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A Big Yahoo Investor Is Calling for a Management Shakeup

Fortune Global Forum - Day 2Fortune Global Forum - Day 2
Marissa Mayer speaks during the Fortune Global Forum - Day2 at the Fairmont Hotel on November 3, 2015 in San Francisco. Photograph by Kimberly White — Getty Images

Activist investor Starboard Value said on Wednesday that Yahoo should consider changing its management, board, and its business strategy.

Shares of Yahoo (YHOO), which owns a 15% stake in Chinese e-commerce giant Alibaba Group, were down 1.5% at $31.71 in premarket trading.

In a letter to Yahoo’s board, Starboard said the Internet company should separate its Asia assets—its stakes in Alibaba and Yahoo Japan—through either a sale or spinoff of the core search and advertising business.

“We are confident that both of these objectives are achievable, but will require a change in leadership and strategy,” Starboard Managing Member Jeffrey Smith wrote in a letter to Yahoo’s board.

“It appears that investors have lost all confidence in [Yahoo’s] management and the Board.”

Yahoo’s Alibaba stake, worth more than $30 billion, accounts for the bulk of Yahoo’s current market value, while its 35% stake in Yahoo Japan is worth $8.5 billion.

Yahoo’s plans to spin off its stake in Alibaba hit a hurdle in September when the Internal Revenue Service denied the company’s request for a ruling on whether the transaction would be tax-free, potentially costing shareholders billions in taxes.

Starboard, which owns less than 1% stake in Yahoo, urged the company in November to drop its Alibaba stake sale plans and sell its core businesses instead. Starboard had previously supported a spinoff.

In December, Yahoo shelved plans to spin off its Alibaba stake and said it would create a separate company that would house Yahoo’s Internet business and its 35% stake in Yahoo Japan.