14 DAY TRIAL // Yahoo is getting ready for its third trimester earnings report and rumor has it that Marissa Mayer will have a lot of explaining and sugar coating to do if it’s going to convince investors that the ship isn’t sinking.
During the Tuesday earnings call, Yahoo’s Marissa Mayer is expected to express a change in attitude towards the acquisition strategy that she’s had since she joined the company, namely buying everything under the sun and then shutting down the companies.
Called “aqui-hires,” these have taken place often enough that they’ve been dubbed as a “shopping spree.” They have cost an estimated $200 million, which isn’t too bad considering that Yahoo has a few billions set aside following the sale of a bunch of Alibaba shares a few years back. The company has also earned a lot of money following the Alibaba IPO, when yet another bunch of shares were sold in the world’s largest IPO ever.
Marissa Mayer has made just a few acquisitions where the company that sold itself to Yahoo has survived. One of these is Tumblr, for whom Yahoo shelled out a whopping $1.1 billion (€0.86 billion), and which continues to stand tall and grow at its own pace while offering Yahoo an infusion of younger users.
The Wall Street Journal estimates that Mayer will promise to do fewer of them, but favor larger acquisitions instead, which might actually help grow Yahoo’s revenues.
There’s also hope that Mayer will outline some new efforts to cut costs, as well as explain why cutting some 500 jobs in India and Jordan seemed like the best idea to go about things.
Harsh comments from a shareholder: Sell to AOL
A few weeks ago, Marissa Mayer received a letter from Jeff Smith, an activist shareholder, who was quite adamant that Mayer should quit making acquisitions altogether. Furthermore, he expressed his opinion that Yahoo should just find a good way to monetize its Asian assets and sell out to AOL.
That fact that Chinese ecommerce giant has also launched on the stock market also plays a big role in this equation. Up until now, investors were buying Yahoo stock because it was the only way to get a hand into the Alibaba gold pot. Now that Alibaba is finally on the market on its own, there’s no reason for some of them to own Yahoo shares.
Yahoo is valued at an estimated $38 billion (€29.8 billion) based on the Friday share price of $38.45 (€30.15), down about 10 percent from the eight-year high that happened a week before Alibaba’s IPO.