Yahoo! Inc. YHOO
Yahoo's Core is mismanaged but fixable — replace Mayer with an operator CEO, cut headcount two-thirds, bring Liberty in as a partner, and shares triple from $35 to $113.
Thesis
SpringOwl argues Yahoo does not need to be dismantled — it needs a new CEO, a refreshed board, and a disciplined operator's playbook. Under Marissa Mayer, Yahoo has misallocated $10B (roughly $4B in failed R&D, $3B in value-destroying M&A, and $2.5B in buybacks above today's price), while Core EBITDA fell 55% to ~$638M and headcount stayed near 12,000 on just $4.9B of revenue. Starboard's recent 'sell the Core at the lows' letter would hand the company to private equity for scrap, unlocking only ~$4/share. Instead, SpringOwl proposes a ten-step turnaround: install an operator CEO, replace directors, bring Liberty Media in via a PIPE for tax and rerating expertise, cut headcount to 3,000, sell-leaseback Sunnyvale, and deploy $10B in sub-$45 buybacks. Together with Alibaba recovery and tax-efficient handling of the Asian stakes, shares re-rate to roughly $113 — more than $30/share above Starboard's plan.
SCQA
Yahoo is a public technology company whose ~$33B market cap is dominated by its Alibaba and Yahoo Japan stakes; the Core ad and search business generates only ~$638M EBITDA on $4.9B of revenue and trades at an implied ~2x multiple.
Under Marissa Mayer, Yahoo has misallocated roughly $10B across failed M&A, R&D with no products to show, and underwater buybacks, while Core EBITDA fell 55% and headcount stayed near 12,000; Starboard now pushes a fire-sale of the Core at the lows.
Replace Mayer with an operator CEO and refresh the board, bring Liberty Media in as a PIPE partner for tax and rerating expertise, take headcount to 3,000, sell-leaseback Sunnyvale, kill in-house search, and deploy ~$10B on sub-$45 buybacks.
If the Core is fixed to $2–3B of EBITDA at 8x, Alibaba recovers to $120/share and the Asian stakes are handled tax-efficiently, Yahoo re-rates to about $113/share — more than $30/share above Starboard's plan and triple today's price.
The three reasons
- 1
Under Mayer, Yahoo misallocated $10B (M&A, R&D, buybacks) while Core EBITDA fell 55% to $638M
- 2
A fixed Core at 8x EBITDA plus tax-efficient Asian stakes gets Yahoo to $113/share vs Starboard's $39
- 3
Yahoo is still dramatically overstaffed at ~12,000 employees; peers like Facebook do $15B with 11,000
Primary demands
- Replace Marissa Mayer with an operator CEO
- Refresh the board with directors who have tech/mobile/media experience
- Bring in a Liberty Media-style partner via a PIPE for tax advice and rerating
- Cut headcount from ~12,000 to 3,000 and eliminate free food, Davos/Met Ball sponsorships and other excess
- End in-house mobile search and write off Mayer's $3B of M&A
- Deploy ~$10B ($4B cash + $4B new debt + $1.8B from Sunnyvale sale-leaseback) on sub-$45 buybacks
- Sell and partially lease back the Sunnyvale campus
- Reject Starboard's 'sell the Core at the lows' plan; turn the Core around as a public company
KPIs cited
Pattern membership
Where this document fits across the library's 12 rhetorical / structural patterns.
Precedents cited
- Tim Armstrong milking AOL's dial-up business
- Liberty Media's 14x EV/EBITDA multiple as a partner template
- Verizon's acquisition of AOL (as strategic-buyer precedent)
- Silver Lake / Marc Andreessen's 2011 $16.50/share bid (cited as anti-example of PE wealth transfer)
- BuzzFeed's audience-growth culture and syndication model
Notable slides (6)
Notes
Classic activist turnaround-vs-breakup deck framed explicitly against Starboard's concurrent 'sell the Core at the lows' letter. Author is SpringOwl Asset Management; cover shows only an email contact (axerri@springowl.com), no named signatory, so author_name left null. The 10-step plan spans pp. 77–85; pp. 22 and 75 duplicate the sum-of-parts valuation bridge (Market / Starboard / SpringOwl / Delta), and pp. 23/93 duplicate the waterfall. Memorable rhetorical devices: Shepard-Fairey-style 'HOPE' Mayer poster (p.32), Shaq-free-throw analogy rebutting 'Yahoo is unfixable' (p.74), Mayer quote 'We're really proud of our record on capital allocation' paired with $9.5B misallocation infographic (p.36). Stake not disclosed; SpringOwl not listed in top-20 holders on p.98. Outcome: Mayer ultimately sold Core to Verizon in 2016 for ~$4.5B — closer to Starboard's outcome than SpringOwl's turnaround vision.