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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.
she bought those zombie companies for the coming apocalypse!
Either that or she was just doing a solid by her old Google buddies
Did they spend that much on the letters M and A? That's the only thing I can gather from this summary.
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.
In case anybody is wondering M&A stands for Mergers and Acquisitions.
Anthropic principle: We see the universe the way it is because if it were different we would not be here to see it.
As the inspiration for most Dilbert strips.
Pretty much all companies totally suck at M&A's. I don't know if he has much of a leg to stand on here given large company track records of small single digit successes in M&A.
She sounds like she has a bright future as Carly Fiorina's running mate!
I remember back around Y2K they were burning through capital and had zero profits to show.
"Do not meddle in the affairs of dragons, for you are crunchy and taste good with ketchup."
the one that made it worthwhile? Sure, most if not all of these were post Alibaba, but after a payout like that who can blame them for trying again. The funny part is that their illustrious CEO sold off 7 billion of Alibaba before it went crazy and they still made 30 billion after the little 'Oops'. Funny to watch the shareholders circling them like sharks though.
Hi! I make Firefox Plug-ins. Check 'em out @ https://addons.mozilla.org/en-US/firefox/addon/youtube-mp3-podcaster/
I don't know when they bought Flickr, but it was under her tenure that they imposed infinite scrolling on us, and made Pro a nearly valueless product for many people. I hope they can spin out Flickr somehow, and make it for all the users again, not just a lame attempt to play to tablet people. Nothing against tablet people, but the world is more than quick-flipping through pictures and memes with text on the picture. For some of us, the prose under our pictures is just as important as the picture itself and when you make viewers hunt for the prose they won't do it. They'll just go "this picture isn't very sensational" and move on. So sad. End rant.
p.s., A wikipedia style non-profit for Flickr might not be a bad idea.
For all intensive purposes, "whom" is no longer a word. That begs the question, "who cares"?
...I was talking to an ex Yahoo insider JUST TODAY. I was in Mt. View CA for a meeting. 7 Years from 2000 to 2007 he worked on search. His wrords: "Google killed us.", his opinions on Meyer's efforts: "DOA." Seriously, time to dump that Yahoo position if you have one.
Python: 'And then suddenly you have a language which says "we're all stuck with whatever the whiniest coder wants".'
Corporate America rewards their CEOs for failure.
Because it has to serve as a shining example of how to do business to Mayer's Number One Fan, Meg Whitman, who has aped everything Yahoo has been doing, using HP's bigger cash coffers.
Maybe Marissa is getting the hint that Yahoo is going in, so the best thing to do is to try to steer the remaining cash to her cronies (and herself) while it lasts?
Nah...couldn't be!
Left MS Windows for Linux Mint and never looked back!
Vote for Bernie in 2016!
You haven't made a compelling case that the assessment of it as "worthless" was incorrect.
Actually, I suspect that it may have some value, and I don't know anything about it. The only problem is, the value may be negative, and I've seen no evidence to indicate that it isn't.
But "worthless" is almost never correct. It is, however, common for liabilities to exceed assets. And that's always a judgment call. E.g., I consider the liabilities of MSWind to exceed its assets, so I don't have it installed. Others evaluate it differently, and, given their circumstances, they may be right, for them. Since the assertion "worth nothing" was based on Yahoo's stock price, I have no reason to think that he wasn't approximately correct. He seems to be taking the context into account, and I can't do that.
I think we've pushed this "anyone can grow up to be president" thing too far.
I will let employees and shareholders judge Marissa, but Yahoo is going through like one CEO per year. Would you expect any employee to be great before at least 3 years on a job? Why is it different for presumably the most difficult job in the organization?
Plus, some time is needed to turn around a large, bureaucratic company in any given direction. With Marissa, it has been killing of smaller projects and focusing on mobile apps. I give her some credit for at least getting people to talk about the company and putting it in front of customers with Firefox deal.
Now maybe there are other successful directions, like extreme cost cutting and collecting profits as long as they can possibly last. Oracle seems to be doing good job milking RDBMS which was dying longer than Yahoo was around.
But if you never allow a CEO to truly learn how to manage the company and spend time implementing a consistent vision, you are doomed to die as you throw away previous spending to chase the latest wishful thinking.
