A week after laying out a new strategic plan, Yahoo! Inc. is facing additional pressure from investors who are running out of patience to see results and are calling for the company to lay off 9,000 employees and cut free food.

Yahoo needs to act now and prioritise selling off some assets, the core operations or the whole business, Canyon Capital Advisors, which owns about 10 million shares in the beleaguered company, wrote to the board in a letter dated Friday. Requiring shareholders to wait at least another year for Yahoo to explore and complete the spinoff of its internet businesses as outlined December 9th is “simply unacceptable,” the firm said.

Prolonged turnaround

Yahoo abandoned a long-held plan to shed its valuable stake in Chinese e-commerce provider Alibaba Group Holding, due to concerns about a high tax bill, and instead is now considering bundling the rest of its assets into a separate, standalone company. It's a "complex transaction," Yahoo said, and could take more than a year to complete, prolonging a turnaround plan under chief executive Marissa Mayer that has failed so far to produce results. "We find it difficult to comprehend that in the face of months of tax uncertainty regarding the spinoff there was apparently no 'plan B,"' Canyon Capital wrote. Yahoo scrapped the spinoff of its Alibaba holdings, after the company failed to get prior approval from the US Internal Revenue Service on the transaction's tax-free status. Going forward with the plan would have carried the risk of getting hit with a tax bill of more than $10 billion. Divesting the core businesses in the new strategy, however, may also carry similar tax risks, Canyon Capital wrote.

Pressure mounts

With sales hovering around 2006 levels, Sunnyvale, California-based Yahoo has been facing pressure from investors for a long time. Activist shareholder Starboard Value LP last month called for the company to drop the Alibaba spinoff and instead sell its web businesses, or face a proxy fight. After engaging with Yahoo for months and imploring Mayer to make changes to boost the company's value, Starboard said in a November 19th letter that "there has been little evidence of a turnaround" and "recent results are actually moving decidedly in the wrong direction." SpringOwl Asset Management also expressed frustration with Yahoo's management and strategy in a 99-page presentation that calls for Mayer's ouster and suggests cutting 9,000 jobs and eliminating free food.

Bloomberg