A Wall Street Journal report has stated that Yahoo! Inc. (NASDAQ:YHOO) might sell its core internet business, as opposed to initial considerations of the Yahoo board to spin off its lucrative stakes in Alibaba, the Chinese e-commerce company. For more than three years, Yahoo CEO, Marissa Mayer has been trying to revive the internet business, with little or no result.
Investors seem to prefer that the company let go of its core internet business while it keeps its 15% in the Asian investment. But the Wall Street Journal states that Yahoo might even sell both its core internet business and its stake in Alibaba. The Yahoo board meets this week to weigh the options and decide on the best course of action.
Wall Street currently values Yahoo internet business at less than zero, making its stake in Alibaba its real value. The worth of the core internet business comes from:
- Yahoo search (Google handles much of its search technology, since their partnership in 2010) which brings in the annual income of about $2billion, which makes up 40% of Yahoo’s total annual revenue.
- Yahoo websites (Home, Finance, Mail, Sports).
- Tumblr, which Yahoo bought in 2013. Tumblr is a social blogging company.
- Flurry, which Yahoo bought in 2014. It is a mobile analytics company.
- Human resources and intellectual property, cash and investments worth $5.9billion and $1.6billion worth of property and equipment.
Any company that buys Yahoo will inherit all these assets. It would also inherit a liability of $1.2billion debt through convertible notes. Some hedge funds and private equity shops have shown interest as potential buyers. Right now, no one knows how much the core business would be sold for.
Despite the 3-year efforts to reverse the fortunes of the internet business, Yahoo seems to be unable to catch up with its competitors like Google and Facebook.
Though Yahoo’s online sites record visits in the hundreds of millions monthly, they cannot compare favourably with Google and Facebook in terms of the engagement of the many users and advertisers. In the three years of the revival efforts, Yahoo has not developed any new applications, programs or services to catch the fancy of users.
Yahoo’s biggest image downer might actually be the fact that many of its top executives have moved, recently, giving the public the picture of it being a lost case. At the end of the week, the world should know what direction Yahoo will be headed heretofore.