Yahoo chief exec to detail another turnaround plan

Ms Mayer, who has overseen falling sales in seven of the past 10 quarters, aims to detail a plan to cut costs and boost growth.
Ms Mayer, who has overseen falling sales in seven of the past 10 quarters, aims to detail a plan to cut costs and boost growth.PHOTO: AGENCE FRANCE-PRESSE

SAN FRANCISCO • Chief executive officer Marissa Mayer is gearing up for yet another turnaround plan for Yahoo.

Given the company's persistent slump, even a sweeping overhaul may do little to fend off activist investors threatening to wage a proxy war aimed at her removal.

Ms Mayer, who has overseen falling sales in seven of the past 10 quarters, promised to detail a plan to cut costs and boost growth.

The effort, set to be announced with quarterly earnings this morning (Singapore time), will probably include job cuts that may affect about 15 per cent of the workforce and involve the closing of some units, sources said.

Since her hiring in 2012, Ms Mayer has made scant headway in efforts to restore growth at the Web pioneer.

Now, she is mired in a complex project to decouple Yahoo's main business from its US$25 billion (S$35.5 billion) stake in Alibaba Group.

Activist investors dissatisfied with progress have all but threatened a proxy war. "She's almost out of time," said Mr Ryan Jacob, who manages Yahoo shares as part of his Jacob Internet Fund.

"At this point, it's hard to imagine a proxy fight being averted. I would welcome it, given the changes at Yahoo have just been incremental. That's what has been frustrating shareholders for years."

While boasting more than one billion users, Yahoo has struggled to keep pace with growth in online advertising, with Yahoo's share of the US market projected to shrink to 3.5 per cent in 2017 from 5.1 per cent in 2014, according to EMarketer Inc.

Analysts project 2015 revenue, minus sales passed on to partners, will fall 8.2 per cent to US$4.04 billion, its biggest decline since 2009.

Yahoo shares, which declined 34 per cent last year, rose less than 1 per cent to US$29.57 at the close in New York on Monday.

Ms Mayer has insisted the company can be turned around - and that these kinds of changes won't happen overnight.

"We see a unique moment and opportunity for Yahoo as we move into 2016 to narrow our strategy and focus on fewer products with higher quality to achieve better growth and better results," she told analysts in October.

Ms Mayer has been trimming costs, reducing the workforce by more than 30 per cent since she joined and closing some sites. And there is a chance she could surprise investors with something radical.

Said Mr Brian Wieser, an analyst at Pivotal Research Group: "Right now, the big risk - from an investor perspective - is that capital will be burned.

"Even if it was a great-sounding proposal, it doesn't mean they can prevent a proxy fight, let alone win one."

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A version of this article appeared in the print edition of The Straits Times on February 03, 2016, with the headline 'Yahoo chief exec to detail another turnaround plan'. Print Edition | Subscribe