What had been a welcomed week out of the headlines for beleaguered Yahoo took a sharp turn late Friday, as a memo to the company's employees from co-founders Jerry Yang and Dan Filo strongly hinted that Yahoo might sell itself.
The somewhat prolix message, co-signed by much-critiqued board chairman Roy Bostock, bemoaned the "external swirl" around the company. Yahoo veterans had to wait five paragraphs before reading that advisors Allen & Company are "fielding inquiries from multiple parties that have already expressed interest in a number of potential options."
The memo's vagueness seemed to enforce the notion that a sale is near, though the missive warned against "rumor and speculation, also cautioning, "While we will move with a sense of urgency, this process will take time. Months, not weeks."
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Shortly thereafter, acting CEO Tim Morse sent out a second memo, aiming to reassure employees that the company is not "in limbo" -- creating perhaps more confusion.
Floating a memo that would inevitably leak would seem to be the company's response to a flood of well, rumor and speculation that the board of directors cannot long withstand the mounting criticism from investors of all levels.
No investor is more of a threat than hedge-fund powerhouse Daniel Loeb, who has recently acquired 5.2 percent of Yahoo's stock. Loeb has gone after companies he thinks are mis-managed before, but the level of vitriol -- and cash -- he’s throwing at the Yahoo board shows that he’s deadly earnest this time.
Though Loeb (right) has declined to be interviewed on the subject, we can be sure that at this moment he’s scrutinizing not just the leaked memo but other deal news that broke Thursday night.
At first glance, market observers weren’t sure how to parse the news that the red-hot private-equity firm Silver Lake Partners was leading a group investing $1.6 billion in Alibaba, the Asian online sales giant (value: $32 billion) that’s 43 percent owned by Yahoo.
A fascinating sidelight that emerged last week and may well play into the memo revelation: Silver Lake, which manages about $14 billion in assets and recently scored big bucks with its prescient investment in Skype (raking $5 billion in profit when Microsoft bought Skype in May), has been bruited as a potential leader in an acquisition of Yahoo.
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That kind of acqusition talk began as murmurs in recent months, and along with a belief that the Asian assets (including Yahoo Japan) will grow ever stronger, led S&P Capital IQ Internet Equity Analyst Scott Kessler to upgrade Yahoo to a `buy’ rating in July, with a 12-month target price of $17.
