An activist hedge fund Thursday launched a bid to replace the entire Yahoo board of directors, saying the struggling Internet firm’s management team has “failed to deliver results.”
In an open letter to Yahoo shareholders, Starboard Value LP said it would nominate nine “highly qualified” directors to the company’s board, following a threat made last year to do so if it was unsatisfied with the pace of change.
Replacing the board could pave the way for a sale or merger of Yahoo, whose troubles have deepened despite a restructuring plan led by chief executive Marissa Mayer.
“We believe that Yahoo is deeply undervalued and opportunities exist within the control of management and the board of directors to unlock significant value for the benefit of all shareholders,” Starboard said.
“We have been extremely disappointed with Yahoo’s dismal financial performance, poor management execution, egregious compensation and hiring practices, and general lack of accountability and oversight by the board.
The letter said the board “clearly lacks the leadership, objectivity, and perspective needed to make decisions that are in the best interests of shareholders.”
Although Yahoo is one of the best-known names on the Internet and is used by around one billioneople, it has fallen behind Google in Internet searches and has been steadily losing ground in online advertising.
In February, Yahoo said was cutting 15 percent of its workforce and narrowing its focus as it explores “strategic alternatives.”
The announcement, coming with the release of a big quarterly loss, offered the first sign that Yahoo may be open to a sale or merger after years of struggling to regain its former glory.
The California company reported a loss of 4.43 billion in the final three months of last year, due mostly to lowering the value of its US, Canada, Europe, Latin America and Tumblr units. Revenue was up marginally from a year ago at 1.27 billion.
Yahoo said at the time it was launching “an aggressive strategic plan to simplify the company, narrowing its focus on areas of strength to better fuel growth.” At the same time, it said it was looking at “additional strategic alternatives,” suggesting it could seek a deal to sell or merge the company.
But some Yahoo stakeholders have been impatient.
Starboard said in a letter earlier this year investors appear to “have lost all confidence in management and the board” after the company, led by Silicon Valley star Mayer, has failed to turn around Yahoo’s struggling core Internet business.
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