With Yahoo (YHOO) seeing a steady stream of execs heading to the exits, the Street is increasingly wondering what the company will do in response. Jefferies analyst Youssef� Squali this morning asserts that the multiple departures raises questions about whether the rank-and-file are committed to the turnaround plan laid out by CEO Carol Bartz. He notes that with the stock in the middle of transitioning paid search to Microsoft (MSFT) Bing, entering the “all important” fourth quarter, any execution stumble could weaken the company’s position in display ads, to the benefit of rivals Google (GOOG) and AOL (AOL).
Squali thinks the company has three options:
- “Persevere in the fight.” She thinks the most likely path is that Bartz will quickly hire a new head of sales, maybe someone who is COO/President material, re-energize the troops and rekindle growth. “This would take several quarters before it bears fruit, as the new hire assembles his/her team and formulates a game plan,” he writes. “Such a length of time could prove too long given investors’ growing impatient with management and the board. Under this scenario, the stock is likely to languish.”
- Sell assets, return cash to holders. He says the company may need to look harder at ways to sell its Asian assets, which now lock up by his estimate about 60% of the company’s market. cap. “Management may also have to explore ways to separate its search and display businesses, as they may be more attractive to buyers separately than together,” he writes.
- Go private. He thinks the company could be more valuable to a financial buyer who could make hard decisions without the scrutiny of the public markets. He estimates the private market value of the company in the $20-$23 a share range.
Yesterday: Yahoo: In Play? Not Yet.
YHOO this morning is up 8 cents, to $14.25.
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