Seems bizarre that a company in Yahoo's situation would be doing M&As with companies that are not clearly wildly profitable. Trying to pick winners in startup space is something VCs should be doing; I'd not be impressed if I was a Yahoo shareholder.
All their acquisitions should be being done because it's more effective for them to invest shareholder money in the acquisition than it is to developed the equivalent product/revenue stream/service internally.
It's not really clear if the acquisitions of startups are really dice rolls from this document, which is pretty high level - it doesn't really show how they align with Yahoo's core business, etc. But it's certainly the implication.
If you're going to be playing M&A games with random startups, probably better to be doing it in the really really early stages so you're not spending millions per acquisition.
I was an original Yahoo search user back in the day, but I can't remember the last time I used a Yahoo product.
No, that IS illegal. The CEO has a responsibility to the shareholders.
Incorrect. The CEOs have a responsibility to themselves .
ELOI, ELOI, LAMA SABACHTHANI!?
What exactly is M&A?
It's the male counterpart of Marissa's management style (Muscles & Ass vs Tits & Ass.)
Seriously, It's alarming the number of posters who whined about not being able to find their way to a search engine to learn a term that they'd be best advised to tattoo on their entitled behinds right now, because in all probability they will lose a job one more more times in their career because of it. It's very much a part of technology.
When all you have is a hammer, every problem starts to look like a thumb.
They got to a search engine, but it was Yahoo!
Google paid $3.2B for a thermostat company founded by a former PM from the iPod team. At least they are selling a few units and in a decade or two they will grow enough to be a footnote for Google's annual report.
People who own Yahoo shares in theory owe money, since the company's market capitalization is negative if you subtract the value of Yahoo's Alibaba stock.
Seven puppies were harmed during the making of this post.
She must be doing something right, seeing as how I keep hearing about them, despite the fact that Yahoo has been largely irrelevant ever since Lycos had the brilliant idea of making a "search engine" for "the Internet."
I'm trying to teach myself to set people on fire with my mind... Is it hot in here?
Anyone who's invested in YHOO in the past decade deserves to lose money for believing the company has any relevance left. I understand being hopeful about a CEO, but when it involves changing the underlying business model you should run away from the stock as fast as you can. There is no gamechanger here for this stock. The fact that it's still valued at $32 per share is reason enough to sell this stock and get the hell away from it.
----- obSig
What kind of Yahoo would spend $4,000,000,000 on monkeys and aadvarks?
Apparently their Mergers and Acquisitions team was looking for candidate companies by using a crappy hierarchical search technique rather than one using page ranking.
Couldn't find out what an M&A is in either the summary or the article.
Or Google I would presume, which is quite depressing since typing M&A into Google explains what it is six times including the first two results.
-- All that is necessary for the triumph of evil is that good men do nothing. -- Edmund Burke
This is a tech site, not a financial news site. How hard would it be to explain what M&A stands for? Money and ass? Marissa and airplanes? Monkeys and aardvarks?
Expecting readers of a tech site to find that the definition of M&A is the first two results of a Google search seems a bit outlandish to me too. I mean, some of us might have heard of search engines before but certainly not most of us!
-- All that is necessary for the triumph of evil is that good men do nothing. -- Edmund Burke
... 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.
"Expecting readers of a tech site to find that the definition of M&A is the first two results of a Google search seems a bit outlandish to me too"
Expecting thousands of people wasting if even 15 seconds each to find what M&A is instead of a single person expending the 5 seconds it takes to explicitly write "mergers & acquisitions" is not only bad taste but infuriating for any engineering-inclined mind.
And have you considered that Google tailors your search results based on your search history? Those results YOU get aren't what *I* get.
I did, which is why I googled with an incognito window and with my cell phone I got a week ago before I posted. They had the same results as my original search. While it does worry me that the quality of articles in Slashdot is declining, I am glad the editors at least respect their audience enough to expect us to do a quick Google search every once in a while. Not everyone has the resourcefulness of a petulant 3rd grader.
-- All that is necessary for the triumph of evil is that good men do nothing. -- Edmund Burke
I criticize hedge fund manager for investing in Yahoo.
Of course news about a fake are Fake News.
