Yahoo is having its third quarter earnings call meeting on Tuesday which will be an opportunity for company CEO Marissa Mayer to discuss future plans. Mayer is expected to discuss her acquisition strategy and how would the company execute its cost-cutting efforts.
Yahoo has been under strong scrutiny after it has sold part of its stake in Alibaba last month. The company has reportedly sold around 140 million Alibaba shares when the Chinese company has gone public. Yahoo has retained an approximate 15 percent of its stake.
With $5.8 billion on hand which the company made from Alibaba's IPO, Yahoo plans to acquire one or more large technology startup companies. The decision came in the midst of criticisms that the company gets from activist investors who had described Yahoo's cost structure as 'bloated.'
The latest criticism came from Jeff Smith of Starboard Value who, in an open letter, wrote that Mayer should stop making further acquisitions that don't add to revenues, monetize the company assets in Alibaba and Yahoo Japan, cut costs by as much as $250 million to $500 million a year, and then merge with AOL.
The company's biggest acquisition deal was made last year when Mayer purchased the blogging site Tumblr for about $1 billion. For the record, Yahoo has done more than two dozen deals under Mayer's leadership.
So far, Yahoo's acquisitions have gained the company few results.
Mayer is also expected to come up with cost-cutting measures on Tuesday's earnings call. Earlier this month, the company reveals its plan to reduce the size of operations in Bangalore, India and to close its office located in Amman, Jordan, affecting almost 500 of its employees. Yahoo is said to be 'streamlining' its foreign offices' operations which could be defined with a combination of cutting jobs, closing offices and transferring workers to its headquarters in Sunnyvale, California.
With this decision, the company can put more focus on its online ad business which is what Mayer has been pushing for a more efficient performance recently. In her reply to Smith's open letter, Mayer said that the company is concentrating on a number of 'capital allocation initiatives' and that she is intending to maintain an 'open dialogue' with the stakeholders.
"The call is critical," says Scott Galloway, a professor of marketing at the Stern School of Business in New York. "If she can demonstrate that she knows how to operate the core business, she has more credibility around all decisions related to Yahoo."
