Yahoo Inc chief executive officer (CEO) Marissa Mayer is getting some unsolicited advice on how to turn around the long-struggling Internet company.
In a letter on Friday, activist investor Jeffrey Smith urged Yahoo to buy another fallen Internet star, AOL Inc and take steps to reduce the future taxes on the company’s lucrative stake in China’s Alibaba Group Holding Ltd (阿里巴巴).
He also chastised Mayer for spending US$1.3 billion to acquire an Internet blogging service and more than two dozen other startups during the past two years with little to show in return so far.
To bolster his arguments, Smith says he has built a “significant” stake in Yahoo through Starboard Value LP.
The prospect of a change in Yahoo’s recent direction seemed to excite investors. Yahoo’s stock rose US$1.71, or 4.4 percent, to close at US$40.66. AOL’s stock added US$1.58, or 3.7 percent, to finish at US$44.55 as investors reacted to a potential buyout bid.
Stakeholder Smith has previously agitated for change at AOL in 2012 after he acquired a 5.3 percent stake in that company and mounted an unsuccessful campaign to win three board seats.
This is the third time in the past six years that an activist investor has targeted Yahoo for a shake-up.
Billionaire Carl Icahn seized three spots on Yahoo’s board in 2008 after attacking the company for spurning a US$47.5 billion takeover offer from Microsoft Corp and hedge-fund manager Daniel Loeb also wound up with three board seats in 2012 after orchestrating the ouster of one of Yahoo’s previous CEOs, Scott Thompson.
Since becoming Yahoo’s CEO in July 2012, Mayer has been buying startups and trendy services such as Tumblr in an effort to appeal to a younger demographic and expand Yahoo’s audience on smartphones and tablets as more people rely on the mobile devices to connect with digital services.
Yahoo could easily afford to take over AOL, whose market value is currently hovering around US$3.5 billion. After paying taxes, Yahoo is expected to pocket about US$6 billion from selling 140 million of its shares in Alibaba, a rapidly growing e-commerce company that went public last week.
Yahoo still holds a 15 percent stake in Alibaba worth about US$34 billion, an asset that Smith contends has been mismanaged.
He believes that Yahoo could boost its stock price by about US$16 per share by coming up with a strategy that would minimize the company’s taxes when it sells the rest of its holdings in Alibaba Group and another investment in Yahoo Japan.
The company’s stakes in Alibaba and Yahoo Japan are valued at a combined US$42 billion.
WASHINGTON’S INCENTIVES: The CHIPS Act set aside US$39 billion in direct grants to persuade the world’s top semiconductor companies to make chips on US soil The US plans to award more than US$6 billion to Samsung Electronics Co, helping the chipmaker expand beyond a project in Texas it has already announced, people familiar with the matter said. The money from the 2022 CHIPS and Science Act would be one of several major awards that the US Department of Commerce is expected to announce in the coming weeks, including a grant of more than US$5 billion to Samsung’s rival, Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), people familiar with the plans said. The people spoke on condition of anonymity in advance of the official announcements. The federal funding for
HIGH DEMAND: The firm has strong capabilities of providing key components including liquid cooling technology needed for AI servers, chairman Young Liu said Hon Hai Precision Industry Co (鴻海精密) yesterday revised its revenue outlook for this year to “significant” growth from a “neutral” view forecast five months ago, due to strong demand for artificial intelligence (AI) servers from cloud service providers. Hon Hai, a major assembler of iPhones that is also known as Foxconn, expects AI server revenues to soar more than 40 percent annually this year, chairman Young Liu (劉揚偉) told investors. The robust growth would uplift revenue contribution from AI servers to 40 percent of the company’s overall server revenue this year, from 30 percent last year, Liu said. In the three-year period
LONG HAUL: Largan Energy Materials’ TNO-based lithium-ion batteries are expected to charge in five minutes and last about 20 years, far surpassing conventional technology Largan Precision Co (大立光) has formed a joint venture with the Industrial Technology Research Institute (ITRI, 工研院) to produce fast-charging, long-life lithium-ion batteries for electric vehicles, mobile electronics and electric storage units, the camera lens supplier for Apple Inc’s iPhones said yesterday. Largan Energy Materials Co (萬溢能源材料), established in January, is developing high-energy, fast-charging, long-life lithium-ion batteries using titanium niobium oxide (TNO) anodes, it said. TNO-based batteries can be fully charged in five minutes and have a lifespan of 20 years, a major advantage over the two to four hours of charging time needed for conventional graphite-anode-based batteries, Largan said in a
Taiwan is one of the first countries to benefit from the artificial intelligence (AI) boom, but because that is largely down to a single company it also represents a risk, former Google Taiwan managing director Chien Lee-feng (簡立峰) said at an AI forum in Taipei yesterday. Speaking at the forum on how generative AI can generate possibilities for all walks of life, Chien said Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) — currently among the world’s 10 most-valuable companies due to continued optimism about AI — ensures Taiwan is one of the economies to benefit most from AI. “This is because AI is