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This is cleverer than people are giving them credit for. It delivers immediate value to shareholders; it delivers opportunities for long term growth to sharehol

This is cleverer than people are giving them credit for. It delivers immediate value to shareholders; it delivers opportunities for long term growth to shareholders; it creates one valuable Asian property that can acquire other properties and continue to deliver shareholder value; it creates a US company that is easier to acquire than it used to be, without the Alibaba share, and thus could be bought by a big media company that values all the core assets and will keep the engineers. Everyone wins here. Managers win, of course, but shareholders, who have been patient, get short-term returns and the potential for long-term ones as well. Employees will see their jobs stay, because of this repackaging. Yes, Mayer will be gone in a year, replaced by someone with experience selling a company. But it's been a good run. She turned Yahoo from a place with mediocre engineers into a decent place to work; she resuscitated existing brands and gave them a place in the world; and now she did some reasonably clever financial engineering.

charlesdm 11y ago
Did she? Maybe I'm a bit more sceptical, but what did she actually achieve? 1. She failed at putting Yahoo back on the map. She spent billions on acquiring businesses that bring in close to no revenue. Maybe it's a great place to work, but if there's no money coming in, it won't stay great long. 2. She failed at financial engineering; she couldn't even get a tax free spinoff through. I would've been happy to cut her some slack if she did one of these things right, and messed up the other one. Some people aren't meant to be product people and others just aren't financial engineers. But this is basically throwing in the towel. Don't forget, this idea of a reverse spinoff didn't come from Marissa. It came from an activist investor, who are basically, master financial engineers.
- mkagenius 11y ago
  > 2. She failed at financial engineering; she couldn't even get a tax free spinoff through. She managed to keep a part of Alibaba stake. This reverse spin off will also be tax free.
  - charlesdm 11y ago
    She's throwing the company away she is currently CEO of. The BABA stake had to be separated from Yahoo, but this is literally the worst possible way, aside from selling the shares + paying taxes, to achieve this.
    - jackgavigan 11y ago
      What's so bad about it? The end result is the same as the original plan - one company with a stake in Alibaba, and another company with Yahoo's core businesses and the Yahoo Japan stake.
      - guelo 11y ago
        They're looking for a buyer of the Yahoo spinoff, it's not going to stay independent. It will probably to be bought by vulture capital firms. Yahoo is basically dead.
        mkagenius 11y ago
        > They're looking for a buyer of the Yahoo Board feels Yahoo's core business is undervalued. The spin off will help clear the picture of how much Yahoo's core business independently value. They are not looking for buyers (unless someone has a offer they can't refuse).
        eva1984 11y ago
        Too early to say that. They are not looking buyers, until the core business spin-off get priced reasonably, by the market.
      - TheOtherHobbes 11y ago
        It's reminiscent of the endgame at HP, where the formerly profitable PC/printer division has been split off from Enterprise - possibly in an attempt to keep at least one afloat. That's not proof of badness, but it does suggest desperation and lack of imagination.
- kaizendad 11y ago
  I think you're being too harsh on the revenue side: they make a ton of money. They may not be growing that at the desired rate, or in the right markets, or be appearing to be innovative (or being actually innovative), but Y! has a ton of cash flow. When Mayer took over, they had no ability to attract or retain any kind of tech talent. Now, they can do so at the same rate as any other ad company. That's a big change. She didn't hit it out of the park, but she's delivered her shareholders a solid double.
jwegan 11y ago
She had nothing to do with coming up with the financial engineering. From the article itself it says the hedge fund Starboard Value came up with the move and has been pressuring the board to do it for months.
guelo 11y ago
Losers are the web market in general which loses a big independent competitor, internet users which will see products shuttered or neglected, and the upcoming laid off employees. All because greedy shareholders didn't want to pay their damn taxes.
smackfu 11y ago
The obvious question is, if it is so clever, why is it plan B?
- Govannon 11y ago
  Plan A, while fairly conventional, got shot down by the IRS. http://www.bloombergview.com/articles/2015-09-09/yahoo-s-alibaba-spinoff-is-in-tax-limbo http://www.bloombergview.com/articles/2015-09-09/yahoo-s-ali...
  - jsprogrammer 11y ago
    So, the magic plan failed and now they are going with a real plan?
    - steve-howard 11y ago
      If I understand correctly, companies used to be able to spin off large amounts of shares tax free by bundling them with tiny segments of their business. The IRS used to let companies ask "did we do this right?" but this time instead of saying "yes" or "no" they said "we won't answer questions like this any more and we want to rethink our rules" which is still in progress. So if the above is roughly accurate it's more like the loophole everybody used is closing and now they're going with a less desirable loophole.
marssaxman 11y ago
What core assets are those? Yahoo seems like Real Networks: a former big name that continues to exist (and get press) for no reason beyond inertia. It's not clear to me that it actually does anything worth paying for at this point.
- drgath 11y ago
  Just to list a few of the valuable properties off-hand: Homepage, Mail, Search, Tumblr, Flickr, Finance, News, Sports, Fantasy sports (including daily fantasy). Some of the bigger ones are billion+ dollar properties. Others are hundreds of millions. > It's not clear to me that it actually does anything worth paying for at this point. Few users of Google and Facebook actually "pay" for those services, they're primarily all advertising funded companies.
  - marssaxman 11y ago
    In what sense are they billion dollar properties? I didn't mean that users would pay for them; I meant that I don't see how one could use them to make money, or at least enough money that it would be worth bothering to acquire them.
    - kaizendad 11y ago
      Mail is the #1 e-mail provider. News is massive. Sports is massive and has one of the top Fantasy operations, a growing market. Homepage is still the homepage for people who set homepages. All are monetized through one of the most effective ad selling operations out there.
      - 72deluxe 11y ago
        This is news to me. I suppose it is because I now move into more restricted Internet circles (not so much time to waste as I used to have), but I haven't visited anything Yahoo!-related since 2004? 2005? Glad to hear they still have a following. I thought GMail and Hotmail were bigger than Yahoo! Mail but what do I know!

