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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.
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.
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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".'
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.
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.
"Improving Shareholder Value" is the new pyramid scheme.
Example: IBM is "too small" to turn things around... so they need to merge with another company, strip off the business, and let go of a bunch of employees (funny that the execs always seem to do great in those deals and the top-heavy organization always remains top heavy with execs and upper management). They'll see an uptick in the stock price. When things fall again, rinse, lather, repeat....until you can no longer reverse the trend, then bail out with that golden parachute, and land as a CEO in another corporation.
There are so many overlapping board members on all of these corporations - and all of them laugh at the fact that they are handed money by investors, venture capitalists and hedge fund managers to burn and burn some more. People like Mayer knows she'll land on her feet to victimize another company because she's played the game and was generous with the bonuses and options paid out to their directors and executives. Directors may sit on a half a dozen boards at any given time, with overlapping areas of responsibilities. They aren't even Generals - at least Generals devise real strategies and are held responsible for their actions. Executives have assistants (who hope to make the jump some day to the executive senior level) who do most of the grunt work, while directors do little actual work (I'd be surprised if they put in more than 10 hours a week, spread across all the boards they belong to and whatever corporate-specific position they hold)
Modern corporations are being run by the human equivalent of locusts. The leave broken companies (and broken people) in their wake.
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.
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
... 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.