Slashdot Mirror
Hedge Fund Manager Criticizes Yahoo for Wasting $3 Billion On Poor Acquisitions (businessinsider.com)
mrspoonsi writes: On Monday morning, Eric Jackson, manager of hedge fund SpringOwl, sent a brutal 99-page presentation to Yahoo's board, outlining his case for why the company should drop Marissa Mayer as CEO and find new management. Jackson points out that Yahoo has burned through $3 billion on M&A in the past three years since Mayer took the reins, which contributes to $10 billion in what Jackson calls Yahoo's misallocated capital. The value of all of those startups Yahoo has acquired, Jackson says, is worth nothing at Yahoo's current stock price. Jackson also points out that Yahoo has a history of buying up startups run by former Google APM members. While at Google, Mayer started the company's elite associate product-manager program. Of the 49 acquisitions Yahoo has made under Mayer's leadership, six were startups founded by ex-Googlers. The total cost of these six acquisitions is $319 million, according to Jackson's slide deck. Yahoo bought Polyvore in July for $230 million. Polyvore, a social commerce site that lets users make artistic collages of clothes and accessories...But Jackson does not mince words when it comes to Yahoo's decision to spend shareholder money acquiring Polyvore and companies like it. "It's not acceptable to pay $230M for zombie companies run by former APM members," he says, pointing out that Polyvore had raised $22 million in VC funding, was 8 years old, and had gone through multiple pivots. For all intents and purposes, it looked like a goner until Yahoo bought it.
So you're at the top of a sinking ship. Your choices are to save every possible person and go down with it standing at attention at the bow or... start feeding passengers to the magic sharks. Okay bad analogy.
If I were in charge of Yahoo at that point I could best ensure my own survive not by trying to mutate the company into something viable but by spreading the wealth and getting into as many crony networks as possible. I buy your gold plated turd for $250 million today, you buy mine tomorrow. That's how it works at the top. It was a shitty thing to do and they should be in prison. But it's not quite illegal. Ceste' la vie.
If video games influenced behavior the Pac Man generation would be eating pills and running away from their problems.
Either that or she was just doing a solid by her old Google buddies
That's what CEO's do. When Yahoo eventually drops her, her buddies will ensure she gets another position at the top of another company without any shareholder input into it, or a nice fat golden parachute on her way out. It's how Léo Apotheker got hold of HP, and how he walked away with $25 Million when they had to boot him.
It's time we destroy the cult of the CEO, they're nothing but corporate leaches feeding the masses (shareholders) free bread (short term gains) while the company crumbles around them.
In case anybody is wondering M&A stands for Mergers and Acquisitions.
Anyone working for a for-profit business with more than 50 employees should be embarrassed if they didn't know what M&A stood for. It means that you're paying no attention to the business climate or the sector your employer is in and it's relative health to its competitors. People like you get blindsided by layoffs
And, no, I am not a business wonk nor do I have a MBA.
Yahoo has a negative market cap. But sure, blame the sex of the CEO.
Seven puppies were harmed during the making of this post.
... in Silicon Valley is that there is an axis amongst venture capitalists and M&A people. A surprising number of senior M&A people are also investors or even partners of VC firms. So when a company turns out to be a dog the VC people have a way to get their money back, the founders get themselves a new job at the acquiring company, and everyone else gets screwed.
To me it is shocking that a hedge fund guy is just figuring it out. It probably has been going on in one form or another for over forty years. And no, as far as I know it isn't even illegal.
her buddies will ensure she gets another position at the top of another company without any shareholder input into it,
What nonsense. Shareholders vote on the board, and the board selects the CEO. You can bet the holders of the majority of shares are content with a CEO selection. Yes, it's one vote per share, not per shareholder, but even so "minority shareholder lawsuit" is a common enough occurrence if the board ignores its fiduciary responsibility.
Socialism: a lie told by totalitarians and believed by fools.