Hardly a month after Marissa Mayer took place as CEO of Yahoo!, investors seem to have got annoyed. It seems like Mayer in not measuring up to investors’ expectations, at least for short-term goals. Following Mayer’s new financial strategy, Yahoo! shares continue to fall sharply as the company sees a downfall of 5.37 percent that is low as compared to what investors expected of dividends.
Earlier in May, Yahoo! announced its plan to sell half of its 40 percent stake in the Chinese company Alibaba that accounts for $7.1 billion. However, investors believed that the proceeds from the sale of Yahoo!’s stake in Alibaba, which is around $4.2 billion would be returned to all shareholders in the form of dividends. This made all shareholders rejoice, but Mayer had some long-term plans. She dismissed the plan of issuing dividends and announced to develop long-term shareholder value.
However, Yahoo! told the Securities and Exchange Commission that the strategy review may cause Yahoo! to revaluate or rethink its current plans, including the company reorganization and share buyback program.
This move by Mayer seems to have been borrowed from Google as the latter is known for not issuing dividends to its shareholders. With this decision, Mayer seems to be in total charge of Yahoo! and ready to take bold decisions.
However, investors do not seem to be happy as they value short-term returns more over long-term decisions.
Now, the question is as to what Yahoo! plans to do with estimated $4.2 billion cash on hand. There have been guesses that Mayer could do some shopping, Yahoo! could take over some other company, invest its money or just keep it intact for a while.
Well, it is just a matter of time, when we will know the CEO’s decision, hoping that it will only strengthen her influence over shareholders.