5 ms·

You have to read between the lines of the recent criticism of Mayer: she's sitting on a load of ca$h from $BABA, and their eyes are set on short-term gains. The

You have to read between the lines of the recent criticism of Mayer: she's sitting on a load of ca$h from $BABA, and their eyes are set on short-term gains. They want to butcher the company up, collect their pound of flesh and be off. I think she's on a decent path, and by replacing the old upper management with the new hires[1], she seems to be putting the right people in charge. Yeah, she made some mistakes[2], but that's a part of the game. [1] http://marketingland.com/yahoo-promotes-flurry-exec-lead-advertising-product-teams-114662 http://marketingland.com/yahoo-promotes-flurry-exec-lead-adv... [2] http://www.businessinsider.com/marissa-mayer-on-henrique-de-castro-2014-5 http://www.businessinsider.com/marissa-mayer-on-henrique-de-...

fiatmoney 12y ago
"Short-term gains" isn't the goal. The goal is avoiding short-term losses for the sake of empire-building. If you look at Yahoo's market cap, net of the Alibaba & Yahoo Japan stakes, it's essentially betting that Mayer will burn a few hundreds of millions of dollars on things like non-value-adding acquisitions in an effort to remain a Major Player.
- gohrt 12y ago
  or it's betting that the cost of current liabilities and ongoing expenses will burn that hundreds of millions of dollars more than what Mayer will recover. It doens't necessarily mean that Mayer will generate no value, since non-BABA Yahoo had negative value even before Mayer started.
exelius 12y ago
I think Yahoo's current path is headed toward disaster. They're obviously bulking up to be an ad tech provider in the online video space. So she's taking the $23 billion (or however much it was) from Alibaba and spending it on buying up ad tech companies. But the problem with buying ad tech companies is that they're not a great long-term investment. Microsoft learned this the hard way with aQuantive - $6 billion in value disappeared in under 18 months. The market is just too fragmented, the services are commoditized and things can change almost literally overnight. And Yahoo doesn't really own a lot of these customer relationships the way Google and Facebook do - Yahoo is heavily dependent on partners for sourcing their data. This is not a path that leads to success for an ad tech provider; your competitors will look to disintermediate you and you have very little room for sustained competitive advantage. It's not an accident that the largest players in advertising own the portals through which consumers access content: Google for search, Google (YouTube) for online video, Facebook for mobile, Comcast for TV video. And what's really happening is that the overall advertising market isn't really growing, we've just seen online ads take over the budgets companies used to spend on print advertising. So what happens when the next advertising trend comes along? You've got to go out and buy more startups to fill the hole; meanwhile your newly acquired companies are just taking business from your older companies, so it's not a net value add. Companies tend to engage in protective acquisitions that erode the bottom line. Granted, I don't think Mayer has very many attractive options in front of her. But CEOs rarely want to admit that it might maximize investor returns to just hand out a large dividend and let the company fend for itself. And that's the big argument: the investors would probably be better off taking that $23 billion and investing it in companies other than Yahoo. What is the exit strategy for an ad tech company? Usually it's "get acquired by Google/Facebook". Yahoo's strategy is "become Google/Facebook", but ad tech is a zero-sum game, and Google/Facebook have sustainable competitive advantages.
- deleted 12y ago
  [deleted]
jpmattia 12y ago
> They want to butcher the company up, collect their pound of flesh and be off. You have to read between the lines even when reading between the lines: The investors are really saying that they don't believe she would deliver decent ROI on the BABA cash.

fiatmoney 12y ago

"Short-term gains" isn't the goal. The goal is avoiding short-term losses for the sake of empire-building. If you look at Yahoo's market cap, net of the Alibaba & Yahoo Japan stakes, it's essentially betting that Mayer will burn a few hundreds of millions of dollars on things like non-value-adding acquisitions in an effort to remain a Major Player.

gohrt 12y ago
or it's betting that the cost of current liabilities and ongoing expenses will burn that hundreds of millions of dollars more than what Mayer will recover. It doens't necessarily mean that Mayer will generate no value, since non-BABA Yahoo had negative value even before Mayer started.

exelius 12y ago

I think Yahoo's current path is headed toward disaster. They're obviously bulking up to be an ad tech provider in the online video space. So she's taking the $23 billion (or however much it was) from Alibaba and spending it on buying up ad tech companies. But the problem with buying ad tech companies is that they're not a great long-term investment. Microsoft learned this the hard way with aQuantive - $6 billion in value disappeared in under 18 months. The market is just too fragmented, the services are commoditized and things can change almost literally overnight. And Yahoo doesn't really own a lot of these customer relationships the way Google and Facebook do - Yahoo is heavily dependent on partners for sourcing their data. This is not a path that leads to success for an ad tech provider; your competitors will look to disintermediate you and you have very little room for sustained competitive advantage. It's not an accident that the largest players in advertising own the portals through which consumers access content: Google for search, Google (YouTube) for online video, Facebook for mobile, Comcast for TV video. And what's really happening is that the overall advertising market isn't really growing, we've just seen online ads take over the budgets companies used to spend on print advertising. So what happens when the next advertising trend comes along? You've got to go out and buy more startups to fill the hole; meanwhile your newly acquired companies are just taking business from your older companies, so it's not a net value add. Companies tend to engage in protective acquisitions that erode the bottom line. Granted, I don't think Mayer has very many attractive options in front of her. But CEOs rarely want to admit that it might maximize investor returns to just hand out a large dividend and let the company fend for itself. And that's the big argument: the investors would probably be better off taking that $23 billion and investing it in companies other than Yahoo. What is the exit strategy for an ad tech company? Usually it's "get acquired by Google/Facebook". Yahoo's strategy is "become Google/Facebook", but ad tech is a zero-sum game, and Google/Facebook have sustainable competitive advantages.

deleted 12y ago
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jpmattia 12y ago

> They want to butcher the company up, collect their pound of flesh and be off. You have to read between the lines even when reading between the lines: The investors are really saying that they don't believe she would deliver decent ROI on the BABA cash.