Yahoo CEO defends strategy in face of criticism

By Michael Liedtke, AP

SAN FRANCISCO — Signaling her reign has reached a pivotal juncture, Yahoo CEO Marissa Mayer is trying to convince restless shareholders that the long-struggling Internet company is heading in the right direction.

Mayer staunchly defended her strategy during a Tuesday presentation that addressed recent criticism leveled by activist investor Starboard Value LP, a New York hedge fund with a history of leading shareholder mutinies.

Starboard contends that since Mayer became CEO in July 2012, Yahoo has been wasting money on ill-advised acquisitions and a bloated payroll while mismanaging its lucrative stake in Chinese e-commerce company Alibaba Group.

In her rebuttal, Mayer described the US$1.6 billion spent her more than 30 acquisitions as smart investments that have made Yahoo more competitive in the increasingly important mobile-device market. She also highlighted cost-cutting measures that have included closing eight offices, dumping 65 products and jettisoning about 1,600 contractors.

And she insisted that Yahoo wouldn’t have been in a position to make as much money as it has on its Alibaba holdings if she hadn’t taken steps to ease ��years of tension and hard feelings�� that existed between the two companies before she came to Yahoo.

��This team has now been in place for two years and we’ve achieved much more than many people realize,�� Mayer said.

Starboard didn’t immediately respond to requests for comment late Tuesday.

Yahoo’s biggest problem has been its inability to sell more digital advertising, even though marketers are shifting more of their budgets to the Internet and mobile devices.

The issue surfaced again in Yahoo’s latest quarterly results, even though the company fared slightly better than analysts anticipated. Yahoo’s revenue during the three months ending in September rose by just 1 percent from last year to US$1.15 billion, a dramatic contrast to the 20 percent increase posted by rival Google Inc.

Yahoo’s share of the roughly US$141 billion worldwide market for digital advertising now stands at 2.4 percent, down from 3.9 percent in 2011, according to the research firm eMarketer Inc. Google holds a 32 percent share Facebook Inc.’s shares stands at 8 percent.

Mayer, a former Google executive, is the sixth CEO since 2007 to try to turn around Yahoo. It remains unclear whether she is on the right track, said Forrester Research analyst Shar VanBoskirk.

��I don’t think anyone is in a hurry to get (Mayer) out of there, but the company remains a bit of a question mark,�� VanBoskirk said. ��This is a critical time for her to demonstrate she has a long-term vision.��

Investors gave Mayer a vote of confidence Tuesday, prompted in part by the third-quarter earnings. Yahoo’s stock added US$1.50, or 3.7 percent, to US$41.68 in extended trading.