Is Yahoo! Inc. (NASDAQ:YHOO) Running Opaque Sales Process?
Some Yahoo! Inc. (NASDAQ:YHOO) investors are not impressed with the manner CEO, Marissa Mayer, is handling the auction of the company. Starboard Value has particularly publicly voiced its concern over a lack of transparency in Yahoo’s sales process. However, Mayer seems to believe that commenting on the sales process at this juncture would only comprise its integrity.
Pressure seems to have mounted on Yahoo’s management and the board after the company reported another quarter characterized by shrinking revenue. The company generated revenue of $1.09 billion, 11% off a similar quarter a year ago, but slightly better than $1.08 billion that Wall Street expected.
Selling Yahoo is the top priority
Mayer fought off claims at Yahoo’s earnings call that the management was dragging its feet in selling the company. According to Mayer, nothing could be further from the truth. She said the reason she is not talking about the particular offers they have received and the timing of deal is that she wants to protect the integrity of the auction process.
Perhaps Mayer and her team believe that Yahoo! Inc. (NASDAQ:YHOO) has much to lose if potential suitors are angered by their public comments on the sales process.
Replacing the board
But not everyone is buying Mayer’s explanation of the silence around Yahoo’s auction. Jeffrey Smith, the CEO of Starboard, says it is the lack of integrity that is driving him to wage a proxy war to send home Yahoo! Inc. (NASDAQ:YHOO)’s existing board together with Mayer.
Besides the issue of opaque auction process and shrinking revenues, Starboard sees a management that has made it a career to break promises to shareholders. According to Starboard’s Smith, there are many promises that Mayer and her management team made to shareholders but failed to follow through. Those promises include the sale of the stake in Yahoo Japan and the spinoff of the Alibaba Group Holding Ltd (NYSE:BABA) stake.
Dialogue before a storm
Initially, Starboard wants to engage Yahoo! Inc. (NASDAQ:YHOO) through conversation. But if dialogue doesn’t lead to a favorable settlement, the company’s board should prepare for a serious proxy fight.
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