Yahoo Board Weighing Sale of Its Internet Business

Yahoo reportedly will be facing a few crucial days of reckoning Wednesday, Thursday and Friday of this week when its board of directors meets on the company’s Sunnyvale, Calif., campus. The company’s core Internet business which propelled Yahoo! to become a household name, has found it hard to keep up with other major corporations such as Google and Microsoft’s Bing.

According to the sources, several private equity firms as well as media and telecoms companies may be interested in the Yahoo sale, which would include the firm’s Yahoo Mail and news sites. In terms of its CEO Marissa Mayer, Yahoo is said to be losing faith in her plan to turn around the company. The difference is attributable to a decline in shares outstanding as Yahoo has bought back roughly US$8.3 billion worth of its stock since the third quarter of 2012, according to Reuters data.

Nonetheless, shares of Yahoo have taken a 33 percent tumble in the previous year.

Though the intentions of Yahoo’s board may not be clear as they head into meetings this week, they certainly have a lot ot talk about. Yahoo will be holding series of board meetings to weight its options on what to do with its flagging Internet business. This is due to its market capitalization being valued at $31 billion, while its 15% stake in Alibaba is worth $32 billion. Wall Street also has grown restless with Mayer’s inability to boost Yahoo’s revenue after three-and-half years on the job. That Mayer is now said to be considering the plan is indicative of the pressure she’s found herself under.

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. She has driven Yahoo to invest in online video, advertising technology and mobile software.

The call by hedge fund Starboard Value came with Yahoo on track to set up a new corporate entity holding the Alibaba stake in coming months that would be spun off. So the core business could have value to a potential acquirer.

News of the possible selloff sent Yahoo shares up 7 percent in after-hours trading on Tuesday, and continued upward on Wednesday, reaching $35.45 by midmorning. Starboard attributes the relatively low price of the Internet business to poor management of the division by Mayer and the Yahoo management team.