off the Alibaba asset, we believe investors have become more concerned around the possible amount of taxes of the spin, should the IRS ultimately tax the spin (please see our detailed note here). When the company began the process of pursuing a spin, one of the key tenets of this strategy was receiving a tax-free ruling (PLR) from the IRS. This unfortunately did not occur and some investors would argue that a MAC (material adverse change) has occurred. While investors are optimistic that the spin should be tax free and hope to have an opinion letter from Skadden Arps shortly, there is still the risk that the IRS deems the transaction taxable, which could usurp the majority of the value of Yahoo's Alibaba (BABA, $79.85, Buy) shares. Lastly, the risk would ultimately be transferred to shareholders from the company, as any taxation would occur post the spin and paid by Aabaco. Pressing questions are centered around what the likelihood is of the transaction being taxed and if the company should take that risk or wait until there is more clarity.
On Management.
With concerns around the core's health and some risk in the Alibaba spin, investors have begun to revisit management and the strategy. First, the executive turnover has accelerated in 2015 with key executives like Jackie Reses, Kathy Savitt, and Scott Burke having left. This year alone, we count 13 key executives who have left, which disrupts continuity. Additionally concerning is that Jackie Reses was supposed to run the Aabaco spin process and investors are unclear on who is leading that now. Further, the CEO recently stated on the earnings call that "the design and changes in Yahoo!'s leadership team are the result of careful planning to achieve the necessary skills, passion, and the ability to execute growth in our business. Our leadership team today is unequivocally the strongest during my tenure." This seems confusing to investors, as the departed executives were hand-picked by the CEO originally. The company also mentioned on the earnings call that now may be "a unique opportunity to reset" and Recode reports that the company is hiring a consulting firm to plan yet another reorganization. Investors are asking that if this is true, is this a natural time to consider changes at the CEO level as well, given the issues discussed above. We believe the board must assess if the current management team has support of 4 factions: senior executives, employees, partners, and investors. If not, we think a seamless transition to new leadership could be in the best interest of the company and shareholders.
As we stated above, we are respectful of the board and think it will continue to honor its fiduciary responsibilities. We don't believe that the above concerns are unreasonable and would look for investors to get more clarity shortly. Below, we go through each one of these topics in more detail to clarify the rationale for some of these concerns.
We look forward to a dialogue between the board and investors, as each seeks to maximize the success and value of the Company.
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