An activist investment firm Thursday launched a bid for control of Yahoo, saying Marissa Mayer's management team has "failed to deliver results" that would revive the struggling Internet pioneer.

In an open letter to Yahoo shareholders, Starboard Value LP said it would nominate nine "highly qualified" directors to the company's board -- a move likely to pave the way for a sale or merger of Yahoo.

"We believe that Yahoo is deeply undervalued and opportunities exist within the control of management and the board of directors to unlock significant value for the benefit of all shareholders," said Starboard, which owns about 1.7 percent of the company's shares.

"We have been extremely disappointed with Yahoo's dismal financial performance, poor management execution, egregious compensation and hiring practices, and general lack of accountability and oversight by the board."

Responding to the letter, Yahoo said in a statement that the board nominating and governance committee "will review Starboard's proposed director nominees and respond in due course."

Although Yahoo is one of the best-known names on the Internet and is used by around one billion people, it has fallen behind Google in Internet searches and has been steadily losing ground in online advertising.

Ironically, Mayer joined Yahoo as chief executive from Google less than three years ago as a result of a proxy war launched by a different activist investor group.

While Mayer has injected some energy and glamour into the company, Yahoo's finances have failed to improve and its core operations are valued in the market as worthless, with the company's valuation propped up by its stakes in China's Alibaba and Yahoo Japan.

Roger Kay, analyst and consultant with Endpoint Technologies Associates, said Yahoo has simply been overtaken as new models emerge for the Internet.

"Yahoo is an old-fashioned portal vintage 1999; it's still useful as a portal but it can't become something else," Kay said.

Under the current situation, "I think the breakup of Yahoo is imminent, as is the departure of Marissa Mayer."

- More restructuring -

In February, Yahoo said it was cutting 15 percent of its workforce and narrowing its focus as it explores "strategic alternatives."

The announcement, coming with the release of a big quarterly loss, offered the first sign that Yahoo may be open to a sale or merger after years of struggling to regain its former glory.

The California company reported a loss of $4.43 billion in the final three months of last year, due mostly to lowering the value of its US, Canada, Europe, Latin America and Tumblr units.

Yahoo said at the time it was launching "an aggressive strategic plan to simplify the company, narrowing its focus on areas of strength to better fuel growth." At the same time, it said it was looking at "additional strategic alternatives," suggesting it could seek a deal to sell or merge the company.

Mayer has been seeking to push Yahoo toward mobile as she seeks to streamline operations and cut back on some digital content.

But the research firm eMarketer said Yahoo's critical advertising revenues were expected to fall 14 percent this year as it lags behind rivals such as Google and Microsoft.

Starboard's letter said that "we have been extremely disappointed with Yahoo's dismal financial performance, poor management execution, egregious compensation and hiring practices, and general lack of accountability and oversight."

One measure of Yahoo earnings, Starboard said, fell 47 percent year over year.

"This atrocious performance is even more appalling when you consider the billions of dollars spent in recent years on what has proven to be wasteful acquisitions and research and development expenditures," the letter said, noting that $2.3 billion was spent on acquisitions since 2012 but that more than half of that has been written down.

Starboard is proposing a slate of directors which includes its chief Jeffrey Smith, who has been active in pressing for change at other firms ranging from AOL -- which was sold last year to Verizon -- to Darden Restaurants.

Analyst Patrick Moorhead of Moor Insights and Strategy said the Starboard effort "complicates the deconstruction of Yahoo in its core business" as the group seeks to divest its hefty stake in Alibaba.

"What Starboard really wants is some kind of payback for their investment losses, not to run the company with their board," Moorhead told AFP.

"I don't expect this board swap-out to get too far and (it) could result in Starboard suing Yahoo and its board members for breaking their fiduciary responsibilities."

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