Activist investor Starboard Value is urging Yahoo to shake up its management and strongly consider a sale of the company’s core Internet business.

In an open letter to Yahoo, Starboard Managing Member Jeffrey Smith said Wednesday that the board of the beleaguered Sunnyvale, Calif., company must accept that “significant changes are desperately needed.”

“The past year has been an extremely frustrating one for shareholders of Yahoo,” Smith wrote, pointing to a “continued downward spiral of the operating and financial performance of Yahoo’s core search and display advertising businesses.”

Starboard has successfully toppled the board of Darden Restaurants, the parent of the Olive Garden restaurant chain, and pushed Staples and Office Depot to merge. Smith hinted that the hedge fund may seek to oust Yahoo’s board.

“If the board is unwilling to accept the need for significant change, then an election contest may very well be needed so that shareholders can replace a majority of the board with directors who will represent their best interests and approach the situation with an open mind and a fresh perspective,” he wrote.

“The letter escalates the pressure on Yahoo as the company tries yet another attempt to alleviate the complaints of its shareholders,” the New York Times said, noting that the company last month abandoned a plan to spin off its stake in the Alibaba Group, the Chinese e-commerce giant.

Yahoo CEO Marissa Mayer instead announced that the company was considering how to spin off its core business — search, email, and the social media service Tumblr — and leave the Alibaba stake as a separately traded company.

Smith told the Yahoo board that a sale of the Internet business remains its best option, saying, “We are highly confident that there are interested and credible buyers.”

As the Wall Street Journal reports, Yahoo’s chairman Maynard Webb told investors last month that the board hasn’t approved a sale process for its Internet business. But in a sign that many observers took as a signal that Yahoo is open to a sale, Webb said the board had “a fiduciary duty to entertain any offers.”

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