Yahoo

Can Marissa Mayer fix Yahoo by breaking it?

By Tina Irgang

Yahoo has been struggling to regain its former relevance in the internet space for years. Now, CEO Marissa Mayer is making her last stand. On Feb. 2, Mayer announced Yahoo would lay off 15 percent of its employees and close offices around the world to put some cash in the bank and get growing.

The plan also calls for shutting down some of Yahoo’s services, such as Yahoo Games, and selling off patents. In a statement, Yahoo calls these steps “non-strategic asset divestitures” and says it expects to generate more than $1 billion in cash as a result, which will help “fuel growth” in the remaining areas of the company.

Will it help? Investors are clearly skeptical, reports tech news site Cnet, as shares dipped slightly following the announcement.

What’s worse, Mayer and Yahoo’s board seem to be at odds over the future of the company, Wired reports. “The board also believes that exploring additional strategic alternatives, in parallel to the execution of the management plan, is in the best interest of our shareholders,” said Maynard Webb, chairman of Yahoo’s board, in a statement on Mayer’s plan. According to Wired, the board is effectively communicating that it wants to sell the very core business units Mayer is hoping to strengthen.

Indeed, some analysts wonder whether all this is just a noisy preamble to the complete breakup and sale of the company to another tech giant.

Yahoo’s troubles go back many years, but investors and employees perked up in 2012, when the company hired high-powered Google executive Marissa Mayer to pull off a big turnaround. Mayer immediately set to work acquiring promising startups, including Tumblr, but this failed to jumpstart Yahoo’s profits, according to a detailed analysis of Mayer’s tenure in New York Times Magazine.

Minus its stakes in Chinese internet giant Alibaba and Yahoo Japan, and some cash reserves, Yahoo’s current valuation may in fact be -$3.8B, Bloomberg News suggests. Yes, that’s a minus in front.

Add to all that the fact that employee morale at Yahoo was at an all-time low even before this latest round of layoffs was announced: “Morale has sunk so low that some employees refer to [Mayer] as ‘Evita’ — an allusion to Eva Peron, the former first lady of Argentina whose outsized ego and climb to power and wealth were chronicled in the musical of that name,” the New York Times reported last month. The article quotes current and former employees as saying that more than a third of Yahoo’s workforce, one way or the other, left the company in 2015.

The article goes on to note that a survey by job-search site Glassdoor found only 34 percent of Yahoo employees indicated they had faith that things were improving at the company. That’s compared with 61 percent at Twitter, which has also had its share of troubles.

Once Mayer’s plan is implemented, Yahoo will be some 42 percent smaller than it was as recently as 2012, Wired notes.

The coming months will show whether this new plan can turn around Mayer’s troubled tenure, but skepticism from employees, investors and the board are likely to make for tough going. If you still have a Yahoo email address floating out there, you might want to consider a switch.

Tina Irgang is the production editor for SmartCEO. Contact her at tina@smartceo.com.