Conflicting reports in recent days about the company and the fate of CEO Marissa Mayer have Yahoo observers scratching their heads.
Advertisement
It had also reported that the board meeting would discuss how to proceed with the spinoff company’s 15% stake in Alibaba, worth more than $20bn.
The Wall Street Journal first reported the possible sale of the Internet business late on Tuesday. The company’s stake in Yahoo Japan is held at a 30 percent discount off its actual market value, while its Alibaba stake is held at about a 59 percent discount.
Buying Yahoo! Inc. (NASDAQ:YHOO)’s core business at the moment is sure to come with its fair amount of challenges.
But as time passed by, the strategies she implanted to increase Yahoo’s dwindling revenues failed to stand up in the face of competition put up by Google and Facebook, which have managed to continually increase their advertising revenue.
News of departures of top executives also haunt this announcement as it becomes obvious that Yahoo is considering all its options.
Marissa Mayer, who became the president and CEO of Yahoo in July, 2012, was brought in to turn around the financially-strapped company, but her efforts have not instilled much confidence in Wall Street. In October, Yahoo said it would update shareholders with a strategic plan for the post-Alibaba era during its next earnings call, expected next month. A Reuters report now claims, that the once dominant internet giant is considering a sale of its internet business, which forms the core part of its operations.
Yahoo has planned to spin off its 15pc stake in Alibaba, but has run into difficulties over the taxes such a move would accrue, with American authorities warning that its elaborate restructuring plan created to avoid taxes on a spinoff would not pass muster.
The fund has threatened a proxy battle for board control if Yahoo refuses to take bold steps and says in the letter addressed to Mayer and board chair Maynard Webb that it is frustrated by “your dismissive approach to our serious concerns”.
Private equity firms are also expected to bid on the company, but Strauss said he thinks Yahoo shareholders would be better off with a buyer that has businesses complementary to Yahoo’s, like Google or Microsoft.
Advertisement
Starboard’s thinking was that Yahoo would then retain its stake in Alibaba, which is more valuable than this core business.
