Yahoo CEO Says Acting Decisively on Sale as Interest Rises

  • Mayer touts process as first-quarter revenue tops estimates
  • Manangement is in frequent communication on the review

Here's How Yahoo's Marissa Mayer Can Salvage Her Legacy

Yahoo! Inc. Chief Executive Officer Marissa Mayer said the company is moving swiftly to consider offers to buy its Web operations, seeking to reassure investors angling for a quick sale of the assets.

While Mayer declined to provide details, she said management speaks daily with Yahoo’s board committee created to conduct the Web portal’s strategic review. There is a “well-defined, aggressive calendar” to push ahead, she said Tuesday on an earnings call with analysts. Yahoo reported first-quarter sales that topped estimates, but still declined sharply from a year earlier.

“Our efforts to date reflect clear, decisive action to move forward quickly and in a way that we believe will yield enhanced value,” Mayer said. “I personally believe that the right transaction could unlock tremendous value.”

Mayer started a review of the company’s options in February after growing pressure from investors and a turnaround that has failed to spark growth or close the gap in advertising revenue with market leaders such as Facebook Inc. and Google. The process accelerated on Monday when Verizon Communications Inc., private equity-firm TPG and YP Holdings LLC were among the first round of bidders for the company’s Internet businesses, according to people familiar with the matter.

Shares of Yahoo gained 4.2 percent to $37.84 at the close Wednesday in New York, the highest price in nine months. The stock has climbed 14 percent this year.

During the call, Mayer said she wouldn’t give any more updates as the review continues after she and the management team have answered “hundreds” of questions on the matter.

Turnaround Effort

Mayer also said her turnaround effort is progressing -- and the first quarter showed the promise to set the company off to a good year.

Revenue, excluding sales shared with partner websites, declined 18 percent to $859.4 million, the Sunnyvale, California-based company said in a statement. That exceeded analysts’ average projection of $846.5 million, according to data compiled by Bloomberg.

Yahoo forecast sales of $810 million to $850 million for the current quarter compared with analysts’ estimates of $860 million. The company confirmed its 2016 revenue outlook of $3.4 billion to $3.6 billion. Analysts project $3.56 billion. The forecast and quarterly results may help the sale process, said Ronald Josey, an analyst at JMP Securities.

“It might firm up the bidding,” Josey said. “If you have a bid in, at least you have more confidence in the guidance the company gave you with these results.”

Yahoo, the vehicle that helped millions of people discover e-mail and the Internet in the 1990s, has failed to keep up with changing consumer tastes and advertising techniques. The company began the process to explore strategic options after it scrapped a long-held plan to spin off its multibillion-dollar stake in Alibaba Group Holding Ltd. because of concerns about a potentially hefty tax bill.

Activist Push

Activist Starboard Value LP has pushed for changes in management for more than a year. The hedge fund last month nominated nine directors to replace the current board and has urged a sale of the company’s main Internet business.

The board needs credibility, Starboard CEO Jeff Smith wrote in a letter to fellow shareholders, adding that the nominees can deliver that. It’s important for the activist to be involved to ensure a “full and fair sale process,” according to the letter.

Smith, in an interview earlier Tuesday with CNBC, said Starboard is talking to Yahoo about replacing some, rather than all directors.

“We want to settle,” Smith said. “If we can reach a mutually agreeable situation, we want to do that.”

Mayer defended the company’s review.

“We’ve been very thoughtful about running a high-quality process, designed to keep interested parties engaged and highlight the tremendous value in Yahoo.”

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