This Is Yahoo’s Single Biggest Problem

On Tuesday night, Yahoo CEO Marissa Mayer spent an hour and fifteen minutes explaining her shiny new plan to simplify Yahoo. She painted a hopeful picture of a business in transition that is just getting its footing.

Descriptions of Mayer’s new strategy–from growing Yahoo’s “mavens” business (her term for mobile, video, native advertising, and social media) and cutting back resources for certain products like Flickr, to divestitures of real estate and patents—sounded anything but simple. And Yahoo’s plan–a reverse spin-off of the company’s operating business while exploring a possible sale, is also far from simple.

Near the end of a longer-than-usual fourth quarter earnings call, Mayer finally admitted what every analyst and journalist listening along already knew: Yahoo is stuck in a complicated mess.

“Its clear to everyone our situation is complex,” she said, answering an analyst question. “Our strategy for maximizing value is also going to be complex.”

Amid the rosy prognosticating, it was nice to hear Mayer at least admit that Yahoo is facing a difficult year.

The earnings report, in which Yahoo beat revenue expectations, was the company’s chance to respond to a December attack by activist investor Starboard Value. It had called for Mayer’s ouster and a sale of the company. As a result, Yahoo reversed course on the planned spin-off of its huge stakes in Chinese e-commerce giant Alibaba and Yahoo Japan, and announced it will explore “strategic alternatives” (code for a sale) of its business.

This call was meant to clear everything up. It didn’t.

Until either of those things—a spin-off or a sale —happen, Mayer says her highest priority is “making sure we really execute inside the company, because that’s what unlocks the most shareholder value.” She added, “We need to create the best version of Yahoo we can possibly create.”

That’s a solid rebuttal to disgruntled investors. Pushing Mayer out now would only make the company more vulnerable during its transition.

But the problem with Mayer’s argument, and strategy, is that most shareholders have already decided that even the best version of Yahoo is worthless. Yahoo’s market value of around $27 billion is currently less than the value of its holdings in Alibaba and Yahoo Japan.

Furthermore, investors have already given Mayer three years to simplify Yahoo. When she joined in 2012, Marc Andreessen advised her to immediately cut 10,000 jobs from an existing workforce of around 18,000. Rather than getting that difficult but necessary move out of the way immediately, she used performance reviews to trim headcount bit by bit over the years, which turned out to be horrible for morale.

Now Mayer is finally getting around to those layoffs by outlining plans to cut 15% of staff and close five offices. She’ll end up with 9,000 employees by the end of the year, which is not far from Andreessen’s suggestion.

In addition to not cutting costs fast enough, Mayer spent money on things that haven’t worked out. Take the $1 billion acquisition of blogging site Tumblr. This quarter, Yahoo revealed that Tumblr missed its $100 million revenue target and that it had written off $230 million of its value.

Mayer also acquired the rights to cancelled TV show Community. Last quarter Yahoo wrote down $42 million for Community and two other shows because it didn’t see a way to make money on them. Additionally, Mayer built a video hub called Yahoo Screen, which will be shut down. She famously hired Katie Couric for $10 million a year, which doesn’t seem to be paying off. On the earnings call, CFO Ken Goldman acknowledged that Yahoo would be cutting some “content costs that don’t make sense.”

This spending has turned Mayer into a target of criticism. She used the earnings call to bite back against some of it by singling out two reports that she spent $7 million on a holiday party and $450 million a year on free food for workers. Those figures were off by a factor of more than three, she said. But a $2 million holiday party, even for more than 10,000 employees, still seems extravagant for a company that’s trying to simplify.

This article originally appeared on Fortune.com