Instead, Yahoo said it would consider alternatives, including the sale of the core business or a so-called reverse spinoff that would turn the Web assets and a stake in Yahoo Japan into a separate, publicly traded company.
Advertisement
The thinking being this reverse spin off route is less likely to spook investors and the markets with fears of Yahoo incurring a big tax bill. The reverse spinoff will require third-party consent and, the company says, it’ll take a year or more to complete.
Commenting in a statement, Mayer reiterated her view that the “ultimate separation of our Alibaba stake will be important to our continued business transformation” – pushing the perception that it’s not the overall strategy that’s being rethought here, just the route to get there.
Separately, Yahoo said Max Levchin resigned from the board, and will instead focus on his responsibilities as the CEO of payments company Affirm Inc In a regulatory filing, the company said the change is not due to any disagreement with on any matter related to Yahoo’s operations, policies or practices.
The chief government of CBS, Leslie Moonves, stated the media firm wouldn’t pursue Yahoo, talking at an occasion earlier this month. The pioneering Web company had veered from one strategy to another.
“It all boils down to data possession here – the companies are anxious to get their hands on Yahoo’s data in order to present a better competitive face to Google and Facebook, and tap into market interest”.
Yahoo’s core business consists of selling search and display ads on its popular news and sports sites, email service and products like Tumblr.
But Yahoo.com still ranks fifth in terms of daily visits, according to monitoring firm Alexa, and this could make it an attractive target for a telecom carrier or private equity.
While her intellectual skills qualify her as a nerd, her good looks and star quality have put her on the cover of magazines including Fortune, Vanity Fair and Vogue, which showed pictures of her in a fashion spread. Coolbrith notes that taxes on spinoffs apply to assets that are controlled, which means that the worst-case tax scenario for spinning off the core business is about $5.3 billion – much lower than what the bill would have been on the Alibaba spinoff because the value of the assets being spun off is much lower. “He indicated they had not explored the sale of core operations and assets”. Analysts credit Mayer for improving Yahoo’s mobile, video and social offerings but say these new growth drivers aren’t offsetting declines in the legacy desktop business.
Ms Mayer added to CNBC that “it’s really a question around timing of the resolution [of the potential tax bill], which could take multiple years”. Yahoo needs the approval of shareholders, United States regulators, Yahoo investor SoftBank and business partners of which there are “too many to name”, Chief Financial Officer Ken Goldman said on the call.
“So what if you have the spin-off and have a decision [about a sale] in a year?” said Josh Strauss of Appleseed Fund, which is invested in Yahoo.
Verizon bought Yahoo rival AOL Inc, another Internet pioneer, earlier this year for about US$4 billion.
It certainly appears a defeat for Yahoo’s CEO Marissa Mayer, who has made numerous efforts to prevent stagnation of the business since she came into the job in 2012, through digital media content creation and targeting advertising deals with companies like Google. Yahoo’s properties might make a nice fit there.
Advertisement
Marissa Mayer, President and CEO of Yahoo, participates in a panel discussion at the 2015 Fortune Global Forum in San Francisco, California November 3, 2015. Yahoo has roughly 1 billion users.
