Updated Activist investors Starboard have joined calls for a management overhaul at Yahoo!, arguing the company is hemorrhaging cash under its leadership.

In a letter to the company's board (PDF), the investors note that the past year has been "extremely frustrating" for shareholders, which has seen a "continued downward spiral of the operating and financial performance of Yahoo’s core Search and Display advertising businesses."

Unlike hedge fund SpringOwl Asset Management, which sent a 99-page letter to the company's CEO Marissa Mayer arguing for her to be ousted, the investors did not single out the embattled chief exec by name.

However, they did criticise the company's strategy over the last three years, roughly the same period she has held the top job.

"Despite over three years of effort and billions spent on acquisitions, the management team that was hired to turn around the Core Business has failed to produce acceptable results, in turn, causing massive declines in profitability and cash flow," it said.

It said the current management has had over three years to demonstrate progress towards improving the business, which still "continues to be plagued with deteriorating financial performance and an accelerating number of executive leadership departures."

Annual operating costs have ballooned, increasing by approximately $500m despite revenue that has been declining. In addition, the company has spent more than $2.3bn, it said. "Unfortunately, most of these investments have been misguided, poorly overseen, and, ultimately, shut down."

It said: "The Board must accept that significant changes are desperately needed. This would include changes in management, changes in Board composition, and changes in strategy and execution."

The company must "deeply reduce unnecessary costs", flog its unprofitable businesses, and overhaul its incentives and compensation programmes, it said.

It added: "Certainly on paper, there could be a viable plan to significantly restructure Yahoo, shift direction under new leadership and attempt, once again, to reverse the current trends of declining revenues, increasing costs, and plummeting profits."

The Register has contacted Yahoo! for a comment and will update this story if we receive one. ®

Updated to add

A Yahoo! spokesperson said the web biz "will share additional plans for a more focused Yahoo on or before our Q4 earnings call. Our board and management team engage in and maintain regular, open dialogue with all our shareholders, and consistently strive to deliver and to maximize shareholder value."