The board is expected to discuss its options in sessions beginning Wednesday and continuing through Friday, according to people familiar with the plans. Yahoo’s market capitalization before these latest reports was about $31 billion – which would effectively value its core business at zero because its Alibaba stake is worth about $32 billion and its Yahoo Japan unit is worth $8.5 billion, according to the WSJ. Mayer had also said that she was having some great expectations from the core business of the company and was confident that they had the right manpower, plan, tools and other requirements that could help take the company towards growth. Yahoo shares have declined 33 percent this year, and revenue is forecast to drop 8 percent in 2015.
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The Wall Street Journal said Yahoo’s board will be meeting this week to discuss the sale.
Yahoo is planning to complete the spinoff of its Alibaba stake, now worth more than $30 billion, by next month, Mayer said on the company’s third-quarter conference call in October – – later than a prior target of year’s end.
News of the possible selloff sent Yahoo shares up 7 percent in after-hours trading on Tuesday, and continued upward on Wednesday, reaching $35.45 by midmorning.
Yahoo is still to comment on the news.
Starboard said in the letter to Yahoo, that it changed its position following federal government’s decision not to rule on whether the Alibaba spinoff would incur billions of dollars in taxes. (NASDAQ:YHOO) seeks a buyer for its underperforming core Internet business. Starboard Value believes that if the board does approve the sale of its core business it would unlock greater shareholder value in the near term.
The Wall Street Journal estimated the company’s dire financial standing, which is largely determined by Alibaba and Yahoo Japan.
SoftBank is keen to focus more on investments in overseas and Internet ventures and could see value in Yahoo’s assets and expertise.
But that spinoff plan has been clouded by concerns that it may not get tax-free status from U.S. authorities, resulting in a hefty tax bill for Yahoo shareholders. Yahoo has been overtaken in search and email by Google and beaten in media by Netflix and Amazon, while its messaging apps have lost users to Facebook and Snapchat. How many top-level programmers truly want to work for a company that’s been reduced to a private-equity rehab job?
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Yahoo’s internet business includes services such as Yahoo Mail and its news and sports sites.
