Loyal users of Yahoo's many services may need to think about alternatives if a vocal investor gets its way.
On Wednesday, investment firm Starboard Value called on Yahoo for a change in leadership along with a more aggressive strategy for a spinoff or sale of the company's core Internet business. In December, Yahoo said that it was open to selling off its core business, though the board has yet to approve such a sale.
A spin-off would would mean Yahoo could be stripped down to an entity that's of more interest to investors than everyday computer users.
The company said Wednesday that it would offer details on plans for "a more focused Yahoo" on or before it reports its fourth-quarter earnings this month.
With Yahoo's glory days behind it, CEO Marissa Mayer has tried to reinvigorate the Internet pioneer and keep it alive by focusing on its mobile services such as Yahoo Mail, Weather, Finance and Sports. She has also tried to make the company a popular media spot, hiring well-known personalities such as journalist Katie Couric. But Yahoo continues to struggle as it's been outshined in search and email by Google and by the likes of Netflix and Amazon on the entertainment side.
Starboard, which owns less than 1 percent of the company, criticized Yahoo management for having "failed to produce acceptable results ... causing massive declines in profitability and cash flow." A sale or spinoff of the company's Internet business would trigger a shift in management, mostly likely starting with Mayer, who was hired as CEO in July 2012 to try to revive the company. It could also mean changes for such services as Yahoo Mail and Search, including their potential demise.
Last month, the Sunnyvale, California, company said it would scrap its plans to spin off its stake in Chinese e-commerce giant Alibaba, worth more than $30 billion.
On Wednesday, Yahoo said it's attentive to the opinions of its investors. "Our board and management team engage in and maintain regular, open dialogue with all our shareholders, and consistently strive to deliver and to maximize shareholder value," the company said in a statement.
Later in the day, the Business Insider blog reported, citing unnamed sources, that Yahoo was working on a plan to cut at least 10 percent of its workforce, or about 1,000 employees.
Mayer has insisted that a turnaround of Yahoo would take years, but Starboard believes a more immediate change is in order to appease unhappy investors.
"It appears that investors have lost all confidence in management," Starboard said.
Update 10:41 a.m. PT: Added comment from Yahoo.