If Yahoo Sells Off Its Core Business, What’s Left?

In November, activist investor Starboard Value LP asked Yahoo to drop plans to spin off its stake in Alibaba and urged the company to sell its core search and display advertising businesses instead. (This isn’t new, we’ve written over the years about how other parts of Yahoo have surpassed its core business’ value.) But a Journal blog post cites estimates by a couple of analysts who say Yahoo’s Internet business might fetch between four to six times its forward earnings before interest, taxes, depreciation and amortization.

The news comes as Yahoo’s board and chief executive Marissa Mayer faces growing pressure over the company’s performance.

The Wall Street Journal reports that the company’s board is considering selling the search giant’s core Internet business.

The Wall Street Journal reported late on Tuesday that Yahoo’s board would discuss these things in meetings Wednesday through Friday. However, even if the spin-off of only the Alibaba shares does go through, it will leave Yahoo in a much weaker position than before and will likely make Marissa Mayer’s job in turning the company around a lot tougher.

Several potential bidders for Yahoo’s core internet business have emerged, including Verizon/AOL, IAC/Interactive Corp and News Corp. She has made efforts to reshape the company for the mobile era as more users shift to tablets and smartphones from PCs. In over three years of her career as the Yahoo! Inc.

One said the report of the Yahoo sale was overblown, noting that the firm had looked at Yahoo earlier, but that it wasn’t for sale and that the company needs to fix a lot of things before it could begin a sales process.

Most of Yahoo’s $31.8 billion market capitalization is tied up in two large Asian assets, China’s reigning champion of e-commerce, Alibaba Holding Group Ltd (BABA – Analyst Report), and Yahoo Japan.

While Yahoo’s share price has more than doubled and widely outperformed the broader stock market since Mayer took over as president and CEO in July 2012, much of the long upward trajectory was funded by an aggressive share buyback program and its stakes in Alibaba and Yahoo Japan (4689.T).

Yahoo, once heralded as an Internet titan, now finds itself struggling to keep up in a digital field dominated by Google and Twitter and struggling to keep the doors open.

Starboard’s about-face followed the Internal Revenue Service’s decision in September not to rule on the tax-free status of the Alibaba spinoff until after the transaction occurs.

And SunTrust analyst Robert Peck reckons a sale of core Yahoo could net $6 billion to $8 billion in net proceeds.