With Yahoo apparently having changed its plans due to technical and tax-related reasons, James Angel – Associate Professor of Finance at Georgetown University’s McDonough School of Business – said that Yahoo would now be achieving “the same strategic benefits, but in a backward sense”.
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Yahoo Chairman Maynard Webb says there are no plans to sell the internet business.
When Yahoo announces those fourth-quarter results next month, Mayer also plans to unveil a shake-up that is supposed to jettison the company’s least profitable products and likely will lead to layoffs. In September, Yahoo disclosed in a filing that the IRS had chose to not grant approval for a tax-free spinoff, though at the time the company stated it would continue to pursue the move.
Mr Webb said on Wednesday that although Yahoo had a “fiduciary obligation” to talk to bidders, “we are not proactively trying to do any of that”.
As for Mayer’s future, O’Donnell said, “It remains to be seen what kind of magic she can pull out of her hat”. The Internet pioneer said the move would create two separately publicly traded companies including one with the Yahoo core which has been struggling.
It’s the climax to an 11-month debate over whether Yahoo would be able to separate its core business from the Alibaba stake without incurring a massive tax bill.
“In addition to our efforts to increase value and diminish uncertainty for investors, the ultimate separation of our Alibaba stake will be important to our continued business transformation”, said Marissa Mayer, CEO of Yahoo.
The new plan will require Yahoo to win the consent of a large cast of players including regulators, shareholders, bondholders, business partners and others “too many to name”, Chief Financial Officer Ken Goldman said on the call.
Yahoo shares rose 1.7 percent to $35.43 at 9:35 a.m.in NY.
Mr McAdam, who recently bought faded internet firm AOL (Xetra: 6OL.DE – news) for $4.4bn, told CNBC: “Once they make a decision, there might be assets that would fit together with AOL”. “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”. How can a company that has $4.5 billion in revenue and 1 billion users be worth less than zero? If Yahoo pushed through with it, It would have been billed $13.3 billion in tax, which was big enough to spook shareholders into fighting against the proposal.
“It potentially does remove the Alibaba distraction and should give the core business a value over the zero dollar value it has now”. The rest of Yahoo is worth $3 billion to $8 billion, according to analysts’ estimates. Starboard Value sent a letter to Yahoo!’s board of directors urging it not to spin off the Alibaba stake, instead focusing on selling the search and advertising business.
Webb, though, emphasized there are no plans to sell Yahoo’s Internet business.
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Pulling back from the spinoff of its Alibaba stake is a significant change for Yahoo executives who had stood by the deal even as questions were raised about whether it could escape scrutiny from the Internal Revenue Service.
