Yahoo! Inc. (NASDAQ:YHOO) Hedge Fund Says Sack Mayer, Beat Netflix, Inc. (NASDAQ:NFLX)

Yahoo Inc (YHOO) Marisa Mayer

Yahoo! Inc. is still trying hard to rebrand itself after it has been practically swept aside in the tech space by the likes of Google, Facebook and Twitter. Yahoo has made some smart moves; it has unveiled some apps, and it has started getting a toehold in the online ads business. Yet, one of its most vocal investors think that the firm should transform to a video streaming firm with a new CEO at the helm.

marissa mayer yahoo aol

In an article published on Forbes, Eric Jackson who manages a hedge fund that holds a stake in Yahoo says that the firm needs to change its core business. Eric has been a vocal Yahoo investor since 2006. He said that but for Yahoo’s stake in Alibaba, Yahoo! Japan and Cash Investments, the firm’s core business is worth only $2.2B. In his words, Yahoo is “trying to reinvent itself in the mobile age, it hasn’t been successful. What Yahoo apps do you have on your phone? That’s the problem”.

Yahoo to copy Netflix

Jackson’s plan for Yahoo sounds very drastic as he suggests that the firm pivot to become a video entertainment platform. In his words, he says, “Yahoo should turn itself into an alternative Over-The-Top video subscription channel that competes against Netflix, Inc. , Amazon, and Hulu. There are few places to subscribe to unique premium content online today”.

He thinks that Yahoo might be able to supplant Hulu in the video streaming market while challenging Netflix for top spot in that space. He says that Yahoo has the content assets that could give it a good start in the video streaming space. In his words, “Yahoo already produces a lot of content today. It could do new content around some of its home-grown talent like NBA expert Adrian Wojnarowski.” However, it is doubtful that cable companies would give Yahoo breathing space now that they are already pushed to the limit by the increase in cord-cutting activities.

Mayer must go

Apart from the drastic changes that Jackson proffered for Yahoo’s core business; he also suggested an overhaul of the management in a move that will see Marissa Mayer dropping the reins at the firm. In his words, “Yahoo would likely need new owners and a new leader”.

He is suggesting that Jason Kilar, former Hulu CEO and founder of Vessel, should take over from Mayer. Vessel is the online video subscription service wants to supplant Google’s YouTube in the online video space.

The plans outlined by Eric Jackson for the pivot of Yahoo are drastic and are not likely to be adopted by the board. Nonetheless, the plan calls into question the focus of Marissa Mayer’s leadership and the possibility that Yahoo will not eventually go the way of MySpace.

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Victor Alagbe is a seasoned business and finance writer with a specialty in writing about how to invest for the long-term in healthcare, pharmacology, energy and tech stocks. His long-term focus is on stocks that provide a nice mix of growth and income. For the short term, he passionately writes about trading stock options for the excitement and leverage that stock options offer.


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