Bob Peck: Activist's Concerns At Yahoo Are

Shares of Yahoo! Inc YHOO have been treading a southward path in 2015 and are down 35 percent year-to-date. SunTrust Robinson Humphrey’s Robert S. Peck maintained a Buy rating on the company with a price target of $40.
Yahoo’s major shareholder has expressed concern about the proposed Alibaba Group Holding Ltd BABA spin and its tax impact, while seeking a change in the company’s board, Peck stated.
Analyst Robert S. Peck mentioned that Starboard Value, an “influential shareholder” of Yahoo has expressed concern regarding the impact of the proposed Alibaba spin and its tax impact. The shareholder also pointed out that the culture of Yahoo was impaired, thus implying changes in its senior management. The shareholder stated that although it has tried to work directly with the company privately, the latter’s reaction has been “dismissive.” Starboard Value stated in the letter that it could “look to make significant changes to the Board if you continue to make decisions that destroy shareholder value.” “The main theme of the letter was spinning Aabaco could have a large tax penalty if it gets taxed (even if unlikely) and perhaps YHOO should pursue a safer alternative such as selling the core,” the SunTrust report stated, while adding that the shareholder was seeking a “ change in culture” to avoid more core declines. Peck believes that this letter may be the beginning of a dialog and that Yahoo may pause or slowdown the spin to discuss the situation further besides assessing various opportunities.

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