Recently hired Yahoo CEO Marissa Mayer may scrap the internet company's plan to reward its long-tormented shareholders with a multibillion-dollar payout this year, underscoring the uncertainty accompanying new leadership.
The unexpected twist disclosed in regulatory documents filed yesterday after the stock market closed caused Yahoo shares to drop more than 3 per cent in extended trading.
Mayer is mulling a shift in direction as part of a sweeping review she is conducting in an attempt to revive Yahoo's revenue growth, spur more product innovation and boost the company's stock price. Those goals eluded her recent predecessors.
Yahoo lured Mayer away from rival Google three weeks ago to become its fifth CEO in five years.
Given Yahoo's persistent headaches, shareholders presumably want her to shake things up.
Mayer will risk alienating Wall St if she decides to do something differently with a windfall that will pour into Yahoo after it completes an agreement to sell half its stake in thriving Chinese internet company Alibaba Group for US$7.1 billion ($8.76 billion).
Yahoo pledged to distribute most of the anticipated after-tax proceeds estimated at $4.2 billion to shareholders. The company reiterated that in a conference call after Mayer's hiring was announced.
Since then, Mayer has decided to reassess Yahoo's strategy "to enhance long-term shareholder value", according to the company's quarterly report. Her review would include potential acquisitions, a restructuring plan that eliminated 1500 jobs during the second quarter and the Alibaba proceeds, the documents said.
Mayer's analysis could culminate in a complete about-face from the previous plans or less dramatic changes, according to Yahoo.
If Mayer decides to chart a completely new direction, she will need the approval of Yahoo's board. The directors include New York hedge fund manager Daniel Loeb, who stands to be one of the biggest winners from an Alibaba payday. Loeb's fund, Third Point, owns a 5.8 per cent stake in Yahoo.
Yahoo shareholders have grown increasingly frustrated as the company's revenue and stock price have flagged, even as advertisers shifted more of their marketing budgets to the internet. Most of that money, though, has been flowing to Google and Facebook.
To compound investor exasperation, Yahoo squandered an opportunity to sell itself to Microsoft for US$33 a share in May 2008. Yahoo shares fell 55c, or 3.4 per cent, to US$15.46 yesterday, leaving them slightly below when Mayer was hired.
- AP
