Yahoo considers sale of Internet business, but it isn’t worth much

A spokeswoman for Yahoo said the company is not going to comment on the WSJ report. The board of Yahoo is weighing a sale of its core Internet business when it meets this week amid a broader debate about the future of the company and that of high-profile Mayer.

People who are familiar with the issue told The Wall Street Journal that the board will discuss whether they want to proceed with the initial plan of spinning off more than $30 billion in shares of Alibaba.

Analysts have put little value on the business, with nearly all of Yahoo’s market capitalisation of about $34bn ascribed to its stakes in Chinese e-commerce company Alibaba Holding Group and Yahoo Japan.

The Wall Street Journal estimated the company’s dire financial standing, which is largely determined by Alibaba and Yahoo Japan.

Buying Yahoo! Inc. (NASDAQ:YHOO)’s core business at the moment is sure to come with its fair amount of challenges. Although Mayer is credited with stabilizing the company, which was in rapid decline, Yahoo has introduced no breakthrough products during her three years at the helm and has fallen further and further behind competitors like Facebook Inc and Google Inc in the battle for advertising dollars. Or it could sell its own Internet business.

Starboard’s thinking was that Yahoo would then retain its stake in Alibaba, which is more valuable than this core business.

In terms of its CEO Marissa Mayer, Yahoo is said to be losing faith in her plan to turn around the company.

Any buyer would have to contend with the complication surrounding the Alibaba stake.

Private equity firms and media companies have already shown interest in the possibilities presented by any potential sale of Yahoo’s struggling internet operations.

“The proposed spin-off of Aabaco Holdings is not Yahoo’s best alternative”. Also, the company issued a light guidance once again; for its fourth quarter of fiscal 2015 (4QFY15), the management expects revenue to fall within a $1.16-1.20 billion range, well below the consensus estimate of $1.33 billion.

Of note, SoftBank is already the largest shareholder in both Alibaba (where it holds a 32% stake), and in Yahoo Japan (where it holds a 43% stake).

There is no guarantee any new deal for part or all of Yahoo will materialize.

News of departures of top executives also haunt this announcement as it becomes obvious that Yahoo is considering all its options.