Yahoo, once heralded as an Internet titan, now finds itself struggling to keep up in a digital field dominated by Google and Twitter and struggling to keep the doors open.
The executive board at Yahoo is currently exploring a range of options on how to best manage a number of their Internet businesses, including the sale of web properties, with talks set to take place Wednesday through Friday, unnamed sources told The Wall Street Journal.
“Directors are likely to discuss whether to proceed with a plan to spin off its investment in Alibaba, currently worth more than $30 billion, find a buyer for Yahoo’s gaggle of Web properties, or both,” the sources told TheWSJ.
Yahoo owns numerous branded and unbranded web properties including Flickr, Tumblr, Yahoo Mail, Yahoo Maps, and Yahoo News. It’s unclear which properties would be up for grabs in the event of a sale (RELATED: One Of Tech’s Biggest Companies Dragged Into Fantasy Gambling Fight)
Verizon, IAC/InterActive, News Corporation, and Time Inc., are all believed to be interested in purchasing Yahoo, in part because of the strength of Internet traffic the company logs. Yahoo trails only Google, YouTube, and Facebook in terms of monthly visitors, according to eBizMBA.
But the company has significant drawbacks for future owners in its diminishing advertising capabilities. (RELATED: Yahoo CEO Allegedly Spent $70K For Wizard Of Oz Role Play)
“The company, once the first stop for many brands when spending ad budgets online, has been eclipsed by Facebook Inc. and Google Inc.,” reported TheWSJ. “Yahoo is expected to pull in 4.4% of the $58.12 billion U.S. digital ad market in 2015, according to research firm eMarketer, down from 5.1% last year.”
Alibaba, a Chinese e-commerce website akin to Amazon, is an additional holding the board is considering changing. Yahoo has a 15 percent stake in the company, valued at $32 billion. The spinoff plan executives are considering involves putting almost 384 million Alibaba shares into a new public company called Aabaco Holdings.
The aim would be to shrink Yahoo’s tax bill by distributing the value of its Alibaba investment onto shareholders, but the IRS refused to rule on the plan’s tax-free status, calling into question the financial upside to the spinoff.
Marissa Mayer, who became the president and CEO of Yahoo in July, 2012, was brought in to turn around the financially-strapped company, but her efforts have not instilled much confidence in Wall Street. And many of Yahoo’s top executives recently resigned, leaving investors increasingly worried about the company’s future viability.
The company reported third quarter profits totaling $76 million in October, but that’s a significant drop from the $6.8 billion in profits Yahoo reported last year.
After the disappointing financial report was released, Mayer said in a conference call with Bloomberg News that “there’s a unique opportunity to reset and realign. This will require us to simplify our structure, improve expense discipline and prioritize our investments to improve growth and profitability.”
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