I love activist investors, not only do they make my job easy but they always make for good news. Despite numerous analysts suggesting, as recently as last week, that Mayer should keep her Alibaba Group Holding Ltd (NYSE:BABA) cash after the company’s famous IPO, Starboard isn’t having it this week.
AOL still has massive following
While younger users are clamoring for an invite to the new social media network Ello, and an addition to their Facebook lives, there remain a tremendous amount of old people who know how to use the Internet but just won’t die. They continue to use the service that first connected them to the Internet, yet continue to be a sought after demographic as home owners with purchasing power.
AOL, Inc. (NYSE:AOL) sees, 181 million monthly users, presumably old and the company is, in Starboard’s opinion a steal at $4.2 billion.
And before Starboard treats Yahoo! Inc. (NASDAQ:YHOO) like the redheaded stepchild that is the Olive Garden, trust that Marissa Mayer is listening.
Starboard sends a letter to Yahoo’s CEO
Starboard, in a letter today, suggested Yahoo should take advantage of its remaining 15% stake in Alibaba Group Holding Ltd (NYSE:BABA) and its 36% stake in Yahoo Japan.
“These two minority equity interests are worth approximately $11 billion, or $11 per share more than the current enterprise value of Yahoo, Starboard said in its letter.
Every time that Tim Armstrong and Marissa Mayer have dinner, The Street speculates on a potential merger. Mayer has certainly never struggled to buy talent or companies outright since she took the Yahoo rudder. It’s almost against her nature, or certainly behavior, to not pull the trigger on a deal like this. But Starboard has felt the need to give her a nudge.
Content Is King?
Representatives from Yahoo! Inc. (NASDAQ:YHOO) and AOL, Inc. (NYSE:AOL) weren’t made available for comment following this, now, public, letter but in lieu of a regulatory filing Starboard owns less than 5% of Yahoo or a regulatory filing would have been made public.
For 2013, Yahoo posted $4.68 billion in revenue, while AOL reported $2.32 billion.
So not a lot of money…..yet, Jeff Smith and Starboard say it’s time to do it now.
AOL has not only had surprising success in a move to video while purchasing The Huffington Post, Yahoo has endeavored to become hipper.
I’m with Starboard, and my girlfriend, make it bigger.