 desk on SiliconANGLE TV for Tuesday, October 9th, 2012. I'm Kristin Folletti. Marissa Mayer is still making headlines as Yahoo's newest CEO. Is she a good fit for the job? Also, will HP bow to analyst pressure for an internal breakup? Join us now with SiliconANGLE founder John Furrier to give us his breaking analysis on these stories. Welcome, John. Hi, how you doing? So 12 weeks ago, she became CEO and is Yahoo's fifth CEO in four years. She's no doubt the highest profile CEO to hire since the days when Jerry Yang was in charge. But the question is whether she'll be able to last longer than her predecessors. So what's your angle on all of this? I think it's great for Yahoo. I think Marissa Mayer is awesome. Love her style, the fact that she has such a great history with Google, being one of the early employees, first female engineer. She has particular quirks about her style that kind of have a Google feel to it. So I think she's going to bring that to Yahoo. I don't think she's the most experienced. She'd come to the table in terms of management style, and she wasn't known at Google as having been the most consummate manager. But Yahoo's got plenty of people who know how to move paper around middle management, and they got to get rid of more of those and bring in more of Marissa Mayer. So I think the feedback is, hey, it's better than nothing. Bring Marissa in. She's got some style. She's got some vision. She understands what the market is doing. She has some relevance, and that's important for Yahoo. She's got her work cut out for her. Yahoo's brand suffering from somewhat of a talent drain, and there have been years of chaos on its board, and in its upper ranks, its second quarter results were grim, and Yahoo's stock price is about half of what it was five years ago. So what does she need to do to turn the brand around? Well, first of all, Yahoo has a good brand for people that are my age, basically. If you're under the age of 30, you've probably never heard of Yahoo. And that's really their core issue, right? Yahoo has a really long-standing brand equity in the older web, web 1.0. They have really almost no equity, but their user base is so massive. So this is a consumer bubble that we're living in. You're seeing Twitter, you're seeing Facebook, you're seeing startups. There's commentary all around Silicon Valley around the struggles of the older companies like Juniper Networks and the startups as well is just struggling in the consumer play. So the land grab for the new consumer is still up for grabs. Yahoo obviously has a stake in that game. Facebook has one billion users. So out of nowhere, Facebook went from nothing to a billion users. And Yahoo could have bought Facebook for a billion dollars or 700 million around that number years ago. So Yahoo does have the users. They can convert those users into social users. And quickly, if that's the goal of Yahoo to do that, I think that's the best play. And they do have the capability to do that. They do gotta get some product leadership and they gotta up their game a bit on that part. So let's talk about her first several weeks in office. She's hired some new people, a new CFO, a new chief, a marketing chief, a new head of human resources and a publicist. She's also fired some others. She freed up $3 billion in cash from the sale of part of Yahoo's stake in the China-based e-commerce site Alibaba. Yahoo investors are urging Merit to buyback shares rather than pay a dividend from that deal. Analysts have predicted that with a buyback, Yahoo's stock can double to $32 within a year. In what other areas would a buyback help Yahoo? Well, two things you mentioned there. One is the hiring new people in the buyback. Let's take those two separately. One on then hiring new people. Absolutely critical path for Marisa is to bring in quality people. When you have companies like Yahoo, and we saw this last week with Juniper when we reported, which we'll talk about that later. When you have people that are not of high quality in positions, it's toxic, right? So what you have at Yahoo is very similar to some of the situations we've been seeing and we'll be reporting lately on other companies in the Valley where you have legacy people who just are toxic and aren't good people. And what you wanna do is you wanna get rid of those people and bring in new people. So let them resign, let them move out. Marisa's gotta bring in new high quality people, people who can operate at a high level who aren't gonna sit on their butts and really kind of reshape the company and move them in the right direction fast on the product leadership side. So that's the culture. The second thing on the buyback is interesting because what that is is they have the ability now what the cash windfall from the sale to the Chinese is to use that to buy back the stock to control the flow. So it's an economic game around control and the share price. And it also sends a signal to the stock market that they have confidence in the company. So two things going on there, they need to use that cash, not to essentially do a dividend or anything like that but to reinvest in the company. And that's gonna come in three areas. One, the culture I mentioned, two, the product leadership and technology that we talked about earlier and three, confidence in the overall economics and the mechanics of the stock. Yahoo has said it will return proceeds from the Alibaba transaction to investors without specifying how or when. How significant of a decision will this be viewed for mayor whether to keep the company's best interests on the agenda or to appease the shareholders? Look at the shareholders, absolutely. If they take the money off the table, all of it that's really greedy. I think that's a wrong move from my personal opinion standpoint. That is not what the company needs. What the company should do is reinvest all of that