This is big. Yahoo, one of the oldest internet companies still around, is exploring selling its assets. The move, announced by the company’s board on Friday, is a clear sign that investors are running out of patience with CEO Marissa Mayer.
The announcement comes at a turbulent time for the collapsing internet giant, with Mayer laying off large numbers of staff and purging unprofitable products in the Yahoo portfolio.
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While Mayer believes these moves will help bring Yahoo back into a state of profitability, investors remain frustrated at continued drops in the company share price.
In response to that pressure, the Yahoo board has brought in investment bankers from Goldman Sachs, JP Morgan and PJT Partners to set up meetings with parties interested in buying either parts or the entirety of Yahoo’s business.
Mayer meanwhile is pursuing a turnaround plan that would entail selling off the company’s stake in prized assets such Alibaba and spinning off some of its other assets into a new company.
“We believe that pursuing these complementary paths is in the best interests of our shareholders and will maximize value,” Yahoo chair Maynard Webb said in a statement.
The trouble is, that Alibaba stake makes up nearly all of Yahoo’s current US$28-billion market cap.
While its unclear exactly which units the board is most keen to offload, the most likely buyer appears to be Verizon.
The US telco last year bought AOL for US$4.4-billion and has reportedly enlisted the help of AOL CEO Tim Armstrong as it looks to put together a viable bid for Yahoo’s assets.
Other interested parties reportedly include AT&T, Comcast, and private equity firms which specialise in buying up troubled companies.
Much of the pressure to sell appears to have come from activist investor firm Starboard Value. The firm has released several statements over the past few months arguing that Yahoo should sell off its core assets and unleash the value of its Alibaba assets.
If the sale does happen, it could prove a crushing blow to Mayer, an ex-Googler who was brought into Yahoo to turn the ailing company’s fortunes around.
Despite her efforts at consolidating Yahoo’s products and the high-profile acquisition of Tumblr, revenues have remained largely flat under Mayer. At the same time however, it’s been spending freely as it looks for a turnaround solution, meaning that the US$4-billion profit the company laid claim to in 2012 turned into a US$4.4-billion loss last year.
Yahoo stock, down more than 40% on where it was in 2014, rose slightly on the back of the news.
