Yahoo’s stock gained more than 4 percent early Wednesday morning after the Wall Street Journal reported that the company’s board of directors will gather Wednesday through Friday to discuss several strategic options available.
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Starboard 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 an entity that despite having lost its status as a household name perhaps as long as a decade ago, is still a monstrously successful company.
The report also noted that Private-equity firm TPG Capital has looked at buying media properties within Yahoo.
The future of Marissa Mayer is nearly certain to come under fire, who was hired with extravagant fanfare from rival Google, where she was accredited with the person behind the success of the coveted search page.
Yahoo’s greatest asset, he said, is a still “relatively large user base”, particularly its email users. The article also notes Yahoo’s cash and short-term investments totaled $5.9 billion at the end of the third quarter. Yahoo’s market value roughly mirrors the value of these investments, meaning Wall Street essentially views its core business as worthless. Yahoo shares have declined 33 per cent this year.
After a successful career at Google, Marissa Mayer became president and CEO of Yahoo in July 2012.
Shares in Yahoo jumped more than 7 percent in extended trading on Tuesday following reports that board members were holding marathon meetings this week to decide on a course of action.
Yahoo had hoped to spin off its Alibaba stake tax-free, but the Internal Revenue Service has not given approval for such a plan. Although Mayer is credited with stabilising the company, which was in rapid decline, Yahoo has introduced no breakthrough products during her three years at the helm and has fallen further and further behind competitors such as Facebook and Google in the battle for advertising dollars.
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. That’s where the core business spin-off idea comes in; Yahoo could eliminate this looming risk if it manages to find a buyer to take over its business.
Its stake of 15% in Alibaba has a current worth of $32 billion, while its stake of 35% in Yahoo Japan is worth approximately $8.5 billion.
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SAN FRANCISCO (AP) – Yahoo’s board is considering an activist shareholder’s demand to sell the Internet services the company is best known for, a maneuver that might help the company dodge a tax bill of more than $10 billion looming over its holdings in China’s Alibaba Group.