money if not 90% of it into the operations of the company to bring back the culture, product leadership and also fix up the mechanics of how they operate their business because ultimately in that business with those kinds of users operating cash flows priority number one for Yahoo. And they got to do that. And they have big Hadoop systems. They have some tech and they got to amp up in other areas where they don't have the technology. So to me, if the stockholders demand that cashback it's a tragedy and it's just total greed. And it speaks to the whole Wall Street mentality of the corporate politics around the boardroom, politics and Jerry Yang, then you have the other CEO. All those games are done by hedge funds and these big companies to get cash out of the deal. So I think Marissa can give them some token cash and say, here look at here's a nice pop on your investment, take that cash. But if they want to be serious for Yahoo in the long run they got to reinvest that cash. So if you look at their move it'll be ultimately a tell sign for what the Yahoo the future will be. If they give the cash back to the investors then it's a total fail at that point. You might as well just, you know don't buy the stock sell it short and run for the hills. If they reinvest it in the company that's a sign of leadership. And that's what I think Marissa Mayer will do. We've been talking about the corporate governance of Yahoo. Let's switch gears for a minute and talk a little bit about the corporate governance of another Valley company, HP. Analysts are saying that HP should break itself up and separate its division that sells printers and PCs from the one that caters to businesses. Do you think that's a good idea or is that just a recipe for channel sales destruction? You know this is a good segue from that last comment because obviously I'm from the East Coast so I totally understand the whole Wall Street mentality. I think it's a total failure to do that at this point. I think, you know, Mega Whitman's planer car is like, oh I took over this ship and it sucks and whatnot, but the bottom line is she's overplaying her hand there. It's not as bad as she's saying. She's setting the expectations low. And I don't blame her for that. I think it's a good move I've commented on that. But to break the company up is a disaster. I'll tell you why. The enterprise business just doesn't have enough legs by itself to make it a really durable business. So they want to do a turnaround to the levels of say what IBM did. Yeah, maybe shed some operating units that have no gross margin. I could buy that, but even then if it's generating revenue and it has the channels and has the leverage from an operation standpoint, HP should keep it. And like I've said in the past, you know, having these operating divisions around could provide new sales channels for new products that haven't even been invented yet. So remember the LaserJet, the product that saved the company in the late 80s, early 90s, wasn't even supposed to be built by HP. I mean, they were in the laser business, laser printer business making $60,000 laser printers. What people don't understand is the laser printer was a rogue project run out of Boise, Idaho and supplied by Canon. That one product that was a rogue, kind of a shadow development project save, literally save the company. HP needs more of those, not less. So cutting and bludgeoning and splitting up divisions is not the kind of leadership Meg Whitman needs to do. What she needs to do is consolidate and grow, create that potential energy, create new R&D and develop breakthrough products because they have the customer base, they have the supply chain, they have the channel. So what she does operationally will define what that company is. And it's a sign of breakups and division cutting. That's just corporate, you know, Wall Street level type playing play and that's not gonna be good for the company. One more quick note from the Valley. We saw the best headline out on gizmodo.com. The headline stated, oh God, Bravo's Silicon Valley show looks even worse than we thought. Have you seen any of this reality show promo yet? Yeah, I've seen it. I've been following that story from the beginning. I love it. I think it's fantastic. Either way, first of all, I think the show is gonna be horrible, but I think it's gonna surprise people because one, I'm gonna watch every episode because I know some of the people in there, at least I know one person. One of the videographers that we used to work with back on my last start of POTEC. But, you know, this really is ultimately a weird deal because one tweet by Chris Toles, ex-netscape executive now runs Top X CEO. He says, this is Hollywood's answer to SOPA. Meaning, you know, payback. This is totally not a representation of Silicon Valley. There's no Asians in there. There's no Indian character. It makes it be more glamorous than it really is. And we saw the failure of Gawker Media's Valleyweg. It's just a testament to the fact that Silicon Valley is a boring. It's an innovation hub and it's sexy and they're gonna try to sexy it up a little bit, but it's gonna be fun to watch. And again, like I said in my Twitter account, it's better than watching, you know, storage wars and parking wars on Bravo. So, you know, it's good to see Silicon Valley come back and we're gonna see how the young people react to it. Will they have the digital IQ? I think they will. I think that'll align with people. If keeping up with the Kardashians can get the ratings, then I think, you know, Bravo might have a chance to do something with the Silicon Valley story, but it's totally not representative of Silicon Valley at all. Well, John, thanks so much for joining us. Great to have you on as always. Great. For information on news of the day and the latest breaking analysis, stay tuned to News Desk right here on SiliconANGLE TV.