Yahoo May Reverse Alibaba Cash Plans

Story first reported from WSJ.com

Yahoo Inc. said Thursday it could reverse its May decision to return more than $4 billion to shareholders from selling part of its stake in a Chinese Internet company, a signal that new Chief Executive Marissa Mayer may want to use the cash for other purposes.

Yahoo's statement, contained in a regulatory filing signed by Chief Financial Officer Tim Morse, sent the Sunnyvale, Calif., company's shares down 3.5% in after-hours trading to $16.17.

In May, Mr. Morse helped engineer the sale of part of Yahoo's stake in Chinese Web company Alibaba Group Holding Ltd. He said on a July 17 earnings call with analysts that Yahoo's board was committed to returning the proceeds from the Alibaba sale to shareholders, though the company hadn't determined the form or timing of such an action.

On Thursday, Yahoo said in the filing it may change its prior decisions because Ms. Mayer, who was hired three weeks ago, is reviewing the company's strategy.

Ms. Mayer's "review process may lead to a reevaluation of, or changes to, our current plans, including our restructuring plan, our share repurchase program, and our previously announced plans for returning to shareholders substantially all of the after tax cash proceeds" from the sale of Yahoo's stake in Alibaba.

Anne Espiritu, a Yahoo spokeswoman, said in a statement that Ms. Mayer is "carrying out a careful review of the company's business" and is looking at "potential strategy changes to Yahoo's current plans" along with fellow Yahoo directors. She declined to elaborate.

Joseph Grundfest, a law professor at Stanford University who is an expert on corporate governance, said that "management can, for entirely legitimate reasons, change its mind as long as it hasn't made a binding commitment" to return the cash to shareholders. Mayer seems to have a different plan in mind for the funds than what was originally intended, as she works to pull Yahoo back to it's earlier successes, while the market is focused largely on Google SEO.

The potential about-face in Yahoo's spending plans falls in line with Ms. Mayer's technology-heavy background, said Ron Josey, an analyst with research firm ThinkEquity, but it still caught some investors by surprise.

He noted a lot of shareholders bought the stock thinking that Yahoo was going to start a multibillion-dollar buyback plan that would help lift the stock's near-term value.

For years, the vast majority of Yahoo's market valuation has been tied to its stakes in Asian Web companies Alibaba and Yahoo Japan. Investors have placed little value on Yahoo's core business, which generates around $5 billion in revenue annually, mainly from selling online advertising.

Yahoo currently has around $2 billion in cash, and Ms. Mayer already has shown signs she is willing to spend substantial sums to turn around the struggling Internet company.

"She didn't come here to wind the company down," Mr. Josey said. "She came here to restore Yahoo to what it used to be."

She has told colleagues she is interested in hiring or acquiring new talent and products through acquisitions, among other things, and possibly investing in Yahoo's advertising technology, according to people briefed on the matter.

"For someone who's thinking about a growth strategy, of course you should maintain as much cash on the balance sheet as possible, maybe for acquisitions," said Mark Mahaney, a stock analyst at Citigroup Inc.

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Lessons Learned from Google

Story first appeared in USA Today.

When people talk about Google and its organizational culture, they are equally fascinated and hopeless, believing that the magic behind Google lies in the deep revenue streams that make it possible to feed its employees three meals a day. Small businesses, especially, tend to dismiss Google as a wholly unattainable model for running a business.

However, there were core lessons learned at Google that transformed the way people look at problem solving and strategic thinking. There were statements that were heard early and often that guided decision-making at every level of the organization. These mantras are at the core of innovation for Google but translate readily to any business to create agility, employee engagement and ultimately, stronger business results. Google's success owes far more to these mantras than the food in the cafes, and even better, they cost no money to implement.

1. Launch and iterate. Even the smartest of the hyper-educated Google leaders cannot predict which products and features will attract a sizable user base. Instead, they urge teams to launch quickly and iterate — in other words, stick with, and perfect, what's working — based on what they learn from their users. Rather than spending time perfecting a product that might not work, get it out there, and let the feedback guide future development.

For a small business, this means trying out a lot of services, products, marketing, sales and other tactics in really small ways, gauging the success and then building on the ideas that work in reality. Resist the urge to perfect — if your customers understand that you truly want their feedback to shape products and services, they will enthusiastically share their opinions.

2. Fail fast. If you try a lot of stuff by launching early and iterating, you'll fail at most attempts. This is the secret to innovation. Failure is not a bad thing, but slow failure in the market is. Launch, iterate and declare the failures as quickly as you can. Most importantly, learn from those failures to help guide future efforts.

Do a weekly retrospective for your operations, lasting no more than 30 minutes. Ask your teams to answer three simple questions: What worked well? What did we learn? What can we do differently? Then, pick the one change that will make the most difference and put it in to play.

3. Focus on the user. Your customers or users should be your singular focus, always. A question asked incessantly to maintain this focus is: "What problem are we trying to solve for our customers?" Every product or service must be linked to a problem or challenge that will make their lives easier.

4. Ask forgiveness, not permission. This mantra was important to mobilize every Google employee in the company to do the things they felt were right without worrying about what approvals they needed to do it. The idea is to remove barriers and to empower employees to act quickly.

Reward employees for taking initiative, and treat their missteps as any other failure — something to learn from, but not to dwell on. What is most important is they become stewards of your company to make the best decisions without seeking 100 approvals to do so.

5. If you see a void, fill it. This is a favorite lesson from Google. It gives explicit permission to employees and the expectation that, if something is broken, everyone is empowered and responsible to fix it. If there is a spill in the kitchen, clean it up. If the copy machine is broken, file a ticket. And if you see a void in the market for an application you believe users will love, then build it.

This creates an environment in which every employee is 100% responsible for making your company better every day in little (or big) ways.
Put together, these five mantras create a responsible organization fiercely devoted to making the lives of customers better, one tiny step at a time. Free bagels are optional.

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