A tech geek's holy trinity - God, Family and Yahoo - and one of them is up for sale!

Back in early February, I discussed the simmering tensions brewing inside the confines of the boardroom of the former Internet giant known as Yahoo! and now it seems that the lid has blown right off the pot and the chickens have indeed come home to roost. In a shocking move, the whole sorry affair is now up for sale, and interested parties have until April 18th to place their bids. Anyone interested?!

The usual suspects are in the bidding war, of course, in particular Google and Microsoft; Yahoo having refused a $45B offer from the latter in 2008, which probably looks significantly more appealing (and more of a mistake to have refused) today! Additionally, media companies such as Time and the Daily Mail are considering offers, along with Verizon who bought AOL last year for $4B. Finally, it is reported that there are a number of private equity companies which may be intending to make an offer for the struggling enterprise. 

If CEO Marissa Mayer was in a tough spot before this, she's in an extremely precarious position now, and it seems inevitable that this state of affairs is likely to lead directly to her departure from Yahoo!, whether it gets sold or not. If it sells for a price found acceptable (only in the context of the mess they are in) to the board, then the new owner will want her out. If it doesn't sell because no entity values the beast at anything close to what the board finds acceptable, then that's a nail-in-the-coffin indictment of her stewardship to date, and she's also out. 

Back in 2000, this scenario would have been unthinkable, when Yahoo was riding high and was valued at almost $260B and offers of several billion dollars would have been laughed off without hesitation. Today, an offer of even $5B would probably have to at least be tabled for consideration, which sort of says it all.  Ms. Mayer has been very reluctant to go down the bidding war route, but it seems that in the end she had zero choice, with activist (if not outright aggressive) investors such as Starboard Value barking across the table.

Hedge fund Starboard has been on Yahoo!'s back for months now, claiming that in the almost four years under Mayer's tenure, nothing has been achieved in terms of truly turning things around, and they have threatened to nominate a whole slew of new directors for the board if nothing is done. Jeff Smith of Starboard made it clear that the changes may start with the board but will include executive leadership, and you know, who could seriously argue that it's not the right thing to do?

Now, it's worth pointing out that it's not the entire company that is up for sale, but just its Internet operations, which these days represents a mere fraction of its overall value, or, depending on who you talk to, another way of putting it is that the entity up for sale has almost no quantifiable value whatsoever! Yahoo!'s Asian holdings (which comprises its stake in Alibaba and Yahoo Japan) are valued at around $34B, but are not for sale, while the part for sale brings Yahoo!'s current market value to (a mere) $35B. Various wags have drawn attention to the fact that Yahoo!'s North American-based web operations are thus essentially worthless. 

Ironically enough, it looks like it will be one of a trio of high profile ex-Googlers who will be in control of Yahoo! at the end of the affair. First off, there's Ms. Mayer herself, who is somewhat legendarily referred to as Google employee #20. The other two who are likely to do battle for control are Tim Armstrong of AOL (owned by Verizon) and Nikesh Arora of SoftBank: the former used to run Google's ad sales wing, and the latter was previously Google's CBO. 

Verizon are clearly interested in the operational side of Yahoo! and that apparently includes the not-for-sale Yahoo Japan, while SoftBank have a specific reason for also eyeing the Asian holdings, given that they already have a majority stake in Yahoo Japan but incur various heavy duty payments for using Yahoo services and branding. So in many ways, Softbank is the ideal buyer of the ailing Yahoo! business, and it is widely believed that it will be either Softbank or Verizon who will end up with the deal. 

It's been a bumpy rollercoaster for Marissa Mayer, but she will still come out of this richer, either way. If she got fired today, that would involve a goodbye of some $12M (which is hardly pocket money) and if she departs as part of any deal, she will walk away with over three times that amount. Yahoo! is being very friendly in that regard, in that the board rewrote the meaning of the change-of-control provision such that any sale of the web business would trigger the larger severance, even if the actual controlling ownership would remain in Asia. 

Why? Well, apart from any other reason, Yahoo! gets rid of her - in a way that will not involve any enmity or litigation - just a simple parting of the ways; that parting is extremely cheap even at the price of $30M plus, because little over a year ago it would have been $110M! Ousting her for a mere $12M is bargain basement level, and must be very tempting for the board today. Somehow, as a modern day CEO of a (once fashionable) huge tech giant, I always found Mayer's stated priorities in life to be quaintly telling: "God, family and Yahoo - in that order." 

That wasn't necessarily reflected in the minute amount of maternity leave she took for her two pregnancies, for which she did take some very vocal criticism from the public and media alike. But irrespective of one's opinion on her trinity of priorities, it is becoming increasingly clear that she will soon be able to exclusively focus on her top two priorities, as Yahoo! will likely not be in the way for very much longer!