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Despite a 'Dysfunctional' Internal War Over Sell vs. Fix, Yahoo to Hire More Sale Advisers

CEO Marissa Mayer and the Yahoo board appear to be on different sides.

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Along with its current advisers, Goldman Sachs and J.P. Morgan, Yahoo has also been preparing to bring in some other advisers to help it sort through what is likely to become one of the most complex and — let’s be honest — perplexing explorations of “strategic alternatives” ever in tech.

Sources said that Silicon Valley dealmaker Frank Quattrone of Qatalyst Partners is being brought in by the Silicon Valley Internet giant. Quattrone, who recently became executive chairman of the powerful boutique firm, has been a longtime friend and informal adviser to CEO Marissa Mayer.

Quattrone declined to comment in an email to me, in which he displayed his typically saucy personality by addressing me using an endearing nickname no one else in Silicon Valley would try. (Sorry, Frank, I am still on to you!)

Both Qatalyst and Goldman have already been reaching out to those who have expressed interest in buying all or parts of Yahoo recently. That includes private equity firms, telco giants like Verizon and AT&T and media companies.

Another boutique investment banking firm that could be called upon is Evercore Partners. A spokesperson for the firm declined comment about whether it had been hired by Yahoo.

In any case, the situation there will require truckloads of advisers, since it includes a reverse spinoff of its core assets, as well as an announced restructuring that includes laying off 15 percent of the staff and more, including deciding what to do with Yahoo’s big stake in Yahoo Japan, even as it separates out its chunk of China’s Alibaba Group.

With all this financial mishegas, it should be no surprise that no one at Yahoo today is focusing on making fantastic products, which is actually the only way out of this mess.

And what a mess it is, after a confusing series of signals yesterday when Yahoo announced more lackluster earnings. On one hand, Mayer talked about the massive — and dubious — restructuring effort she was undertaking; on the other, the company’s board said it would entertain other options, by which it seems to mean a sale. Oh, and another board member left — this time Charles Schwab.

Call it a tale of two press releases, which then resulted in a what-the-f*#k reaction from investors, with Yahoo shares down more than 5 percent today. The stock has already dipped 37 percent from a year ago.

“It is clear to us that what is happening inside is very dysfunctional,” said one major investor, who wonders if all the confusion is a feint by Mayer in particular not to sell at all.

Indeed, it has been a fascinating morning watching Mayer jump on every business news program possible in order to try to sell investors on her latest plan to fix the troubled company.

You know, the new turnaround plan, unlike the old one that resulted in an ever weaker performance at Yahoo.

“What is your focus?” asked CNBC’s David Faber in an interview.

“My focus is on the strategic plan we laid out yesterday, and on how do we make Yahoo the very best version we can of itself,” said Mayer, in what is clearly a phrase she and a passel of PR peeps cooked up (she used the same Oprah-borrowed bromide yesterday on a call with analysts).

It was a hard sell of her clear desire to keep at it, despite the board declaration that it was exploring strategic alternatives, i.e. a sale.

When Faber asked Mayer if Yahoo was running a sale process, she said the “exploration is led by the board, and I’m a member of the board, but obviously something being led by the independent directors.”

Actually, it is a process that typically involves the CEO in a major way, including in due diligence and much more. One source said that several board members, including the now-departed director Schwab, had pressed for the sale option hard and that Mayer has been resisting it in favor of the fix-it approach.

Mayer said as much to CNBC. “Overall, we view these initiatives as very complementary. Everyone is aware of the large stake in Alibaba. The separation of that stake is the most direct path we have to value maximization. Strategic alternatives are another way to achieve that,” she said. “We think it dovetails well with our Mavens efforts, because the way to maximize the sum of the parts is to achieve both the separation of the Alibaba interest and to develop the potential of the core assets.”

I cannot even begin to unpack that last sentence, but I think she is saying she does not want to sell or it is a very clever way to up the price to $10 billion from the $6 billion to $8 billion that many are pegging Yahoo’s core value at. According to sources, Mayer has also been dialing up select reporters today — not me, obvi! — on the QT and stressing much the same thing in veiled language.

Thank god for CFO Ken Goldman, who told Barron’s that yes, Yahoo would be entertaining offers.

“A number of companies have said they want to look at us, and there are a number of private equity firms that are interested in looking at us,” he said. “I’m not saying that we’ve received offers. I’m not saying that at all. I’m saying parties have expressed interest in us. And what we’re saying is that we’ll be open to that.”

Indeed interest and indeed open. Except not. Stay tuned.

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