When I did my quick hit on CNBC today I talked about how well Twitter and Facebook have been doing, especially in the video space.

The topic of Yahoo came up, and the hosts had read my piece defending Marissa and endorsing her spending $10–20b over five years buying startups in the hopes that one or two could transform the company.

Strategies like that have worked exceptionally for Google, which bought two epic, industry-changing products in Android and YouTube. Not to mention Facebook, which has had equal success buying Instagram and WhatsApp.

What did I think of Yahoo giving back all the Alibaba cash?

My snap reaction was “they’re done!” Marissa will be out of there in 18 to 24 months and it will be sold for parts.

[ Click to Tweet (can edit before sending): http://ctt.ec/GxCT1 ]

I guess that was a little too blunt because people were like, “whoa.” Of course, I kind of think this should be apparent to anyone who has watched Larry Page, Jeff Bezos, Steve Jobs, and Mark Zuckerberg give zero cash back to shareholders — instead deciding to invest that money back into their companies.

When you have great ideas about how to own the future you invest every dollar you can. When you start giving back large amounts of money it’s because one of two things has happened:

You don’t have a lot of great ideas for how to grow your business. You have so much cash that even with those great ideas you can’t put it all to work.

That second reason has happened once: Apple under Tim Cook (but not Jobs).

In fairness, we are in deep and uncharted territory with Yahoo spinning off their returns for Alibaba into a publicly-traded entity called SpinCo — that doesn’t have to pay ~$14b in tax on the ~$40b windfall.

Has this happened before? I’ve never heard of anything like this.

It looks like this is the start of Marissa waving the white flag:

Step One: She gives back a massive return to shareholders with this spin out.

Step Two: She finishes overhauling Yahoo’s businesses: pruning the dying ones, refreshing the winners (Mail, Finance, Homepage, Search), and creating new business lines (Yahoo Screen, Tumblr & App installs).

Step Three: One grand round of layoffs based on the stack rankings (think 5–20%), which would make the business fundamentals look much better.

Step Four: Sell to Facebook, Google, or Microsoft and return even more cash, or fall back to merging with AOL (and letting Tim Armstrong handle the hard work of integration, layoffs, and activist shareholders).

If Marissa does this she will have made a fortune working on Yahoo for four years, but she will have fallen short of what most people considered a fool’s errand: bringing Yahoo back to prominence.

Oh, and one more thing … what if there is a “Yahoo spring surprise” coming, in which Marissa proposes to shareholders that they can sell their shares in SpinCo today, but if they want to leave $10 or $20b behind she will find interesting things for Yahoo to buy.

I give the “spring surprise” a 10% chance. If you had $10b laying around you would be better off betting it on Facebook, Twitter, Apple, and Google. Heck, it’s starting to feel like Microsoft would be a better bet than saving Yahoo with no checkbook.

[ Note: to my friends at Yahoo, my hat is off to you on a spectacular effort so far. Seriously. ]

best @jason