Yahoo shutters products as investors push for AOL merger

As Yahoo brings more resources in (tapping out considerable financial and brainpower reserves simultaneously), other things have to go.

It hasn't quite reached "Terrible, Horrible, No Good, Very Bad Day" levels for Yahoo yet today, but executives down in Sunnyvale are likely thinking TGIF at least this morning.

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For starters, Yahoo has garnered quite the reputation for nabbing startups left and right since the dawn of the Marissa Mayer era in 2012. Much of these have been filtered in for the technology company's evolving mobile-first strategy.

But as Yahoo brings more resources in (tapping out considerable financial and brainpower reserves simultaneously), other things have to go.

Thus, Yahoo is shuttering three more products: the Qwiki app for making short films from a user’s camera roll, the Yahoo Education portal for connecting users with education providers and content, and Yahoo Directory -- the last of which looks like it hasn't been touched since the Geocities era.

Jay Rossiter, senior vice president of Yahoo's Cloud Platform Group, elaborated in a blog post on Friday as to why these three in particular are being phased out at this time.

Quite simply, these products just don't align with Mayer's repeated mantra about building products that satisfy Internet users' "daily habits."

Rossiter updated that with these closures, Yahoo has sunset more than 60 products and services during the last two years alone.

Yahoo Education will be the first to close at the end of September, followed by Qwiki in November and Directory at the end of the year.

On a broader level for the company, some shareholders want a different direction and vision altogether.

Private hedge fund Starboard Value LP penned an open letter directed at Yahoo's CEO, petitioning for a merger with AOL, among other suggestions.

Starboard investors argued that despite Yahoo's potential boon from its substantial investment in Alibaba, which just experienced the biggest IPO in history, it doesn't mean Yahoo is in the clear whatsoever.

Here's more:

Although Yahoo's stock price performance over the past few years has been strong, we believe the main reason for this performance has been the significant increase in value of Yahoo's stake in Alibaba. The appreciation in Alibaba's valuation, which Yahoo purchased in 2005, has masked the poor performance of Yahoo's core business. As shown in the table below, since new management was appointed in Q2 2012, revenue in Yahoo's core Search and Display businesses has been stagnant, yet SG&A and R&D expenditures have grown by a staggering $390 million, in turn, causing EBITDA to decline by 19%.

Starboard posited that a merger with AOL could be worth up to $1 billion in value, strengthening and synergizing both companies' display advertising businesses.

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