Yahoo board in final talks on future of company

SAN FRANCISCO Yahoo Inc’s (YHOO.O) board of directors on Friday is in the third and final day of meetings that could decide the future of one of Silicon Valley’s most prominent but troubled companies.

Yahoo is likely to hit “pause” on any major decisions, says SunTrust analyst Robert Peck. If plans to sell these properties and Internet businesses goes through, the only thing that the company will have in the market is its Alibaba and Yahoo Japan stakes. The site said a decision, which could include halting, delaying or continuing with the spinoff, was expected by the end of the weekend, citing sources.

Yahoo’s board may be considering this week the sale of its core Internet business, after an activist investor demanded last month that the company explore the sale of its core search and display advertising businesses.

Yahoo Chief Executive Officer (CEO) Marissa Mayer seems to be in a favor of the spin-off of the Alibaba stake. If the U.S. Internal Revenue Service deems the spin-off is taxable, shareholders would be paying about $12 billion in taxes.

Jeff Smith, who leads Starboard, states in a letter to Yahoo that the company can benefit shareholders through buybacks and dividends using current cash holding and the money that will be received from a sale of the company’s business.

The two cited four reasons for targeting the media/telecom giant as a buyer: First, skepticism that Yahoo can pull another turnaround; Comcast’s existing digital assets; ad assets at Yahoo complementary to Comcast’s ad business; and Comcast’s strong ability to absorb a deal (with $25B in annual EBITDA, Comcast could retain debt-to-EBITDA ratio of 2:1).

At present, Yahoo is the only “Silicon Valley company we know that now has a stock price nearly entirely driven by the value of an entity outside of its control”, Smith wrote, referring to Yahoo’s stake in Alibaba.

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