CEO Marissa Mayer’s tired Internet giant has gone from Yahoo! to Yahoo??? as anonymous sources tell the Wall Street Journal the company may sell its core business.
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Yahoo’s board is considering whether to proceed with its plan to spin off its investment in Alibaba Group Holdings, Ltd., find a buyer for the company’s Web properties or both.
Yahoo was founded in 1994 by then-Stanford University electrical engineering graduate students Jerry Yang and David Filo.
Lack of a long-awaited turnaround at Yahoo has put pressure on Mayer to prove she has what it takes to revive the faded Internet pioneer.
Alibaba and Yahoo did not respond to requests for comment. Yahoo Inc.is struggling to keep its head above the waters due to competition from rivals like Google and Facebook.
Ad-technology investor Dave Morgan, chief executive of Simulmedia, suggested declining tech valuations may be hastening the the Yahoo! board. But those still betting on her may have lingered too long: The stock is down 50 per cent since November 2014, and much of the long upward trajectory was funded by an aggressive share buyback program.
Yahoo’s core business is not attractive because its successive managers have faced many challenges in turning it around, the Journal noted. It added that Alibaba would consider buying its own shares back from Yahoo, only if they come at a steep discount.
But investors are nervous that the Alibaba spin-off might not get the tax-free treatment that Yahoo hopes, resulting in a hefty tax bill.
Shares of Yahoo jumped $2.293, or 7 percent, to $36 in midday trading Wednesday.
Comcast (NASDAQ:CMCSA), Verizon Communications (NYSE:VZ) and Barry Diller’s IAC/InterActiveCorp (NASDAQ:IACI) have been rumored as possible buyers. In October, Yahoo said it would update shareholders with a new strategic plan for the post-Alibaba era during its next earnings call, which is expected in January.
The company’s future is being considered by the Yahoo board this week partly in response to a campaign by activist hedge fund and Yahoo shareholder Starboard Value, according to a Wall Street Journal article.
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This could help Yahoo dodge capital-gains taxes on its investment in Alibaba, which was bought a decade ago for a billion USA dollars (£670 million) and is now worth 33 billion U.S. dollars (£22 billion) as the ecommerce business has boomed.
