Yahoo to sell internet business? Markets think so

Written by on December 2, 2015 in News with 0 Comments
Marissa Mayer of Yahoo

Marissa Mayer, President and CEO of Yahoo, participates in a panel discussion at the 2015 Fortune Global Forum in San Francisco, California November 3, 2015. REUTERS/Elijah Nouvelage

(Reuters) – Shares of Yahoo Inc opened more than 5 percent higher on Wednesday after reports that the company could sell its core Internet business, which Chief Executive Marissa Mayer has failed to turn around after more than three years on the job.

Yahoo’s board will weigh a sale of the business – which some analysts said could be worth in the neighborhood of $4 billion – at a board meeting starting later on Wednesday, a source familiar with the matter told Reuters on Tuesday.

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

Cowen & Co analysts estimated that the company’s core search and display advertising business was worth $3.84 billion, while Pivotal Research Group valued it at just $1.9 billion.

“Realizing value is far from assured, however,” Pivotal analyst Brian Wieser wrote in a note. “The big question is whether anyone would actually show up with a meaningful bid.”

The Wall Street Journal, which first reported that Yahoo might sell its Internet business, also reported on Tuesday that the board meeting would discuss how to proceed with the spinoff company’s 15 stake in Alibaba, worth more than $20 billion.

Technology news website Re/code cited sources as saying the board would focus on the Alibaba spinoff at its meeting, which ends on Friday.

“As the old saying kind of goes, reports of the impending demise of CEO Marissa Mayer at Yahoo are greatly exaggerated,” Re/Code’s Kara Swisher said.

“And so are rumors that the board of the Silicon Valley Internet giant is poised to sell off the entire core business.”

Yahoo’s Internet business, which includes services such as Yahoo Mail and its news and sports sites, has been struggling to boost revenue from ad sales in the face of stiff competition from Alphabet Inc’s Google and Facebook.

Yahoo’s shareholders could end up paying roughly $12 billion in taxes if the Internal Revenue Service deems the Alibaba transaction to be taxable after the spinoff. The company has said it wants to proceed with the deal anyway, and close it this month.

Activist investor Starboard Value LP asked Yahoo in November to drop plans to spin off its stake in Alibaba due to the tax concerns, and urged the company to sell its core search and display advertising businesses instead.

Yahoo shares were up 5.6 percent at $35.61 in early trading.

(Reporting by Supantha Mukherjee and Anya George Tharakan in Bengaluru; Editing by Ted Kerr)


About the Author

About the Author: Thomson Reuters is the world's largest international multimedia news agency, providing investing news, world news, business news, technology news, headline news, small business news, news alerts, personal finance, stock market, and mutual funds information available on, video, mobile, and interactive television platforms. .


If you enjoyed this article, subscribe now to receive more just like it.

Subscribe via RSS Feed

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.