Less than a month after taking over Yahoo, Marissa Mayer is already sending strong signals of leadership to investors. Yet, the announcement of a new financial strategy led to a 5.37 percent downturn of YHOO today as the company played down dividend expectations.
Yahoo filed with the Securities and Exchange Commission that the strategy review “may lead to a re-evaluation of, or changes to, our current plans.”
In particular, following the announcement in May that Yahoo would sell half of its 40 percent stake in the Chinese company Alibaba for $7.1 billion, investors believed that the after-tax cash proceeds — $4.2 billion — would go back to investors in the form of dividends.
Shareholders rejoiced, but with another CEO came another plan. Mayer has just scrapped the plan of distributing dividends in order to “enhance long-term shareholder value” as she wrote in the SEC filing. According to Reuters, the board of directors still backs Mayer’s long-term plans.
In addition to the new dividend plan, the French news agency AFP reported that the business review could lead to “revaluating or rethinking our current plans, including our company reorganization and our share buyback program”.
Once again, Mayer is borrowing some ideas from Google, her previous company. Google is known for not issuing dividends to its shareholders. By doing that, she gives the impression that she is in charge of Yahoo and ready to take bold decisions. But investors seem to value short-term returns over a long-term vision.
Now, we are left wondering what Yahoo will do with this cash on hand. It could acquire some companies, invest it or keep it for a while.