Yahoo! Inc. (NASDAQ:YHOO) is selling its 48.6 acre development site in Santa Clara, California, according to a report from the Silicon Valley Business Journal based on information from people familiar with the situation.
According to the report, the tech giant is quietly looking for a buyer for the property, and its brokers contacted potential buyers over in recent weeks.
Yahoo acquired the Santa Clara development site for $106 million in 2006. The property is located near the Levi’s Stadium and Great America Theme Park. The tech giant previously considered the property as a critical expansion play in the future. The company already obtained permits to build up to 3 million square feet of office or research and development space on the site in 13 buildings that can accommodate 12,000 employees.
Last year, the Yahoo signed an agreement with San Francisco 49ers to use the property as a parking area. Currently, the company is working with JLL, a real estate brokerage from to find a buyer for the development site.
Yahoo continues to struggle
Market observers suggested that the move demonstrates that Yahoo, once a dominant brand in the internet industry, continues to struggle to return to growth and profitability. The company’s revenue declined to $4.6 billion last year from its highest level of $7.21 billion in 2008.
Earlier this month, Yahoo decided to cancel its plans to spin off its stake in Alibaba Group Holding (NYSE:BABA). Instead, the company considered selling its core internet business.
Starboard Value, one of the company’s major shareholders opposed the plan to spin off the Alibaba stake, but supported its plan to sell assets.
Selling the development site makes sense
Eric Jackson, managing director at SpringOwl Asset Management called for massive changes at Yahoo. He suggested a cost reduction of $2 billion annually, a sale-leaseback deal for the company’s headquarter in Sunnyvale, and cutting back on free food as well as the attendance of executives in high-profile events.
According to Jackson, Yahoo’s move to sell its development site in Santa Clara “makes sense.” He said, “Our argument was they have way too many employees even still, and they need to dramatically cut because the profitability’s been shrinking for the last three years. There’s been outside pressure on the company building this year, so it’s not too much of a surprise that they would do things to show they’re creating value.”