Recently hired Yahoo CEO Marissa Mayer may scrap the Internetcompany's plan to reward its long-tormented shareholders with amultibillion-dollar payout later this year, underscoring the uncertaintyaccompanying new leadership.
The unexpected twist disclosed in regulatory documents filed Thursday after thestock market closed caused Yahoo shares to drop more than 3 percent in extendedtrading.
Mayer is mulling a shift in direction as part of a sweeping review that she isconducting in an attempt to revive Yahoo's revenue growth, spur more productinnovation and boost the company's stock price. Those goals have eluded herrecent predecessors.
Yahoo Inc. lured Mayer away from rival Google Inc. three weeks ago to becomeits fifth CEO in the past five years.
Given Yahoo's persistent headaches, shareholders presumably want Mayer to shakethings up.
Even so Mayer will risk alienating Wall Street if she decides to do somethingdifferently with a windfall that will pour into Yahoo after it completes anagreement to sell half its stake in thriving Chinese Internet company AlibabaGroup for $7.1 billion toward the end of the year.
Yahoo pledged to distribute most of the anticipated after-tax proceeds — anestimated $4.2 billion — to shareholders. The company, which is based inSunnyvale, California, reiterated that in a conference call held the afterMayer's hiring was announced.
Since then, though, Mayer has decided to reassess Yahoo's strategy in an effort"to enhance long-term shareholder value," according to the company'squarterly report filed with the Securities and Exchange Commission. Her reviewwill include potential acquisitions, a restructuring plan that eliminated 1,500jobs during the second quarter and the plans for the Alibaba proceeds, thedocuments said.
Mayer's analysis could culminate in a complete about-face from the previousplans or less dramatic changes, according to Yahoo. The documents didn'tspecify a timetable for completing Mayer's review.
If Mayer decides to chart a completely new direction, she will need the approvalof Yahoo's board. The directors include a major shareholder, New York hedgefund manager Daniel Loeb, who stands to be one of the biggest winners from anAlibaba payday. Loeb's fund, Third Point LLC, owns a 5.8 percent stake inYahoo.
Yahoo shareholders have grown increasingly frustrated as the company's revenueand stock price have flagged, even as advertisers shifted more of theirmarketing budgets to the Internet. Most of that money, though, has been flowingto Google, the Internet's search and video leader, and online social networkingleader Facebook Inc.
To compound investor exasperation, Yahoo squandered an opportunity to sellitself to Microsoft Corp. for $33 per share in May 2008. Yahoo shares fell 55cents, or 3.4 percent, to $15.46 in extending trading Thursday, leaving themslightly below their level before Mayer was hired. The stock hasn't tradedabove $20 in nearly four years.