How the Yahoo Work-in-the-Office Edict and Stock Buybacks Intersect
From the hubbub over Marissa Mayer’s decision to ask Yahoo (YHOO) employees to come into the office to work, you’d think she’d proposed chaining workers to the oar. It’s doubtful any substantive business decision Mayer makes will get as much ink anytime soon.
The decision, aimed at increasing creative interaction among workers (and, perhaps, at finding out just what the hell some of them were doing), conceivably could accelerate Yahoo’s transformation under Mayer. Sure, it’s possible there will be an immediate boom in great ideas as workers palaver and have coffee together. But it seems more likely that Mayer and her executive ranks, upon taking a more complete inventory of Yahoo’s people, might decide innovation isn’t going to be entirely home-grown.
And that’s where the stock buybacks could become an issue.
The share repurchases have no doubt helped Yahoo shares in their recent rise – up 45% over the last year, as seen in a stock chart. But if Yahoo, like so many tech giants, is going to have to make acquisitions to bring new products and talent aboard, is buying its own shares a good idea?
Even without the repurchases, Yahoo would lag noted tech giants – Google (GOOG), Apple (AAPL), Microsoft (MSFT) and Amazon (AMZN) – in size of war chest. (Apple's war chest is vastly understated here as two-thirds of its cash sits in longer-term investments.) And given Yahoo's lesser reputation for recent dynamism, Yahoo might have to pay up to capture some of the most sought-after startups.
Mayer is off to a great start, regardless, producing 2012 revenue growth after years of shrinking and, even before the home/office dustup, garnering some positive attention for a company that had gone mostly unloved for years. To realize her full ambitions for the company, however, she made need all the cash she can lay her hands on.
Jeff Bailey, The Editor of YCharts, is a former reporter, editor and columnist at the Wall Street Journal and New York Times. He can be reached at firstname.lastname@example.org.