[FoRK] Say goodbye to Yahoo
Joseph S. Barrera III
joe at barrera.org
Sun Nov 22 13:16:32 PST 2015
On Sun, Nov 22, 2015 at 9:54 AM, Bill Kearney <wkearney99 at hotmail.com>
> Wait, what? Yahoo's still alive? I had no idea, I thought they'd tanked
> long ago.
When I read Stephen's message, I thought he was referring to the following
article. Because who would buy Yahoo (minus Alibaba) and what would they do
SAN FRANCISCO (AP) — Activist investor Starboard Value is urging Yahoo to
scrap a planned spin-off of its lucrative stake in Chinese e-commerce
company Alibaba and sell its own Internet business instead.
The demand, outlined in a Thursday letter to Yahoo CEO Marissa Mayer and
the company's board, represents a reversal for Starboard. The New York
hedge fund last year began pressuring Mayer to spin-off Yahoo's Alibaba
Group stock into a different company to avoid paying future taxes on the
gains on its original investment of $1 billion. Yahoo's stake in Alibaba
currently is worth $30 billion, far more than its main business of showing
ads on its websites and mobile applications.
Starboard wants Yahoo to hold on to Alibaba because of the uncertainty
raised by the Internal Revenue Service's refusal to guarantee
the spin-off will qualify for a tax exemption. Yahoo is still planning to
transfer its 384 million Alibaba shares into a new company called Aabaco
because it believes tax law is on its side. The spin-off is scheduled to
occur next month or in January.
If the spin-off doesn't get an exemption, the tax bill and other costs
associated with the maneuver could total about $19 billion, estimated
SunTrust analyst Robert Peck.
"We urge you to change direction and do the right thing for shareholders,"
wrote Jeffrey Smith, Starboard's managing member. If Yahoo doesn't heed the
advice, Smith threatened to lead a shareholder mutiny to overthrow Yahoo's
board. Starboard has a nearly 1 percent stake in Yahoo, according to
Yahoo declined to comment Thursday.
Under Starboard's alternative scenario, Yahoo Inc. would become the holding
company for two Asian investments, Alibaba and Yahoo Japan. The hedge fund
didn't suggest who might be willing to buy Yahoo's Internet business, where
revenue has been declining for years even though advertisers have been
steadily increasing their digital marketing budgets.
Starboard's missive is the latest sign of the mounting pressure on Mayer,
who has been unable to engineer the turnaround that she has been promising
to deliver since Yahoo hired her away from Google to become its CEO.
In an unusual step for a Wall Street analyst, Peck recently sent a letter
to Yahoo's board of directors recommending that the Sunnyvale, California
company dump her as CEO.
Yahoo's stock has more than doubled under Mayer's leadership, but the gains
have been driven by the rising value of the Alibaba stake. In a sign that
Wall Street is losing confidence in her strategy, Yahoo's stock has
plummeted 35 percent this year while the Standard & Poor's 500 index has
risen 1 percent.
Yahoo's shares shed 1.1 percent Thursday to close at $32.62.
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