Mayer Plans to Leave Yahoo Board After Verizon Sale
According to recent documents, Marissa Meyer plans to step down from Yahoo’s board after the company’s pending sale to Verizon. Mayer states she intends to stay in her role as CEO. Still, this is yet another sign that the era of Yahoo as an online competitor has ended. David Filo, one of the company’s original founders, will also be resigning from the board following the company’s restructuring.
Who is Marissa Mayer?
Mayer was once seen as a leading figurehead of the “Lean In” movement, which promoted the inclusion of women in more executive roles. The movement took its name from the book written by Sheryl Sandberg in 2013, which discussed how women can learn to take more risks while setting appropriate limits. Mayer received lots of criticism when she took only two weeks off following the birth of her son and less than a month off after the delivery of twin girls in 2015. The move seemed to imply that women can only be successful if they give up hands on motherhood.
Mayer’s Failed Tenure as CEO
Since taking over as Yahoo’s CEO, Mayer faced even more criticism for her failure to turn around the company’s falling fortunes. Appointed in 2012, to stabilize the company, she made a series of decisions which in retrospect proved to be disastrous. In 2013, Mayer advocated for the purchase of the popular microblogging platform Tumblr for 1.1 billion dollars. Tumblr was not able to translate its high level of buy-in to monetization, and the platform has lost $230 million in the past three years. She also engaged in an experiment to create online magazines dedicated to niche topics, like travel and food. In 2016, these magazines were also quietly dropped, in a move that reduced the Yahoo workforce by 15 percent. The magazines failed to attract the advertising dollars that Yahoo had counted on to stave off financial ruin.
Yahoo Lost Sight of Core Businesses
Yahoo stock prices fell by a third since Mayer’s installation as CEO. Outsiders argued that although Mayer had been a strong performer in her previous role at Google, she had never had to turn around either a department or a company. When she first came to Yahoo, her assessment was that the company needed to acquire other potentially profitable brands. However, the slide to irrelevance had begun long before Mayer. The company forgot about supporting its core products, like Yahoo Mail, Flickr, and Yahoo Answers, which were all copied by competitors who flourished while driving Yahoo out of the market space.
In the worst instance, Google decided to focus on technology, and built advertising and search systems which reshaped the internet. Yahoo just sold more ads, until people stopped showing up to click on them. This is even more ironic given that Yahoo’s search engine was popular first.
Yahoo Sold Off Their Most Profitable Asset
Yahoo’s failure to keep their core products updated was problematic. Even more troublesome was the critical failure of how the company handled Alibaba. Ten years ago, Kerry Yang, Yahoo’s cofounder, purchased 40 percent of the wholesaler site for $1 billion dollars. That investment was set to pay off handsomely, as Alibaba is now worth $200 billion. In order to stay afloat, Marissa Mayer and her predecessors sold off 35 percent of the company. Yahoo’s shares in Alibaba are still worth $30 billion. Unfortunately, the company’s core business is worth much less than that. After the sale to Verizon of the actual services and intellectual property, the plan is to rename the company to Altaba, and continue as an investment company for the Alibaba holdings.
Privacy Issues Haunt Verizon Buyout
Mayer may not even get to enjoy a quiet retirement. Her contract promises an estimated golden parachute of $55 million. However Verizon has raised concerns about security issues following breaches in which Yahoo allowed hackers access to almost one billion user accounts and passwords. Verizon has stated that the sale will only continue after a full investigation of the breach. The tech industry is pursuing strict privacy compliance as it fights cooperating with the Trump administration to build a Muslim registry.
How the Yahoo Sale Affects Trading
Yahoo shares are trending down, because it’s clear the company is on its last legs. Verizon is a clear winner. They will likely gain control of key holdings at a low price. Alibaba shares will go up, as Yahoo will be able to focus more attention on its only profitable asset. Google shares will continue to increase, as they have solidified their reputation as the web portal of record. Traders will buy U.S. indices, as fears over Yahoo’s performance subside. The Shanghai stock index should also see a bump as Alibaba is a major economic driver in that region.