Y! was eating itself from the inside out BEFORE the .com crash.
in 1999 they were Google, Ebay, Match, Facebook and Steam. All rolled into one.
Whoever sacrificed the dominant position on the entire Internet to form an acquisitions firm for worthless tech companies is a fool. But that decision was made while Google was run from a garage and Ms Meyer was still at college.
This perpetual motion machine Lisa made is a joke, it just keeps getting faster and faster. - Homer
She sucked at her last 2 CEO jobs as well. Why did anyone expect anything different?
She's only been the CEO of one company, and that's Yahoo.
Eric Jackson has been peeing on Yahoo for 7 years.
He advises people on How to be an activist investor, and it mostly comes down to making a lot of noise, even when you only own about 0.2% of the stock -- which is what his fund owns of Yahoo.
http://www.wsj.com/articles/ho...
http://recode.net/2014/08/12/a...
http://greenbackd.com/tag/dr-e...
His dream (now all but kaput, thanks to the financial crisis in China) was to have Alibaba flush with cash, spending it on acquiring Yahoo.
I'd sex the two of 'em. Bathe them and send them to my tent.
Better yet, don't bathe them.
"So long and thanks for all the fish."
I do my fair share of technical editing, and one of the most frequent mistakes I encounter is not defining acronyms on first use. I constantly (and repeatedly) have to remind people to treat ANY technical document as if, even though it's expected that the reader is assumed to have some level of technical experience, that it's to be treated as if someone is picking up material on this particular subject for the first time. That includes defining all acronyms.
Don't get me started on how often I have to explain that "data" is plural.
Some people don't believe in fairies. I don't believe in The Patriarchy.
Another case where you need to RTFA. The synopsis is shit but everyone is eating it up and parroting the talking points. Hence, sheep. If anyone was paying attention, there's a battle between investors about what to do with Yahoo's core business. You have a group of investors who want Yahoo to SELL off their core business and a group of investors who don't.
"In Jackson's view, Yahoo's core business is undervalued after being poorly managed by Mayer. Selling today would mean selling it at a low point. He thinks selling Yahoo right now would only enrich some private-equity people while current shareholders would miss out on upside.
This has less to do about Mayer and more to do with investors deciding how best to carve up Yahoo,
she has succeeded in changing the image of the society. It was hopelessly dying. Now, it is still not very healthy, but the reputation has improved a lot. Such a success in a society where shareholders are such dicks, I think she is really strong. If the stupid shareholders fire Marissa Meyer, I close my yahoo email account and I remove my bookmarks on yahoo.
Death by PowerPoint. A presentation that takes 99 slides to make its point its clearly pointless.
If it works, it's obsolete
Quite. It's good writing and common courtesy, both of which are in short supply round here due to cunts like the GP.
Confucius say, "Find worm in apple - bad. Find half a worm - worse."
I do my fair share of technical editing, and one of the most frequent mistakes I encounter is not defining acronyms on first use. I constantly (and repeatedly) have to remind people to treat ANY technical document as if, even though it's expected that the reader is assumed to have some level of technical experience, that it's to be treated as if someone is picking up material on this particular subject for the first time. That includes defining all acronyms.
Don't get me started on how often I have to explain that "data" is plural.
Yes, but there are some acronyms which you are entitled to assume people know.
You wouldn't expect to see every article mentioning NASA or NATO spelling it out as National Aeronautics and Space Administration or North Atlantic Treaty Organisation, unless perhaps it was for children.
In context here, it is pretty obvious that the story is about Yahoo's finances, and M&A is a standard financial abbreviation. Slashdot is a site for adults, so it is not unreasonable to expect most readers to have a basic group of the real world.
To have a right to do a thing is not at all the same as to be right in doing it
People who own Yahoo shares in theory owe money, since the company's market capitalization is negative if you subtract the value of Yahoo's Alibaba stock.
That's not how shares work. Your liability is limited to the unpaid nominal value of the shares. Their market value is irrelevant.
To have a right to do a thing is not at all the same as to be right in doing it
Come on... Almost all acquisitions are crap. Take the Apple take over of Beats. Did Apple need the branding kudos? Of course not. Did they need the expertise to make a music streaming service or a pair of headphones? Of course not. 99% of acquisitions are complete nonsense.