Yahoo’s Board to Discuss Sale of Internet Business, WSJ Reports

The Wall Street Journal, citing “a person familiar with Alibaba’s thinking”, said that the company is unlikely to make a bid for the troubled business.

There’s coverage galore about what will become of Yahoo after the Wall Street Journal and others reported Tuesday that the board is meeting this week to consider selling off the Sunnyvale company’s Internet business, possibly in response to investor Starboard Value’s call last month to do so.

Yahoo plans to spin off its Alibaba stake into a public company along with Yahoo Small Business that provides domain names and local marketing.

“It is clear that time is running out for the current management and they are trying to come up with an alternative”. For now, the person familiar with Alibaba’s thinking said the company is passing.

It still might happen if Mayer’s big bets on mobile applications and online video pay off and Yahoo gets the all-clear from the feds to use Google’s search technology to attract more traffic and sell more advertising.

Yahoo had hoped to spin off its Alibaba stake tax-free, but the Internal Revenue Service has not given approval for such a plan. SoftBank owns a 43% stake in Yahoo Japan.

The news comes among long-standing concerns about Yahoo’s future.

This could help Yahoo dodge capital-gains taxes on its investment in Alibaba, which was bought a decade ago for a billion United States dollars (£670 million) and is now worth 33 billion USA dollars (£22 billion) as the ecommerce business has boomed.

Shares have tumbled as a result, falling by around 30% this year. Excluding the Alibaba stake, cash holdings and partial ownership of Yahoo Japan, Starboard valued Yahoo’s core business at about $2bn. 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 authorized to publicly discuss the plans.

Many investors believe Yahoo remains bloated, given that its net revenue has fallen from $5.4 billion in 2008 to a projected $4 billion this year.

For a while, it seemed that Mayer was shaking things up at Yahoo. Representatives of Yahoo declined to comment. Yahoo has been overtaken in search and email by Google and beaten in media by Netflix and Amazon, while its messaging apps have lost users to Facebook and Snapchat.