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Yahoo! Inc. (YHOO): Are Investors Justified To Block Marissa Mayer Acquisition Spree?

Pressure continues to mount on CEO, Marissa Mayer, to unlock Yahoo! Inc. (NASDAQ:YHOO)’s value in Alibaba Group Holding Ltd (NYSE:BABA) and return the same to investors.  During an interview on Bloomberg, Nicholas Carlson, reiterated that shareholder pressure might not be the only problem that Mayer is poised to grapple with, this year. The author of Marissa Mayer and the Fight, to Save Yahoo, believes the giant search engine company might also be struggling with an identity dilemma.

Alibaba Group Holdings Ltd (NYSE:BABA)

“From the very beginning, it solved the problem right in the 90’s it made the internet easier to use. Since then it has struggled to know what it is, and I think Marissa Mayer is dealing with the same problem,” said Mr. Carlson.

Investors led by Star Board Value have raised concerns after reports emerged that Yahoo! Inc. (NASDAQ:YHOO) was planning to use part of the amount recouped from Alibaba Group Holding Ltd (NYSE:BABA) stake sales to fund other costlier acquisitions. Most of the investors are against such a move; Yahoo having failed to generate significant returns on most of the past acquisitions.

Carlson maintains that investors are justified in blocking the acquisition of other entities in the months to come as the company continues to struggle on its core business.  The author notes that Mayer had on her hands an opportunity to streamline Yahoo! Inc. (NASDAQ:YHOO)’s operations making it a leaner company able to generate profits but failed on some uncharacteristic purchases in the past.

“She did not do well enough so that shareholders are excited about the idea of her taking all this Alibaba Group Holding Ltd (NYSE:BABA) billions and reinvesting in yahoo. They would like her to just give the money back. […] They would like her to find a way to tax efficiently return the money,” said Mr. Carlson.

Carlson also believes the best move for Mayer at the moment is splitting Yahoo! Inc. (NASDAQ:YHOO) into two entities, made of a smaller core company and another one that is a holding company for Asian investments. It will be hard for investors to stop Mayer on an acquisition spree this year according to Carlson considering she has the full backing of the board.

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