According to more than two dozen investors and current and formerYahoo! Inc. NASDAQYHOO employees, things started to quickly unravel for the company after CEO Marissa Mayer failed to keep her secret 2015 pledge to investors to limit the company’s spending. TheWall Street Journal’s Douglas MacMillan reported Mayer’s decision to aggressively invest in growth initiatives put the company in the position it’s in today.
In April 2015, Starboard Value CEO Jeffrey Smith agreed to withdraw his Yahoo board nominations in response to a secret commitment by Mayer to operate in a more budget-minded manner.
Shortly thereafter, Yahoo spent $20 million on the NFL’s first streaming-only game broadcast and $160 million on shopping site Polyvore Inc., three times what other Yahoo executives believed to be its value at the time.
In addition to M&A, Mayer devoted 300 employees to a mobile-search project called Project Index that was intended to be competition to Apple Inc. NASDAQAAPL’s Siri and Alphabet IncNASDAQGOOG NASDAQGOOGL’s Google Now. According to employees, the original development plan was presented as a three-year project. In the months that followed, the timeline was cut and the project was repeatedly stopped and restarted.
With Yahoo’s revenue continuing to decline and a steady flow of top-level talent leaving the company, Smith went…
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