The Wall Street Journal reported on Tuesday that Yahoo’s board will meet several times this week, during which the company’s directors will consider whether to sell Yahoo’s lucrative stake in Alibaba, the company’s core Internet business, or both.
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Yahoo’s board will weigh a sale of the business, which e analysts said could be worth in the neighbourhood of $4bn (€3.77bn), at a board meeting which started late Wednesday, a source familiar with the matter told Reuters.
Starboard also argued that in her three years at the helm CEO Marissa Mayer has failed to turn around the core business.
The rumours about selling its key business indicates the mounting pressure on Mayer. That has left the company in the awkward position of having its Alibaba stake valued at more than $30 billion, or nearly its entire $33.6 billion market capitalization.
“Really for the first time, it seems more plausible for a variety of different companies to pursue Yahoo”, Kessler said, drawing a parallel Verizon’s acquisition of AOL as a potential model. Yahoo shares rose 5.6pc at $35.61 in early trading. Yahoo is expected to pull in 4.4% of the $58.12 billion USA digital advertising market in 2015, according to research firm eMarketer, down from 5.1% past year.
Yahoo’s stock closed at $15.64 when Mayer was appointed chief executive on July 16, 2012.
The original decision to split Yahoo’s holding in Alibaba was seen as an attempt to calm restless shareholders, starting with activist fund Starboard, which lobbied for the strategy.
In a letter last month Starboard urged Yahoo to halt plans to sell the $22 billion Alibaba stake due to the risk of a $12 billion tax liability and because the holding along with Yahoo Japan accounts for most of Yahoo’s implied value.
Yahoo’s Internet business has been struggling to boost revenue from ad sales in the face of stiff competition from Alphabet Inc’s (GOOGL.O) Google and Facebook Inc (FB.O).
Meanwhile, over the past 12 months, the value of Yahoo’s core business in the public market has gone from close to zero to negative , key executives have departed and outside consulting firms have entered the fray.
The company’s emerging businesses, which Mayer calls Mavens – mobile, video, native and social advertising – have been the bright spot for the company.
Despite all of this though, Yahoo still has control over one of the biggest Internet user bases in the world, with more than a billion users worldwide.
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KitGuru Says: Yahoo is a company that it’s always a surprise is still around, but it’s certainly kicking along ok, even if it’s profits are dipping year on year.
