Yahoo Board Plans Sale of Web Business

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New Delhi: Yahoo’s stock soared in after-hours trading after CNBC reported that the board of Yahoo has decided to explore a sale of its 20-year-old Web business. An announcement by the company could come as early as Wednesday, the network said, citing unnamed sources.

The report came as activist investors have been expressing doubts that chief executive Marissa Mayer could turn around the struggling company and urged the board to sell its Web business to the highest bidder. Without its famed e-mail, news content, search engine and other Web properties, Yahoo would essentially become a shell of itself, largely holding just its valuable but large stake in Chinese retailer Alibaba. Those shares are estimated to be worth about $35 billion.

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Selling the Web business would be a blow to Yahoo chief executive Marissa Mayer, who had planned to use the proceeds from the sale of that stake to deliver value to Yahoo shareholders and rebuild its iconic brand. But after the Internal Revenue Service said it could not guarantee that the spin-off of those shares would be tax-free, several activist investors pushed the board to hold onto its Alibaba stock and sell the Web business instead.

The company’s board held a series of meetings, beginning last week, to discuss the idea. As its members met, investors began to surface potential bidders for Yahoo. Even Verizon’s chief financial officer speculated that his firm might be interested.

“If Yahoo is right, we might look at it,” said Verizon chief financial officer Fran Shammo at a New York conference Monday. Company chief executive Lowell McAdam reiterated Verizon’s interest Tuesday at a separate conference, saying that Yahoo is “so hot.”

A deal between Yahoo and Verizon could turn the telecom company into a media titan. Like Comcast-NBCUniversal, Verizon would own not only the broadband networks that grant access to the Internet, but also much of the valuable Web content that would travel over those networks. Verizon this year made an initial step in this direction by buying AOL — a company that owns the Huffington Post and major tech websites such as Techcrunch and Engadget.

A Verizon spokesman declined to comment.

Yahoo shares spiked on the CNBC report, sending the stock up 2.4 percent. A company spokeswoman declined to comment on the report.

Since taking over at Yahoo in 2012, Mayer has been struggling to turn the company around. A former Google executive, Mayer’s hire was hailed as a badly-needed breath of fresh of air. A series of high-profile acquisitions, including of the blogging site Tumblr, as well as an investment in mobile applications helped fuel early optimism that she could make the company relevant again. She also built out the company’s original content business, with splashy but expensive hires such as Katie Couric and former New York Times tech writer David Pogue.

But quarter after quarter, Mayer has been unable to give investors the breakout growth and revenue that they expected — prompting some to lose their patience. In November, investors from Starboard Ventures — a hedge fund with stake in Yahoo — sent a stern letter to Mayer saying that her strategy is not working.

“We have grown increasingly frustrated with your unwillingness to accept our help,” he said in a letter to Mayer. “Despite our numerous conversations and meetings, and notwithstanding your willingness to provide us an audience, you have been reluctant to respond or adapt to the realities of the current environment.”

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