Thursday 22 March 2018

Yahoo shares up on talk it will sell core Net business

Marissa Mayer, president and chief executive officer at Yahoo. Photo: David Paul Morris/Bloomberg
Marissa Mayer, president and chief executive officer at Yahoo. Photo: David Paul Morris/Bloomberg

Supantha Mukherjee and Anya George Tharakan

Shares of Yahoo opened more than 5pc higher yesterday 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 in the job.

Yahoo's board will weigh a sale of the business - which some analysts said could be worth in the neighbourhood of $4bn - at a board meeting due to take place yesterday, a source familiar with the matter told Reuters.

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

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

"Realising 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 that the board meeting would discuss how to proceed with the spin-off company's 15 stake in Alibaba, worth more than $20bn.

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

"As the old saying kind of goes, reports of the impending demise of Marissa Mayer, inset, at Yahoo are greatly exaggerated," Re/Code's Kara Swisher said.

"And so are rumours that the board of the Silicon Valley internet giant is poised to sell off the entire core business."

Yahoo's internet business, which includes Yahoo Mail and news and sports sites, has been struggling to boost revenue from ad sales in the face of stiff competition from Google and Facebook.

Yahoo's shareholders could end up paying roughly $12bn in taxes if America's Internal Revenue Service deems the Alibaba transaction to be taxable after the spin-off. Yahoo has said it wants to proceed with the deal anyway, and close it this month.

Activist investor Starboard Value 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 rose 5.6pc at $35.61 in early trading. (Reuters)

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