charlesdm 11y ago

Did she? Maybe I'm a bit more sceptical, but what did she actually achieve? 1. She failed at putting Yahoo back on the map. She spent billions on acquiring businesses that bring in close to no revenue. Maybe it's a great place to work, but if there's no money coming in, it won't stay great long. 2. She failed at financial engineering; she couldn't even get a tax free spinoff through. I would've been happy to cut her some slack if she did one of these things right, and messed up the other one. Some people aren't meant to be product people and others just aren't financial engineers. But this is basically throwing in the towel. Don't forget, this idea of a reverse spinoff didn't come from Marissa. It came from an activist investor, who are basically, master financial engineers.

mkagenius 11y ago
> 2. She failed at financial engineering; she couldn't even get a tax free spinoff through. She managed to keep a part of Alibaba stake. This reverse spin off will also be tax free.
- charlesdm 11y ago
  She's throwing the company away she is currently CEO of. The BABA stake had to be separated from Yahoo, but this is literally the worst possible way, aside from selling the shares + paying taxes, to achieve this.
  - jackgavigan 11y ago
    What's so bad about it? The end result is the same as the original plan - one company with a stake in Alibaba, and another company with Yahoo's core businesses and the Yahoo Japan stake.
    - guelo 11y ago
      They're looking for a buyer of the Yahoo spinoff, it's not going to stay independent. It will probably to be bought by vulture capital firms. Yahoo is basically dead.
      - mkagenius 11y ago
        > They're looking for a buyer of the Yahoo Board feels Yahoo's core business is undervalued. The spin off will help clear the picture of how much Yahoo's core business independently value. They are not looking for buyers (unless someone has a offer they can't refuse).
        eva1984 11y ago
        Too early to say that. They are not looking buyers, until the core business spin-off get priced reasonably, by the market.
    - TheOtherHobbes 11y ago
      It's reminiscent of the endgame at HP, where the formerly profitable PC/printer division has been split off from Enterprise - possibly in an attempt to keep at least one afloat. That's not proof of badness, but it does suggest desperation and lack of imagination.
kaizendad 11y ago
I think you're being too harsh on the revenue side: they make a ton of money. They may not be growing that at the desired rate, or in the right markets, or be appearing to be innovative (or being actually innovative), but Y! has a ton of cash flow. When Mayer took over, they had no ability to attract or retain any kind of tech talent. Now, they can do so at the same rate as any other ad company. That's a big change. She didn't hit it out of the park, but she's delivered her shareholders a solid double.

jwegan 11y ago

She had nothing to do with coming up with the financial engineering. From the article itself it says the hedge fund Starboard Value came up with the move and has been pressuring the board to do it for months.

guelo 11y ago

Losers are the web market in general which loses a big independent competitor, internet users which will see products shuttered or neglected, and the upcoming laid off employees. All because greedy shareholders didn't want to pay their damn taxes.

smackfu 11y ago

The obvious question is, if it is so clever, why is it plan B?

Govannon 11y ago
Plan A, while fairly conventional, got shot down by the IRS. http://www.bloombergview.com/articles/2015-09-09/yahoo-s-alibaba-spinoff-is-in-tax-limbo http://www.bloombergview.com/articles/2015-09-09/yahoo-s-ali...
- jsprogrammer 11y ago
  So, the magic plan failed and now they are going with a real plan?
  - steve-howard 11y ago
    If I understand correctly, companies used to be able to spin off large amounts of shares tax free by bundling them with tiny segments of their business. The IRS used to let companies ask "did we do this right?" but this time instead of saying "yes" or "no" they said "we won't answer questions like this any more and we want to rethink our rules" which is still in progress. So if the above is roughly accurate it's more like the loophole everybody used is closing and now they're going with a less desirable loophole.

marssaxman 11y ago

What core assets are those? Yahoo seems like Real Networks: a former big name that continues to exist (and get press) for no reason beyond inertia. It's not clear to me that it actually does anything worth paying for at this point.

drgath 11y ago
Just to list a few of the valuable properties off-hand: Homepage, Mail, Search, Tumblr, Flickr, Finance, News, Sports, Fantasy sports (including daily fantasy). Some of the bigger ones are billion+ dollar properties. Others are hundreds of millions. > It's not clear to me that it actually does anything worth paying for at this point. Few users of Google and Facebook actually "pay" for those services, they're primarily all advertising funded companies.
- marssaxman 11y ago
  In what sense are they billion dollar properties? I didn't mean that users would pay for them; I meant that I don't see how one could use them to make money, or at least enough money that it would be worth bothering to acquire them.
  - kaizendad 11y ago
    Mail is the #1 e-mail provider. News is massive. Sports is massive and has one of the top Fantasy operations, a growing market. Homepage is still the homepage for people who set homepages. All are monetized through one of the most effective ad selling operations out there.
    - 72deluxe 11y ago
      This is news to me. I suppose it is because I now move into more restricted Internet circles (not so much time to waste as I used to have), but I haven't visited anything Yahoo!-related since 2004? 2005? Glad to hear they still have a following. I thought GMail and Hotmail were bigger than Yahoo! Mail but what do I know!