It has a lot to do with what Griffith calls “trader-bait” or short-term changes a company can make that affect the firm’s balance sheet. Consequently, these changes which includes cost-cutting measures and asset divestitures which can shore up the company’s cash reserves make the company’s stock more tradable in the short term.
According to Griffith, Yahoo! Inc. (NASDAQ:YHOO), under Marissa Mayer, has done a lot of these “trader-bait” moves. The Fortune writer notes that the company has reduced its outstanding shares by a significant 22% via $9.4 billion in buybacks, made $600 million by selling patents and licenses, closed 17 offices and cut its number of employees.
Not to mention, Yahoo! Inc. (NASDAQ:YHOO) is set to spin off its big Alibaba Group Holding Ltd (NYSE:BABA) stake later this year, a move that some expect will signal the beginning of the real test for Mayer.
Griffith says that the trouble Internet old-timer has only one “trader-bait” move left up its sleeve. That is it’s selling of its stake in Yahoo Japan.
Analysts during the earnings call did not care that the company had great growth in mobile and for Tumblr. All they seemed to care about is the company’s next “trader-bait” move.
Which brings us to Mayer seemingly becoming exasperated by the focus on the short term of those who were asking her questions during the critical earnings call last night.
“During the call, Mayer noted that the amount of capital Yahoo has returned to shareholders goes ‘well beyond any commitments we have made’ and is four times as much as the company has spent on acquisitions. In other words, Yahoo’s chief executive seemed to say to Wall Street: What more do you want?” Griffith writes.
After it divests its interests in Alibaba Group Holding Ltd (NYSE:BABA) and Yahoo Japan, investors will have to believe what Yahoo! Inc. (NASDAQ:YHOO)’s long-term mission is, Griffith adds, which Mayer says is to be “the indispensable guide to digital information, yours and the world’s.”
It might just be what industry observers like Edmund Lee of Re/code and Youssef Squali of Cantor Fitzgerald are looking for. Or maybe not.
Daniel S. Och’s OZ Management owned about 8.99 million shares of Yahoo! Inc. (NASDAQ:YHOO) by the end of the December 2014 quarter.
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