No, Investing In Snapchat Is Not Going To Save Yahoo From Starboard

Marissa MayerREUTERS/Ruben SprichWhat? Not even an investment in Snapchat will get Jeff Smith to leave me alone?

The WSJ’s Evelyn Rusli and Douglas MacMillan just broke news that Yahoo is in talks to invest in Snapchat at $US10 billion valuation.

If one were a cynic, one might wonder if word of this deal leaked because Yahoo hopes it will alleviate pressure from Starboard’s Jeff Smith, the activist investor pressuring Yahoo to split into two companies and merge its core business with AOL.

Will such a ploy work?

We think the answer is: No, it won’t.

A close read of Smith’s letter to Mayer from a couple weeks ago makes it pretty clear that Smith does not want Mayer to go forward with any more acquisitions or investments — especially not any in pre-revenue startups.

It is clear from that letter: Starboard’s view is that Yahoo is not a venture capital firm, and that it should be evaluated based on the performance of its core business.

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