Yahoo’s board is considering an activist shareholder’s demand to sell the Internet services the company is best known for, a maneuver that might help the company dodge a tax bill of more than $10 billion looming over its holdings in China’s Alibaba Group. The board did not reach a decision on Wednesday and will continue discussions on Thursday, CNBC reported. (YHOO – Analyst Report) may be selling a piece of the business. In October, Yahoo said it would update shareholders with a strategic plan for the post-Alibaba era during its next earnings call, expected next month.
Advertisement
Naturally, Yahoo isn’t commenting on any of this.
The big question is whether anyone would actually show up with a meaningful bid. And Recode’s Kara Swisher downplays the original WSJ report and writes that the Yahoo board is actually going to be backing the embattled Mayer and focusing on the company’s planned Alibaba spinoff.
Alibaba, seen by some as a potential buyer, is unlikely to be interested, according to the Wall Street Journal. Also, the company issued a light guidance once again; for its fourth quarter of fiscal 2015 (4QFY15), the management expects revenue to fall within a $1.16-1.20 billion range, well below the consensus estimate of $1.33 billion.
The board will be meeting to discuss the sale in a series of meetings from Wednesday through Friday, The Wall Street Journal reported, citing people familiar with the matter. “Yahoo is the only Silicon Valley company we know that now has a stock price nearly entirely driven by the value of an entity outside of its control”, the letter reads. It is important to state that shares of Yahoo Inc. have been in a strong downtrend since the beginning of the year and have underperformed the broader markets. She has made efforts to reshape the company for the mobile era as more users shift to tablets and smartphones from PCs.
She has also lost several executives in recent months including chief development officer Jacqueline Reses, who shifted her focus this year to the Alibaba share sale.
Regardless of whether the board sides with Starboard on the spinoff issue or not, Yahoo will likely keep pushing forward with its video and advertising strategies. But over the past year, Yahoo’s stock has fallen 30%.
Advertisement
“To me that would be most valuable to sell”, said Ivan Feinseth, an analyst at Tigress Financial Partners.
