Yahoo Inc. will consider selling the company’s core internet business, with the possibilities being discussed in a series of board meetings being held from Wednesday to Friday, the Wall Street Journal reports.
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Activist investor Starboard Value asked Yahoo in November to drop plans to spin off its stake in Alibaba due to the tax concerns, and urged the company to sell its core search and display advertising businesses instead. “Yahoo is expected to pull in 4.4% of the $58.12 billion USA digital ad market in 2015, according to research firm eMarketer, down from 5.1% a year ago”.
Such a sale would mark an abrupt change of plans at the company, which has been trying to revitalize its business for more than three years under CEO Marissa Mayer, while spinning off the ancillary Asian investments in a transaction expected to close in January. Yahoo has a 15 percent stake in the company, valued at $32 billion.
Analysts think shoppers could include phone giant AT&T, search engine companies Google and Microsoft, and even Rupert Murdoch’s NewsCorp, which owns news publications like The Wall Street Journal.
Richard Holway, tech analyst at U.K.-based TechMarketView, said Mayer has “failed in her role” because she hasn’t succeeded in monetizing much of the company’s content. Starboard has also suggested it retain Yahoo Japan, a successful joint venture with Japan’s Softbank.
Though it has fallen out of fashion, Yahoo still remains one of the most visited web brands in the US, with 210 million people visiting the company’s properties in October, according to ComScore.
While in its heyday Yahoo’s portal, Yahoo Mail and various sports sites were the centre of the internet universe, others have filled that gap and, despite Mayer’s able stewardship and dedication, the battleship Yahoo just won’t turn fast enough.
This means that Yahoo will have to pursue a tax-free spinoff of its Alibaba stake.
The call by hedge fund Starboard Value came with Yahoo on track to set up a new corporate entity holding the Alibaba stake in coming months that would be spun off.
Yahoo has declined to comment on the report.
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Starboard doubled its stake in Yahoo in the third quarter, after earlier selling part of its holdings. Such an amount of traffic is what many media and telecommunication companies are yearning for, seen as a ideal audience for advertising purposes.
