Activist investor Starboard Value is calling for more changes at Yahoo, saying the company should spin off its Japanese business, get cash from its intellectual property and real estate holdings, and buy back $3.5 billion to $4 billion in stock.
In a letter to Yahoo's board of directors, Starboard urged the moves, as well as cost cuts.
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In 2014 Starboard pushed Yahoo to spin off its $39 billion stake in Chinese e-commerce company Alibaba. In late January Yahoo said it would make that move, which is intended to allow most shareholders to pay lower taxes on stock sales than Yahoo would have paid. Yahoo did not immediately respond to a request for comment.
New York-based Starboard says Yahoo could create between $2.6 billion and $3.1 billion in value by separating Yahoo Japan, possibly through the same process it used to move its shares in Alibaba to an investment vehicle called Spinco. It said Yahoo could get $1.7 billion from its intellectual property and real estate assets and said the company could eliminate at least $330 million in annual spending.
FactSet says Starboard owns 7.7 million shares of Yahoo, giving it a 0.8 percent stake in the company. In addition to its criticism of Yahoo's handling of its stake in Alibaba, Starboard has said Yahoo is spending too much money on acquisitions and should merge with rival AOL Inc. It did not mention the AOL proposal in Monday's letter.
Yahoo's investment in Alibaba is worth far more than its online services, which have struggled to generate revenue in recent years while competing with Google Inc. and Facebook Inc. The San Francisco company's stock has nearly tripled in value over the 2 1/2 years of CEO Marissa Mayer's tenure, primarily because of the investments in Alibaba and Yahoo Japan.
Shares of Yahoo lost 58 cents to $42.86 in afternoon trading. The stock has dropped 14 percent in 2015.