News About Banking Industry

Yahoo ‘morale challenge’ faces CEO Mayer; shares down 1.2%

Yahoo shares were down Tuesday as CEO Marissa Mayer faced continuing challenges in her turnaround of the web media giant. Concerns have crescendoed since an activist investor last week suggested Yahoo should halt its planned spinoff of its shares in Chinese retailing giant Alibaba and instead focus on selling its core web portal business. That investor, Starboard Value, which owns nearly 1% of Yahoo’s shares, called the spinoff risky because it could come with a tax hit of billions of dollars.Yahoo! Sunnyvale headquarters.  October 28, 2001 (Y! Photo / Brian McGuiness)

Meanwhile, Yahoo faces “a crisis of morale,” according to a Tuesday story in The Wall Street Journal, as many executives have exited recently. Yahoo (YHOO) shares have fallen 36% this year and closed down 1.2% to $32.96 after falling more than 2% earlier in the day.

In an interview, SunTrust Robinson Humphreys Internet equity analyst Robert Peck said “we do think that there is a question of moral support given the lack of traction in the turnaround of the company after the good three and a half years that the CEO has been there.” His investment bank sent a note to Yahoo’s board earlier this month with concerns about the possible risk in the company spinning its 384 million shares in Alibaba Holding Group into a new firm Aabaco Holdings, valued as high as $30 billion.

If there is risk, perhaps Yahoo should “go a different route and maybe not do that spin and maybe instead sell the core (business) or spin the core or just pause until you get some further clarification from the IRS,” Peck said.