INVESTOR URGES YAHOO TO BUY AOL

sunnyvale, calif. Yahoo chief executive Marissa Mayer is getting some unsolicited advice on how to turn around the long-struggling Internet company, just like some of her predecessors who tangled with dissatisfied investors.

In a letter Friday, activist investor Jeffrey Smith urged Yahoo to buy another fallen Internet star, AOL, and take steps to reduce the future taxes on the company’s stake in China’s Alibaba Group. He also chastised Mayer for spending $1.3 billion to acquire an Internet blogging service and more than two dozen other startups with little to show for it.

To bolster his arguments, Smith says he has built a “significant” stake in Yahoo through Starboard Value LP. The size of the stake wasn’t quantified in Friday’s letter.

Various analysts have argued a marriage between the two companies would allow them to cut costs, attract moreWeb surfers and, most important, strengthen their online advertising arsenal to compete against Google and Facebook.

This is the third time in the past six years that an activist investor has targeted Yahoo for a shake-up. Billionaire Carl Icahn seized three spots on Yahoo’s board in 2008 after attacking the company for spurning a takeover offer from Microsoft, and hedgefund manager Daniel Loeb also wound up with three board seats in 2012 after orchestrating the ouster of one of Yahoo’s previous CEOs, Scott Thompson. The Associated Press