Shares of Yahoo are up sharply before the opening bell on a report that the company will discuss the sale of its Internet business. These sessions are set to begin Wednesday and carry on through Friday, according to these sources.
Advertisement
Yahoo’s business is now valued at less than zero by Wall Street, which assigns all of the company’s value to Yahoo’s Asian investments, including its 15% stake in Chinese e-commerce giant Alibaba Group.
The Wall Street Journal also noted that a Yahoo executive recently canceled a scheduled appearance at an industry-wide conference – fueling further speculation that major changes could be underway at Yahoo. It had earlier made a decision to do the same in September, but the plans failed to take off as US Internal Revenue Service stood firm and refused to grant Yahoo the permission to carry out the deal as tax-free. During these meetings, anything will be on the table, including whether it will continue with the spin-off of more than $30 billion in Alibaba shares, sell its own Internet business, or both.
Brian Wieser, an analyst at Pivotal Research Group, said in a research note Tuesday that he values Yahoo’s core business at roughly $1.9 billion, not counting cash on hand. Yahoo Search is a search engine serves as a starting point to navigate the Internet and discover information, which is ranked and organized -based on their relevance to the query.
Starboard said in a letter to Yahoo’s board and chief executive Marissa Mayer that the spinoff of the entity called Aabaco Holdings “is not Yahoo’s best alternative” and argued that “instead, you should be exploring a sale of Yahoo’s core search and display advertising businesses”.
Yahoo could not get prior approval for its plan from the IRS, increasing the risk that the agency could later challenge the tax-free status of the spin-off. It will consider drastic action on several fronts, including the CEO.
Yahoo has struggled for many years to re-energize its business model. Under her supervision, the company has modified its mobile apps including Yahoo Mail, Weather, Sports and Finance.
Advertisement
If Yahoo does manage to find a buyer for part or all of its business, this would be an opportunity to finally cash out of this ailing Internet company. AOL ultimately was sold to Verizon for $4.4 billion. The gains to Wednesday, of more than 125 per cent, widely outperform gains in the Standard & Poor’s 500, up 55 percent since, the Nasdaq 100, up 84 per cent and even Apple Inc, which has gained 35 per cent in the same period, and Microsoft Corp, up nearly 90 per cent. The company’s market capitalization, however, has grown about 66 percent.
