Yahoo board convenes as the company considers selling itself

The board meetings come amid media reports that Yahoo is considering selling its core internet business, either in addition to or instead of the Alibaba spinoff.

Yahoo stock did in fact jump in value by six per cent overnight on Wall Street in a positive reaction to the rumours, as investors favour plans to separate Yahoo and Alibaba without being hit by a punishing capital-gains tax demand.

The company’s advertising-funded internet properties – its search engine, email services and the Yahoo website – as well as Tumblr, the social network it acquired in 2013 and a number of advertising technology companies bought by Ms Mayer, could be acquired by private equity buyers, or possibly Softbank itself.

But Kara Swisher, the well-sourced editor of Re/code, dismissed those reports in her story on Wednesday morning, attributing them to the Silicon Valley gossip mill.

One of the oldest and well distinguished online companies, Yahoo, is likely to put flagging Internet businesses up for sale. Verizon Communications Inc. (NYSE:VZ) and IAC/InterActiveCorp (NASDAQ:IACI) are some of the companies that have reportedly shown interest in Yahoo’s core business. Those companies make up the majority of Yahoo’s $31 billion market capitalization, WSJ said, while its core business is worth just $3.9 billion. Representatives of Yahoo declined to comment.

Yahoo’s revenue grew 6.8% in the third quarter, but profits dropped to $76 million. “Yahoo is expected to pull in 4.4% of the $58.12 billion USA digital ad market in 2015, according to research firm eMarketer, down from 5.1% previous year”.

Yahoo’s shareholders could end up paying roughly $12 billion in taxes if the Internal Revenue Service deems the Alibaba transaction to be taxable after the spinoff. Starboard attributes the relatively low price of the Internet business to poor management of the division by Mayer and the Yahoo management team. On top of that, rumors are also claiming that the company is considering selling its entire core business.

She has also lost several executives in recent months including chief development officer Jacqueline Reses, who shifted her focus this year to the Alibaba share sale. Alibaba would be interested in buying its shares that Yahoo owns, but only at a steep discount, Wong added, citing a source.

Its stake of 15% in Alibaba has a current worth of $32 billion, while its stake of 35% in Yahoo Japan is worth approximately $8.5 billion.