Yahoo considers selling Internet business

Mayer’s bet on display ad sales proved to be ill-timed: The value of that business diminished as buyers and sellers increasingly turned to programmatic deals – computer-handled instant auctions that have tended to drive down prices.

Part of the issue, of course, is the changing landscape for technology companies. On the other hand, Yahoo’s stake in Alibaba and Yahoo Japan is relatively high; this is much better proportion in terms of investor point of view. So who would buy Yahoo?

UBS analyst Eric Sheridan suggested that the core business could be worth $4.6 billion, or about 6 times earnings before interest, taxes, depreciation and amortization, in a recent report. He declined to comment on the company’s potential interest in Yahoo assets. SoftBank also owns Sprint. That opinion was echoed by Kessler, though he cautioned the strength of the USA dollar could be a deterrent.

Last month’s letter from Starboard referred to “numerous conversations and meetings” held privately with Yahoo in the past year, and the activists’ growing frustration with the company’s reluctance to adapt its plans as Yahoo’s shares – and those of Alibaba – have declined. “I think at the beginning, it was limited to either private equity or an Asian Internet conglomerate”. If the company sells out their core operations, it needs to pay tons of taxes, which will not be a good sign for the Internet tycoon. Ms Mayer has been a star CEO, garnering heaps of press attention and a large pay package, which previous year amounted to an estimated $42m. But ultimately it may not be enough to preserve the company’s independence.

Nothing lasts forever. Even Yahoo, which at 21 is practically immortal in Internet years, may see its days numbered. Mahaney said on CNBC’s “Squawk Box” Wednesday.

BEIJING-Chinese e-commerce giant Alibaba Group Holding Ltd.is unlikely to pursue troubled U.S. Internet portal Yahoo Inc.’s core business, according to a person familiar with Alibaba’s thinking.

The board of Yahoo is weighing a sale of its core Internet business in meetings this week amid a broader debate about the future of the company and whether Mayer should lead it.

Despite Yahoo’s struggles, the potential buyers would be attracted to the company’s vast reach: Its properties attract more than 200 million monthly visitors in the USA each month. Starboard Value believes that if the board does approve the sale of its core business it would unlock greater shareholder value in the near term.

Yahoo was planning to complete the spinoff of its Alibaba stake, now worth more than $30bn, by next month, Ms Mayer said on the firm’s third-quarter conference call in October – later than a previous target of year’s end.