Yahoo Seeks Qualified Strategic Proposals To Spin Off Stakes In Alibaba

Yahoo Inc. is finally exploring an option to separate its Asian assets from its core business. The chairman of the company, Maynard Webb, said that the internet company is looking for ‘qualified strategic proposals’ to spin off stakes in Alibaba in the coming times. The announcement came after Yahoo announced that it would be laying off 15% more jobs as a part of cost cutting strategies. Yahoo reported revenue of $1.27 billion only for the quarter.

Maynard Webb’s comment in the letter to investors stated, “The Board also believes that exploring additional strategic alternatives, in parallel to the execution of the management plan, is in the best interest of our shareholders.” From the investors and shareholders, there has been a mixed opinion regarding the stakes in Alibaba and Yahoo Japan. The search engine giant first announced to spin off its stakes in the Chinese company but was stopped and asked to sell its core business instead.

Starboard Value LLP wrote in a letter that the firm should first prioritize the sale of its core internet and advertising business than spinning off its stakes in the Asian companies. As of now, Alibaba stakes of Yahoo value for the majority of the company’s valuation in the market. Its core business is negatively valued on the financial sheets.

Maynard added, “Separating our Alibaba stake from our operating business continues to be a primary focus, and our most direct path to value maximization. In addition to continuing work on the reverse spin, which we’ve discussed previously, we will engage on qualified strategic proposals.”  

Now it is said that the board of directors are exploring options for a sale along with the sale of Alibaba stakes. Sources suggest that many potential buyers might be interested, such as AT&T, Comcast Corporation, and Verizon. Verizon already owns AOL, which operated on the same business model as that of Yahoo but faced major downfall in recent years.

The investors are not satisfied with the performance of CEO Marissa Mayer and her management team. If Yahoo ends up in selling its assets, it can increase its value by more than $1 billion. The CEO believes that there is enough potential in the assets and products such as Tumblr and Yahoo Mail etc. to turn around things in the near future.

Mayer stated, “Today, we’re announcing a strategic plan that we strongly believe will enable us to accelerate Yahoo’s transformation. This is a strong plan calling for bold shifts in products and in resources.”

Previously, Microsoft offered $44.6 billion to buy Yahoo in 2008 but the deal did not go well for unknown reasons. Later, both parties agreed to form a search alliance but that deal has withered now.

Currently, the firm is valued at only $28 billion with a stock price, which has declined by 34% or more in the past 12 months. 

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Created on Dec 31st 1969 18:00. Viewed 0 times.

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