Yahoo’s board will have a series of meetings this week to see how the company can make the most of its stake in Chinese e-commerce powerhouse Alibaba Group Holding Ltd.
Advertisement
Shares of Yahoo rose $1.93, or 5.7 percent, to $35.64 in morning trading Wednesday. Inc. (NASDAQ: YHOO)’s board of directors will convene to discuss a potential sale of the company’s core Internet business.
Nearly all of Yahoo’s market capitalization of $34 billion is ascribed to its stakes in Alibaba and Yahoo Japan.
Yahoo plans to spin off its Alibaba stake into a public company along with Yahoo Small Business that provides domain names and local marketing.
Yahoo (Hanover: YHO.HA – news) is considering a radical move to sell off its core business as a three-year turnaround effort from Marissa Mayer fails to bear fruit, according to reports.
Several types of buyers might give Yahoo a close look, including private-equity firms and media or telecoms firms. Mayer came to Yahoo after a long stint at Google.
Activist shareholder Starboard wrote a letter to Yahoo last month urging it to halt its plan to spin off its 15% stake in Alibaba through a complex tax-free spinoff that Yahoo hopes to complete by January. Alibaba isn’t interested in Yahoo’s stake in Yahoo Japan Corp. either, the person said.
Yahoo’s core business is shrinking, but it still represents some of the most visited services on the Web. It is important to state that shares of Yahoo Inc. have been in a strong downtrend since the beginning of the year and have underperformed the broader markets.
The argument there is that as long as Yahoo’s stock price is tied to Alibaba’s performance, Yahoo can’t compete for talent the way other tech giants can.
“I have very aggressive expectations for Yahoo’s core business”, she said.
Yahoo’s desktop search ads continue to decline.
The board will weigh all its options, and it is unclear whether the directors will change course, said the people, who spoke on the condition of anonymity because they were not authorised to publicly discuss the plans.
Advertisement
Now, Yahoo may be doing just that, or even getting rid of both, according to media reports, and this appears to have pleased investors. SAN FRANCISCO, CA – NOVEMBER 03: Yahoo president and CEO Marissa Mayer speaks during the Fortune Global Forum on November 3, 2015 in San Francisco, California.
