Yahoo’s Core Business May Be Sold By Friday

Growing concerns about the lack of progress by Marissa Mayer the CEO in turning the company around and the recent exodus of top company executives has heightened the pressure on the board to look at her future and the alternatives to her attempted turnaround now entering its fourth year.

The Wall Street Journal said potential bidders could include Verizon and IAC/InterActiveCorp (IACI.O).

Yahoo shares were up 7.5 percent at $36.25 at midday.

Last month, activist investor Starboard Value urged Yahoo to scrap a planned spinoff of its lucrative stake in Chinese e-commerce company Alibaba and sell its own Internet business – i.e. the only thing it is known for – instead. Not only that, but people don’t change their email addresses and Internet habits all that fast which means that even though Yahoo’s core businesses are in decline, they remain substantial and may still be valuable to someone. Yahoo trails only Google, YouTube, and Facebook in terms of monthly visitors, according to eBizMBA.

Firms like Softbank Group Corp. would also be interested in Yahoo.

Starboard doubled its stake in Yahoo in the third quarter, after earlier selling part of its holdings. Private equity firm TPG Capital is also reportedly considering buying some of the business that Yahoo may seek to offload.

Still, the discussions – which are expected to take place at a regularly scheduled board meeting – highlight the difficulties that have long troubled one of the most prominent Internet companies.

Yahoo’s board is weighing the sale of the Internet business at a three-day board meeting starting on Wednesday, a source familiar with the matter told Reuters. (NASDAQ:YHOO) seeks a buyer for its underperforming core Internet business.

Cantor Fitzgerald analyst Youssef Squali sketched out the three most likely scenarios for Yahoo, and concluded that a sale of Yahoo’s core business would deliver the biggest payoff. Yahoo’s last bet on the native and social media ads also failed to generate substantial profits for the company as Mayer’s position began to wobble. Mayer was a software engineer, usability leader, and a Google spokesperson. None of these companies appear to be in talks with Yahoo about a potential deal.

Yahoo’s stock gained $1.94, or almost 6 percent to close at $35.65. The company’s 15 percent share of Alibaba is now worth roughly $32 billion, while its stake in Yahoo Japan is worth about $8.5 billion. According to some estimates, investors are giving Yahoo virtually no credit for the core business in its current market value.