Friday, May 24, 2024

Yahoo CEO ‘confident’ in strategic plan

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Yahoo CEO Marissa Mayer took to the business TV news circuit Wednesday to discuss the company's plans, but stopped short of saying the Net media company is actively seeking a buyer.

The troubled online and mobile advertising and media company is streamlining its workforce and its product offerings while also looking to separate its 15% stake in Alibaba, worth about $25 billion, while considering offers for all or parts of its core Internet business.

That was the message from the company's fourth quarter earnings announcement Tuesday. However, when CNBC's David Faber and Jim Kramer asked Mayer about whether the company was for sale, Mayer was coy.

"I can't speculate," said Mayer, adding that she would no comment on what all "strategic alternatives" the company might consider.

"On the whole, our focus here is to maximize the tremendous potential we see at Yahoo," she said on CNBC's Squawk on the Street. The company has 1 billion monthly users including 600 million on mobile, she said.

Investors weren't reassured. Shares of Yahoo (YHOO) were down more than 7% Wednesday to $26.84, setting a new 52-week low. Shares have fallen nearly 40% over the past 12 months.

Mayer also declined to comment on a potential sale when she appeared on Bloomberg TV a few minutes later.

"I will say Yahoo’s situation is complicated," Mayer said. "Particularly with some of the assets we have with Yahoo Japan (it owns 36%) and Alibaba plus the core (business). We need to have a somewhat complicated solution  … because we need to address how do we really see the most value we can from the operating business and how do we realize the most value we can, in particular from the Alibaba stake but also maximizing Yahoo Japan."

Investors weren't reassured. Shares of Yahoo (YHOO) were down more than 7% Wednesday to $26.84, setting a new 52-week low.

Yahoo chief finance officer Ken Goldman offered a clearer answer to Barron’s on Tuesday saying that the company would consider offers.  “A number of companies have said they want to look at us, and there are a number of private equity firms that are interested in looking at us," he told Barron's. "I’m not saying that we’ve received offers. I’m not saying that at all. I’m saying parties have expressed interest in us. And what we’re saying is that we’ll be open to that.”

Mayer said it had taken Yahoo longer to build its mobile advertising platform than expected and the company is tempering expectations for 2016. The company's forecasts call for a decline in revenue of at least 14% in the first quarter and as much as 12% for the full year.

The company also took a $4.5 billion impairment charge, meaning that it considers the value of assets such as Tumblr, Flurry and Polyvore have fallen by that amount.

Mayer said she understands now how long it would take to build its mobile business "and do it really well. ...We feel good about our plan and we are confident in that plan but I do think it makes sense for us to have a more reasoned perspective in terms of how quickly we can really move it."

The complex plan and tempered forecasts left Nomura Global Markets Research analyst Anthony DiClemente discouraged, he said in a note to investors Wednesday. The firm lowered its target price for shares to $34 from $40, keeping its Neutral rating, citing "the complexities of navigating the three different strategies at the same time."

Yahoo has sidestepped answering how industrious it would be about a sale, said SunTrust Robinson Humphreys Internet equity analyst Robert Peck noted. "The Board plans to engage on qualified strategic proposals, and recognizes that a parallel process is in the best interest of shareholders. However, no word was given on the Active or Passive nature of the process," he said in a note Wednesday.

Yahoo's core business could be worth $4 billion to $8 billion, depending on the buyer, said Peck, who maintained a $40 target price for Yahoo stock. "The mere separation of the core from Alibaba ... would make ANY monetization of the core a positive for shareholders."

Investment firm AllianceBernstein dropped its target price to $42 from $44, but kept an "Outperform" rating saying Yahoo remains "primarily a bet on Alibaba's value," said senior analyst Carlos Kirjner in a note Wednesday.

The "threat of a proxy war" when board slots come open this summer could be catalyst to the company's move to simplify the business, he said. "It may be too little, too late."

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