On Friday I wrote “Memo to Yahoo!: Barbarians at the Gate” outlining all of the various options that would make onlookers (investment bankers, private equity, shareholder activists, Redmond, etc.) salivate, including:
- status quo (a $100B market cap by 2010?)
- merger with eBay
- merger with Viacom
- merger with CBS
- acquisition by/merger with Microsoft
- taken private
- sale to AT&T
- can Google buy Yahoo!?
- Spin off ad network unit
Then the WSJ penned an article calling for a shakeup at Yahoo! This morning Henry Blodget is suggesting that long-overdue layoffs are in the works at Yahoo!
While Blodget’s tip was anonymous, Paid Content’s tip was not, and they echo the same: layoffs, maybe. The thinking is they’ll report earnings on the 29th, then depending on the stock, they will make the call about layoffs.
Hmm… here’s what I think:
- For Yang and YHOO’s mgmt to think that the stock might edge up after the reports suggest that Q4 was relatively good. Otherwise, they would definitely time the layoffs with the report. So net-net, that is a positive.
- But, that is not how the market works. This rumor, true or not, is out there, the information should make the stock bump up a bit (no big feat given that YHOO is now a $27B company). I fear that if the company backs away from the layoffs, the market will punish the stock. Unless, of course, traders understand this is merely a rumor about the thought of layoffs.
My two sense: YHOO is a great company, but a mature one. It’s about time Yahoo! cleaned up shop, especially at the very top… in the middle and at the bottom too. The company’s fat, slow, it’s time to go.
SAI has an updated post. I agree that Yahoo! could very well survive and thrive alone - online ads will double in 3 years and YHOO is the biggest site online - but it is a bit troubling that Jerry Yang and the Board are seemingly going to let the market decide the fate of the company after the results are reported. I sure hope that is a rumor and not what the company actually plans to do.
You don’t manage according to Wall Street, Jerry, you just don’t !
Note: Long YHOO stock.
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