Starboard urges Yahoo to buy back up to $4 billion of shares
(Reuters) - Yahoo Inc shareholder Starboard Value LP said the company's spinoff of its stake in Alibaba Group Holding Ltd was a "good first step" but it could do more, including a share buyback of up to $4 billion.
"Yahoo is in need of a major overhaul," the activist investor wrote in a letter to Yahoo's board on Monday.
Starboard recommended that Yahoo aggressively cut costs, buy back $3.5 billion-$4.0 billion of shares and separate the Yahoo Japan stake in a tax-efficient manner.
The steps could unlock $11.1 billion of shareholder value, or about $11.70 per share, Starboard said.
Yahoo, which is trying to reverse a multi-year decline in revenue, has faced increasing investor pressure more than two years after Chief Executive Marissa Mayer took the reins to lead a comeback plan.
Yahoo has spent about $4.8 billion on acquisitions and product development since the current management team took over. Starboard said Yahoo can reduce $330 to $570 million in costs per year.
Yahoo's operating costs have gone up 7 percent in 2014.
Yahoo said in January it planned to spin off its 15 percent stake in Alibaba, responding to pressure to hand over to shareholders its prized e-commerce investment.
Starboard, which owned a 0.8 percent stake in Yahoo as of November, did not mention anything about its previous push for Yahoo to combine with AOL Inc. Continued...