

As Marissa Mayer Annoys Investors By Keeping $4.2B In Dividends - stevewillows
http://techcrunch.com/2012/08/10/as-marissa-mayer-annoys-investors-by-keeping-4-2b-in-dividends-yhoo-is-down-5-4/

======
DanielRibeiro
Related posts:

 _The Dumbest Idea In The World: Maximizing Shareholder Value[1]_

and

 _Does Business Short-Termism Require A Long-Term Stock Exchange?[2]_

[1]
[http://www.forbes.com/sites/stevedenning/2011/11/28/maximizi...](http://www.forbes.com/sites/stevedenning/2011/11/28/maximizing-
shareholder-value-the-dumbest-idea-in-the-world/)

[2] [http://www.forbes.com/sites/stevedenning/2012/07/03/does-
bus...](http://www.forbes.com/sites/stevedenning/2012/07/03/does-business-
short-termism-require-a-long-term-stock-exchange/)

~~~
jamesaguilar
Definite LOL on point one. The business should focus more on the needs of its
customers than its owners? In what world does that make sense. I can see
focusing on the customer rather than short term financial issues, but that
doesn't seem to be what the article is advocating.

------
SeanDav
Absolutely support this. Far too much attention is paid to quarterly returns
rather than business strategy, with very short term views of profitability.

I have some great war stories about this type of thinking. One of the best is
Merrill Lynch firing almost their entire Bond trading desk because the market
was quiet for a couple of months and the desk made a small loss. They did this
just as the bond market turned and in rival companies the Bond desks went
rapidly to rabid money making machines. Merrill Lynch had to scrabble to hire
the people they just fired at vastly greater cost. This was literally a matter
of weeks after firing them.

This type of thinking is one of the main reasons Merrill Lynch does not exist
any more as an independent entity. When you reward your traders and managers
on short term results, you encourage short term risk taking. What do they care
if the position they have taken will potentially blow up in 3 years time if
there is a fundamental shift in conditions? All that matters is their current
last few quarters make them look like heroes and they are going to get a fat
bonus...

------
csense
Yahoo is on the defensive here. There are two ways it can go:

1\. Attack. Keep probing for new markets via acquisitions and new product
development. Try to catch up to competitors by increasing investment in core
competencies.

2\. Retreat. Quit some markets by folding or selling business units. Focus
resources selectively on core competencies. Return excess capital and sale
proceeds to investors via dividends.

I think the dividend warning is a signal that Mayer is planning on option #1.
This is actually good news; most companies' stock value is much greater than
their sale price. If Yahoo chose option #2, its decline would likely become
irreversible as morale and reputation suffered due to the cuts, and investors
would suffer enormous losses. With option #1, Yahoo has a decent chance of
recapturing its former greatness, or at least stabilizing its position.

The holding pattern Yahoo's been in since the early 2000's is the reason for
its decline; it's time for them to either raise or fold.

------
cbsmith
This isn't copying Google. This is copying any tech company that is planning
to grow and innovate.

~~~
yen223
Apple comes to mind.

~~~
cbsmith
Fine. _almost_ any tech company..

~~~
yen223
Sorry this wasn't clear, I actually meant Apple as an example of what you
said.

Apple under Steve Jobs famously refused to issue dividends in spite of
shareholder pressure, instead choosing to reinvest most of the cash back into
the company.

This clearly turned out to be a great decision. Tim Cook's decision to start
issuing dividends may well turn out to be the beginning of Apple's decline.

~~~
cbsmith
Honestly, Cook was between a rock and a hard place. They had a real hard time
doing something with all that cash that justified holding on to it.

------
mtgx
I think this was the right move. The recovery and the long term sustainability
of the company is much more important than helping some investors earn some
money in the short term, while the company keeps becoming more irrelevant by
the day. Look at Apple. They didn't even give dividends until they had $100
billion in cash. Marissa Mayer should use the money to put Yahoo back on a
high-growth path, which would benefit everyone, including the investors.

