Inc.to drop the plan to spin off its stake in Chinese e-commerce company Alibaba Group Holding Ltd. and instead sell its search and display advertising businesses.
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Starboard, which said it is a “significant shareholder” in Yahoo, instead urged the company to sell its core search and display advertising businesses, where growth has been tepid.
“If you stay on the current path, we believe the potential penalty for being wrong is just too great”, Starboard wrote in the letter, according to the Journal.
In the letter, Starboard continues to believe that the spin-off wouldn’t incur taxes. Last month Yahoo said that the spinoff is likely to be completed in January 2016. At the time, Smith, whose firm owns less than 1% of Yahoo, urged a combination of the company and AOL that would [facilitate] the realization of value from Yahoos non-core equity stakes.
Yahoo, whose shares were up flat premarket on Thursday, was not immediately available for comment. The EconoTimes content received through this service is the intellectual property of EconoTimes or its third party suppliers. Any taxes on these transactions would be less than for the sale of the Alibaba stake, Starboard said.
Many analysts attribute little or no value to the business and say Yahoo’s worth – about $31 billion as of Wednesday’s close – lies in its Asian assets: the Alibaba stake and a 35 percent stake in Yahoo Japan Corp.
The investor is ratcheting up pressure on Yahoo Chief Executive Marissa Mayer as her effort to turn around the aging Internet company enters its fourth year with few signs of progress. AOL was ultimately bought by Verizon in May for $4.4 billion. In 2012, when she arrived, Yahoo sales totaled $4.5 billion.
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On an earnings call with analysts in October, Ms. Mayer signaled Yahoo will adopt a new strategy to “reset” the company’s focus on fewer areas and shift further into mobile.
