Mark Cuban Weighs In on Yahoo (aka, a Jerry Yang Nightmare)
BoomTown, who never met a Yahoo story I didn’t like to write up, is handing over the stage today to hyperactive entrepreneur Mark Cuban, who just weighed in on what Yahoo should do.
Literally, his post yesterday on his Blog Maverick site is titled “What Yahoo Should Do,” and he lays waste to a lot of the conventional wisdom about the Internet portal’s fate.
Cuban and Yahoo have a rocky history. Yahoo bought his company, Broadcast.com, in the Web 1.0 boom in 1999 for $5.7 billion in stock, which Cuban promptly sold at the peak.
Since then, he’s used the billions he garnered to conduct the longest-running I-told-you-so in the digital industry, including being on the alternate board when Carl Icahn was waging a proxy fight against Yahoo (YHOO) earlier this year.
(Full disclosure: Cuban has recently also gotten into a tussle with the SEC recently.)
Let’s just say, Yahoo CEO Jerry Yang is not a fan. Ironically, in the piece, Cuban seems to be a big fan of Yahoo, or–more precisely–of its potential.
First, Cuban discounts any purchase of Yahoo’s search business by Microsoft (MSFT)–sorry, Carl. And not because Yahoo does not want to sell, but because he thinks the software giant will not waste its cash horde, as it gears up to fight Google (GOOG).
“Why anyone thinks that Microsoft is stupid enough to give up what amounts to most, if not all of their liquidity is beyond me. Particularly when their net current assets have now fallen a little below Google’s. Between liquid assets and borrowing capacity, both have about the same amount of ‘powder’ in place in the event ‘the next big thing’ appears on the radar. I doubt either wants to be at a disadvantage to the other when it comes to potential opportunities.”
Next, calling Yahoo’s directors and large shareholders the “Huggy Bear contingent,” after that classic cliché of a character on the “Starsky & Hutch” television show, he advises against “trying to dress up Yahoo in order to pimp it out to any bidder it can find.”
Instead, in a very clear strategic explanation, Cuban advises that Yahoo become an aggressive buyer of traffic, services, content and monetization.
Given so much is on sale at a huge discount, Cuban posits that Yahoo should make 20 or more acquisitions in the next 18 months:
“Yahoo should be on the warpath, vetting each and every media (yes, media) and technology company it can sit down with looking for bargains.
“It should be taking Yahoo stock and finding every and any accretive investment in the Internet and media space that it possibly can. Some may argue that Yahoo stock is too cheap to use for acquisitions. I beg to differ. The speculation around a potential Microsoft acquisition, along with a very strong balance sheet has propped up its stock. Compared to private and public would be targets, Yahoo stock is amazingly strong currency.”
I like Cuban’s moxie–I always do–especially given he seems to be able to articulate a clear vision in his piece of what Yahoo could be, much better than its leadership.
“Yahoo has the opportunity to be the ultimate next generation media company,” write Cuban, quite correctly. “It just has to stop being afraid of its own shadow.”
Amen to that.