Yahoo! Inc. (NASDAQ:YHOO) is linked to an investment in Snapchat, a photo messaging app. Rumors suggest that the investment might value the start up at around $10 billion. Yahoo! Inc. (NASDAQ:YHOO)’s CEO, Marissa Mayer has been under consistent pressure to turn the company’s fortunes. The path she chose was to invest in social media app acquisitions. Many investors wonder, how this move would rejuvenate the core advertisement business of the company. Intermedia Managing Partners Leo Hindery and Bloomberg’s Thomas Giles talked on Bloomberg TV about Mayer’s interest in Snapchat and core business of Yahoo.
Giles said that Snapchat is very popular application among the youngsters. He accepted the fact that the startup does not have a regular business model and the company doesn’t generate revenues.
“Yahoo needs to be relevant; Yahoo needs to be a place that the kids want to use. It’s not that right now. An investment in Snapchat gives them that entry level with the new generation of people that are using internet very very differently,” Giles said about Snapchat.
Yahoo! Inc. (NASDAQ:YHOO) and Facebook Inc (NASDAQ:FB) are equally active in making acquisition of social media applications. But Mayer is criticized more for the acquisition when compared to Zuckerberg. Hindery mentioned that Zuckerberg has a very successful business with good profits and Zuckerberg is playing on the edge with acquisitions. He added that Mayer is just making such investments and hoping that it would turn out to be the next Alibaba Group Holding Ltd (NYSE:BABA) for them. He said that Alibaba investment was not her action as well, which she is currently reaping benefits from. Hindery thinks that Mayer is running the business as CEO of Venture Capital (VC) Firm and not as CEO of a public company like Yahoo.
“[…] In my opinion, she (Mayer) has done almost nothing to improve the core business of Yahoo in all of the time she has been there, so she places these bets,” Hindery said about Mayer.
Giles thinks that Alibaba IPO has given Yahoo! Inc. (NASDAQ:YHOO) a lot of money in the bag. He accepted Hindery’s comments that Mayer is running the company as VC Firm, by making multiple investment and wait for profits and revenues from at least one.
Hindery pointed that there is a lot of difference between VC investors and public company investors. He thinks that the investments made by CEO of a public company should help improving the business for the company. He thinks that Yahoo! Inc. (NASDAQ:YHOO)’s Snapchat deal does not make any sense.
Hindery also pointed out that if he was CEO of Yahoo! Inc. (NASDAQ:YHOO), he would have accepted for the merger with Microsoft Corporation (NASDAQ:MSFT) years ago. Both Giles and Hindery mentioned that Microsoft merger was a lost opportunity for Yahoo.
As of 30 June 2014, John Thaler‘s Jat Capital Management hold around 8.8 million Yahoo! Inc. (NASDAQ:YHOO) shares.
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