Yahoo considering selling its web business: report
09 Jan 2016
Yahoo! Inc is considering an outright sale of its business, as pressure from activist shareholders increases, Bloomberg reported on Friday.
Last month, Yahoo executives had proposed a plan to spin off its main internet business, the latest of several strategies they proposed over the past year to deal with slowing revenue.
The idea might now be dropped in favour of a sale, according to people familiar with the matter said.
However, anlaysts say the sale of Yahoo's core web business, would leave it as a holding company for the company's various investments. These include primarily its stakes in Alibaba, Yahoo Japan Corp
Bloomberg reported, "After accounting for a $27.7 billion stake in Alibaba Group Holding Ltd., $7.96 billion stake in Yahoo Japan Corp. and $5.88 billion in cash and equivalents, Yahoo's market value of $28.9 billion shows that investors consider the main business to be worth zero or less, according to Bloomberg Intelligence."
Overtaken by Google in the internet advertising business, and failing to react quickly to the rise of mobile and social networking, Yahoo has been attempting to revive its growth.
In 2008, Yahoo co founder Jerry Yang rejected repeated attempts at a take over by Microsoft. (Microsoft withdraws from Yahoo!; shareholders restive with Yang).
Yahoo and Google then entered into attempted ad partnership, which was aborted by opposition from US Department of Justice, as the deal would have enabled the two companies to corner 90 per cent of the market (Google-Yahoo adventure ends after warning by US dept of justice news).
In 2009 Yang's successor Carol Bartz entered into a 10-year ad-partnership with Microsoft, under which, Microsoft powered Yahoo! search while Yahoo! became the exclusive worldwide relationship sales force for both companies' premium search advertisers (Microsoft, Yahoo! agree on joint search news).
The company might need a new plan in the face of a likely proxy fight by activist investor Starboard Value's Jeffrey Smith.
Yahoo had still not concluded that it had to sell and had not hired a bank to run an official process or contacted potential buyers, though Verizon Communications is open to a deal, "if it made sense".
Verizon bought AOL last year (Verizon to acquire AOL in $4.4-bn deal), in pursunce of its of its LTE wireless video and over-the-top video (OTT) strategy.
AOL is a leader in the digital content and advertising platforms segment, and the combination of Verizon and AOL creates a scaled, mobile-first platform offering directly targeted at what eMarketer estimates is a nearly $600 billion global advertising industry.
If Verizon does acquire Yahoo, the deal would add to AOL's 170 million web visitors, the 1 billion users from Yahoo's mail, finance, sports and video sites. Such web traffic, along with exclusive content, is appealing to Verizon, which needs to lure and retain a new smartphone-addicted generation.
''There is no determination by the Board to sell the Company or any part of it,'' Yahoo chairman Maynard Webb said in a conference call when the plan was unveiled in December. ''We believe that the business remains very undervalued, and we are focused on realizing and unlocking that value, both with separating our assets the way we are talking about, and also working on transforming our operational businesses.''
Yahoo had been struggling for years to revive its growth after not being able to keep pace with the rise of mobile and social networking. Multiple turnaround plans had been tried but they had failed to work.
Activist investor and Yahoo shareholder, Starboard Value's Jeffrey Smith, on Wednesday, wrote a letter criticising the company's board and called for CEO Marissa Mayer to step down.
In its response Yahoo said, it was in a ''multiyear transition'' and was preparing to be ''more focused.''
Meanwhile, Business Insider reported that the company was planning to announce layoffs of 10 per cent of its employees, or about 1,000 total, during the first quarter (See: Yahoo to cut workforce under Mayer's revival plan).
