Based in Sunnyvale, California, Yahoo has offices around the world and employs 11,000 people.
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Yahoo had originally proposed in January to spin off its Alibaba stake into a new company to be named Aabaco, but in September the IRS declined to rule on whether the transaction would be tax-free. Inc is changing course.
Yahoo Inc. on Wednesday signaled that its Internet business is up for sale, dealing a blow to Chief Executive Marissa Mayer and setting the stage for what may be the final act of a Web pioneer that failed to reinvent itself in the smartphone age.
If Yahoo didn’t reconsider the Alibaba plan, Starboard threatened to lead a shareholder mutiny aimed at overthrowing the board next year.
Yahoo Inc said it scrapped a plan to spin off its stake in Alibaba Group Holding Ltd, citing tax concerns. Yahoo’s stock is up almost 3 percent, ahead of the regular trading session.
The bifurcation will still require various third party consents – including shareholder approval and SEC filings and clearance.
Yahoo’s core business business has suffered over the past few years, as Mayer struggles to stem the company’s falling revenue. “In 2016, we will tighten our focus and prioritize investments to drive profitability and long-term growth”.
Yahoo announces that it will spin off its core business into a separate, publicly-traded company and abandon its previous plan on spin off its valuable stake in Alibaba.
The change in Yahoo’s strategy, which follows deliberations by the board over the last week, is the latest effort by Mayer to assuage shareholders.
Yahoo has a 15 percent stake in the Chinese e-commerce giant Alibaba. Others have said it could be worth less than $2 billion. But one analyst, Robert Peck with SunTrust, said he expected the company to expedite the process.
AT&T Inc and Verizon Communications Inc could possibly be potential consumers for the Internet enterprise, FBR Capital stated.
Proactive Investors Australia is the market leader in producing news, articles and research reports on ASX emerging companies with distribution in Australia, UK, North America and Hong Kong / China. McAdam believes that Yahoo’s assets would be useful for AOL.
A Yahoo spokeswoman declined to comment further. But even a valuation of up to $8 billion probably has Yahoo’s board gnashing its teeth – after all, 1 billion Internet users has to be worth more. Meanwhile, its quarterly operating profit has dropped as customer acquisition and other costs have gone up.
“We have made no determination to sell the company or any part of it”, Chairman Webb said in an interview.
Sept 8: The spinoff plan has hit a snag after the IRS refuses to bless Yahoo’s proposal as a tax-free transaction.
Yahoo chief Marissa Mayer said she “has no intention of stepping down” from her leading role following the company’s announcement that it will roll its core internet assets into a new listed entity.
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Yahoo has struggled to grow its Internet business, which includes selling search and display ads on its news and sports sites and email service, in the face of competition from Alphabet Inc’s Google and Facebook Inc. “We believe that we are tremendously undervalued and we think the best path to unlocking that value is by separating the Alibaba assets from our operating businesses, and also turning around the performance in our operating business, which we’re very focused on doing”.
