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Yahoo’s Response To Activist Shareholder: A New Plan Is Coming

January 6, 2016, 8:18 PM UTC
Marissa Mayer speaks during the Fortune Global Forum on Nov. 3 in San Francisco.
Marissa Mayer speaks during the Fortune Global Forum on Nov. 3 in San Francisco.
Photograph by Kimberly — Getty Images for Fortune

The new year is off to a rocky start for Internet stalwart Yahoo. On Wednesday, activist investor and Yahoo shareholder, Starboard Value’s Jeffrey Smith, wrote a strongly worded letter criticizing the company’s board and calling for CEO Marissa Mayer to step down.

Yahoo (YHOO) quickly responded Wednesday afternoon, according to CNBC, by saying that the company in a “multiyear transition” and is preparing to be “more focused.”

“We attract more than a billion people a month and we’ve built a profitable, billion dollar business in mobile, video, native and social that we expect will drive sustainable growth,” the statement read. Yahoo added that it would share more about how its turnaround is going sometime later this month.

Unfortunately, a new plan to narrow Yahoo’s focus—language that usually means cutting jobs and products— may not be enough to turnaround the beleaguered company. It has been struggling to revive growth after years of failing to react fast enough to the shift to mobile, the rise of social media, and changing behavior by advertisers.

In November, Starboard Value pressed Yahoo to reverse its plan to spin off its large stake in Alibaba (BABA), which is worth more than $30 billion. Eventually, Yahoo agreed and said it would instead spin off or sell its operating business.

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The question is whether Smith’s most recent letter will have an impact on how long Mayer keeps her CEO job. It made clear that he thought she should leave.

“To be successful, dramatically different thinking is required, together with significant changes across all aspects of the business starting at the board level, and including executive leadership,” Smith said.

Yesterday also brought the news that Yahoo shuttered Yahoo Screen, its online video hub for syndicated TV shows, sports, and original video content. The significance of the shut down was that Mayer prioritized video as part of her “MaVeNS” strategy, or mobile, video, native advertising, and social media. Clearly, part of the plan didn’t work out. Or that plan is also in a transition.