Yahoo Selling Its Internet Business Smp Blogs

Yahoo Considers Selling Its Internet Business

Yahoo’s board is considering an activist shareholder’s demand to sell the Internet services the company is best known for, a maneuver that might help the company dodge a tax bill of more than $10 billion looming over its holdings in China’s Alibaba Group.

The boardroom intrigue revolves around a recent proposal from Starboard Value, a New York hedge fund that been pressuring Yahoo CEO Marissa Mayer to take dramatic steps to boost the company’s stock.

Starboard’s latest idea is for Yahoo to sell its websites, mobile applications, ad services and data analytics so it can abandon a plan to spin off its 15 per cent stake in Alibaba, a thriving e-commerce company. The spinoff is designed to shelter Yahoo from capital-gains taxes on its investment, but it’s unclear if the strategy will work. Earlier this year, the Internal Revenue Service declined to guarantee that it would qualify for a tax exemption.

The Wall Street Journal first reported the board will consider selling Yahoo’s Internet business, citing people familiar with the situation. The drama began unfolding Wednesday during a meeting that Yahoo’s board of directors holds in early December each year.

Yahoo Inc. declined to comment on the board’s agenda. The company’s advisers, though, have expressed confidence that taxes won’t be due in the spinoff, emboldening Mayer and the rest of the board to continue pursuing a breakup that is supposed to be completed later this month or in January.

Mayer is also working on a major overhaul that will jettison an unspecified number of unprofitable Yahoo services and could lay off hundreds of workers. She has promised to provide further details next month.

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.

Starboard’s demand evidently prodded the board to consider an alternative way to avoid a tax bill that could wipe out more than two-thirds of the gain on Yahoo’s Alibaba stake, which was acquired a decade ago for $1 billion and is currently worth $33 billion. If Yahoo’s board sticks to the Alibaba spinoff, Starboard is threatening to lead an attempt to oust the nine directors next year.

Analysts have estimated that Yahoo could end up paying anywhere from $10.5 billion to $19 billion in taxes, depending on whether China also demands payment on the gains. The potential bill dwarfs the estimated value of Yahoo’s operating business, which analysts peg at $2 billion to $4 billion, after subtracting the roughly $7 billion that the company has in the bank.

Yahoo’s business has declined in value largely because its net revenue has fallen under Mayer even though advertisers are pouring more money into digital marketing. Most of the dollars, though, are flowing to rivals Google and Facebook.

If Starboard’s scenario is embraced, Yahoo’s best-known services and, most likely, its brand would be taken over by a new owner, leaving the company as a shell for stakes in Alibaba and Yahoo Japan. Outsell analyst Randy Giusto believes AT&T Inc. might be interested in buying Yahoo’s services, taking a page from rival telecommunications provider Verizon Communications, which bought AOL for $4.4 billion earlier this year.

Other potential suitors include a long list of investment firms that specialize in taking companies private and cutting costs.

Investors have become increasingly disillusioned with the Alibaba spinoff because of the potential tax hit. Wall Street also has grown restless with Mayer’s inability to boost Yahoo’s revenue after three-and-half years on the job.

Yahoo’s stock gained $1.94, or nearly 6 percent to close at $35.65. The shares remain down by about 30 percent this year.

Comments

  • I wanted to thank you for this excellent read !! I definitely loved every little bit of it. I have you bookmarked your site to check out the new stuff you post.

  • 738032 163473Fairly uncommon. Is likely to appreciate it for men and women who incorporate community forums or anything, internet internet site theme . a tones way for the client to communicate. Exceptional job.. 845863

  • 514 25571Good to be visiting your weblog once far more, it continues to be months for me. Nicely this post that i致e been waited for so lengthy. I want this post to total my assignment inside the university, and it has very same subject together along with your post. Thanks, terrific share. 727117

  • I’ve been surfing on-line more than 3 hours nowadays,
    yet I never discovered any interesting article like yours.
    It’s beautiful price enough for me. In my opinion, if all web owners and bloggers made good content material as you probably did, the net can be a lot
    more useful than ever before.

  • Unquestionably consider that that you stated.
    Your favorite reason seemed to be on the web
    the simplest factor tto be aware of. I say to you, I definitely get irked at the same time as
    people think about issues that they plainly don’t recognize
    about. Yoou controlled to hit the nail upon the highest
    as neatly as defined out the entire thinbg without having side effect ,
    other folks can take a signal. Will probably be again to
    get more. Thanks

  • After looking over a number of the blog articles on your blog, I seriously like
    your way of blogging. I saved it to my bookmark
    site list and will be checking back in the near future.
    Take a look at my website as well and tell me what
    you think.

  • As a result, the installation of waterfalls for
    decorating and aerating Koi ponds has increased.
    The bacteria e-coli are mostly accountable for this.
    He wrote a book concerning one of the most famous flattop plateaus,
    or tepui’s, where the plants and animals on top had become separated from the rest of the world because
    of eroding land around it, and they evolved by themselves over
    time into indigenous species existing nowhere else.

Leave a Reply

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