Investors Increasingly Critical Of Yahoo Business Decisions (NASDAQ:YHOO)

Investors have been increasingly vocal about their displeasure in the business decisions Yahoo has been making. Two decades ago, Yahoo was one of the hottest companies in Silicon Valley. Marissa Mayer took over the helm of Yahoo three years ago. She has repeatedly insisted that Yahoo is a very different and better company than the one she took over. However, some investors are skeptical of the claims.

During her tenure, Ms. Mayer has paid about $3 billion for acquisitions of largely unknown companies, like Aviate, Polyvore and Distill. The one notable acquisition made during her tenure is that of popular social media site Tumblr. The company recently announced the reversal of its plan to spin off its stake in Alibaba. Some investors think Yahoo’s core business is worthless. Yahoo’s stock has been plummeting.

In recent weeks, criticism of Ms. Mayer’s stewardship of Yahoo has increased. Roughly $9.4 billion has been spent on stock buybacks. Free food for the staff has cost the company an estimated $450 million and parties and events, including a “Great Gatsby�?-themed holiday party several weeks ago, have added double-digit millions of dollars more to the tab.

Many critics also view executive compensation at the company to be out of control. During her tenure, Ms. Mayer has earned about $365 million of compensation (assuming she stays for an additional year and a half). An executive she hired to be her chief operating officer, who was then fired 15 months later, took home about $109 million in compensation.

Those figures were disclosed in a presentation sent to Yahoo’s board by Eric Jackson, who runs the SpringOwl Asset Management hedge fund. Jackson has long been critical about the company’s perceived missteps.

Several Silicon Valley luminaries have since come to Ms. Mayer’s defense. Mark Pincus, Zynga’s chief executive, praised her on Twitter for leading Yahoo with courage and heart. Marc Andreessen, the venture capitalist and co-founder of Netscape, said that she is a hero for taking on the challenges of Yahoo. Unfortunately, praise will not return Yahoo to the profitability investors expect.

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