Yahoo won’t be selling Alibaba stake after all

The company said the new plan will take at least a year to implement.

The digital media company clarified that it had no plans to sell its core business.

“Today I’m leading a very different company than the one I started at”, Mayer said, adding that the company today has better products, more modern advertising offerings and more focused employees. Yahoo chairman Maynard Webb said Wednesday that the company believed the Alibaba stake spin would have been tax free, but acknowledged that “we were concerned about the market’s perception of tax risk, which would have impaired the value” of the separated company. However, the board has been more hesitant toward Mayer’s plans in the past six months, as they start to question the CEO’s performance over the past three years.

It was not immediately clear what the deal would mean for the core Yahoo operations.

Meanwhile, Yahoo also loses a key board member.

The main source of value for Yahoo lies in the hands of other companies, like Alibaba and Yahoo!

However, speculation indicates the act of separating Alibaba, which is worth $31 billion, from Yahoo, would be heavily taxed.

Its Alibaba stake, worth more than $30 billion, accounts for the bulk of Yahoo’s current market value of $32 billion.

It will be the latest overhaul of a company that is now on its fifth full-time CEO in the past seven years, all of whom have struggled to define what Yahoo’s mission should be.

Facing increased competition from Facebook Inc.

Some reports say there could be interested buyers for some Yahoo assets, and Verizon’s top executive this week suggested the telecom giant may be interested in parts of Yahoo that could fit with its newly acquired AOL unit. The ailing company has finally put speculation to rest over a plan to build a new company to hold either its 15 percent stake in Chinese e-commerce giant Alibaba or its entire Internet business. The spun-off entity was to be named Aabaco.

When asked if Yahoo would entertain an offer to buy its online operations, Webb told CNBC that Yahoo’s board would have a fiduciary duty to consider it. “We think this is a reasonable decision, given the considerable tax-related uncertainties around the [Alibaba stake] spin-off”, Scott Kessler, equity analyst with S&P Capital IQ, said in a note to clients.

With Yahoo apparently having changed its plans due to technical and tax-related reasons, James Angel – Associate Professor of Finance at Georgetown University’s McDonough School of Business – said that Yahoo would now be achieving “the same strategic benefits, but in a backward sense”.