Yahoo reportedly to mull sale of its core business

The board of Yahoo will discuss potentially selling off the beleaguered Internet company’s core business during a series of meetings this week, people briefed on the plans said on Tuesday.

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. But last month, activist investor Starboard Value reversed its stance on the Alibaba stake sale, and suggested the company should bid farewell to its internet business instead.

The meetings come amid an extensive debate about the future of the company and growing concerns around high-profile Yahoo Chief Executive Marissa Mayer and her lack of progress turning around Yahoo. However, she is now planning to completely sell YHOO’s iconic Internet services, according to Wall Street Journal citing sources familiar with the matter. Back then, Yahoo invested $1 billion in Alibaba, and also handed the company the keys to Yahoo China. The firm argued Yahoo should proceed with finding a buyer for its Internet business. Despite these efforts, Yahoo has failed to generate the same kind of excitement or, dare we say it, “cool factor” of rivals firms like Google and Apple, Amazon.com, Inc., and Netflix Inc. Remember all the Microhoo talk years ago? Brian Wieser, an analyst at Pivotal Research, said “The saving grace for Yahoo is that it still has a relatively large user base that is reliant on the platform so long as they maintain email addresses there”.

The boardroom intrigue revolves around a recent proposal from Starboard Value, a NY hedge fund that been pressuring Yahoo CEO Marissa Mayer to take dramatic steps to boost the company’s stock. Its 15% stake in Alibaba is now worth about $32 billion, and its 35% stake in Yahoo Japan is now worth about $8.5 billion.

That’s a reversal from earlier this year, when Starboard had led the charge for Yahoo to spin off its Alibaba holdings.

It could take three years for the tax uncertainty surrounding the proposed Alibaba spinoff to be resolved, Nomura analyst Anthony DiClemente wrote in a note Wednesday. She has driven Yahoo to invest in online video, advertising technology and mobile software. Less than half of its market cap is attributable to Yahoo’s own business, according to a Thomson Reuters Breakingviews calculator.