Now That Henrique de Castro Is Out, Here's What Yahoo! Needs

The Internet icon reframes its business around original content as it works on ways to grow its ad revenue.

Jan 21, 2014 at 2:30PM

Yahoo! (NASDAQ:YHOO) is losing Chief Operating Officer Henrique de Castro for all the right reasons, Fool contributor Tim Beyers says in the following video.

Re/code's Kara Swisher first reported that de Castro was on his way out after the executive was noticeably absent from CEO Marissa Mayer's keynote address at CES. More importantly, Mayer hired de Castro in 2012 for his expertise as an ad sales executive. Display ad revenue fell 12% and 7%, respectively, in the second and third quarters.

In an SEC filing, Yahoo! said that de Castro would receive "severance benefits" per the conditions of his employment as outlined in his offer letter and a February 2013 severance agreement. How much he's due isn't entirely clear but his initial package called for $600,000 in base salary, a cash bonus intended to be 90% of salary, and $36 million worth of restricted stock and performance stock options.

A hefty price, to be sure. Yet Tim says he'd rather Mayer find and hire talent that's more aligned with her all-in bet on original content and contextual "Stream Ads" that sit alongside original articles in Yahoo! app feeds.

Do you agree? Or would you have preferred Yahoo! do a better job leveraging de Castro's talents? Please watch the video to get Tim's full take and then leave a comment to let us know whether you would buy, sell, or short Yahoo! stock at current prices.

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Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team and the Motley Fool Supernova Odyssey I mission. He didn't own shares in any of the companies mentioned in the article at the time of publication. Check out Tim's web home and portfolio holdings or connect with him on Google+Tumblr, or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.

The Motley Fool recommends Yahoo!. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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