According to the Wall Street Journal, Yahoo Inc.’s board is thinking about selling off the company’s flagging Internet businesses.
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Yahoo’s core business could be worth about US$1.9 billion, not including about US$5.8 billion in cash expected at the end of next year, along with some growth assumptions, Mr Brian Wieser, an analyst with Pivotal Research Group, wrote Tuesday in a note.
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. However, even if the spin-off of only the Alibaba shares does go through, it will leave Yahoo in a much weaker position than before and will likely make Marissa Mayer’s job in turning the company around a lot tougher.
Her arrival kicked off heightened expectations of a quick turnaround at Yahoo, which had struggled to grow its advertising business to compete with market leaders Google and Facebook.
But that spinoff plan has been clouded by concerns that it may not get tax-free status from United States authorities, resulting in a hefty tax bill for Yahoo shareholders.
Yahoo’s greatest asset, he said, is a still “relatively large user base”, particularly its email users. Yahoo shares have fallen 35% this past year, as they trades for $33.71 as of December 1st closing.
Begun as a simple website called Jerry and David’s Guide to the World Wide Web, Yahoo has grown into one of the biggest names in the Internet business. Recently, Starboard Value LP, an activist hedge fund investor, urged the company to sell instead all the remaining assets, particularly its core business, which has been flagging for some time now.
Mayer came to Yahoo after a long stint at Google.
Most of the company’s value is tied to its stake in Chinese e-commerce giant Alibaba. IAC did not immediately respond to a request for comment.
The obvious candidates to purchase Yahoo’s internet business include telecommunications and media companies as well as private equity firms.
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Yahoo Finance’s own investor message board lit up with speculations of an outright sale and the potential impact on the company’s stock value, which has been trending near its 52-week low.
