YAHOO THINKING OF SPLITTING OFF IT STAKE IN ALIBABA

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The US internet firm Yahoo has confirmed
it is looking at “strategic alternatives” for
its business – including splitting off its
stake in Chinese online retailer Alibaba.
Yahoo said it is setting up a committee to
look into how the business can be reorganised
to reverse its current financial woes.
The firm’s share price has fallen by more than
40% since the end of 2014.
Boss Marissa Mayer has been under pressure
to revitalise the business.
Earlier this month Yahoo confirmed it was
cutting 15% of its workforce after reporting a
$4.3bn (33bn) loss for the year.
The job cuts will mean the company will have
around 9,000 staff by the end of 2016.

‘Improve efficiency’

Ms Mayer said: “Separating our Alibaba stake
from Yahoo’s operating business is essential to
maximizing value for our shareholders.
“We can achieve this by working with the
committee… while in parallel, aggressively
executing our strategic plan to strengthen our
growth businesses and improve efficiency and
profitability.”

Analysis: Dave Lee, North America
technology reporter
Marissa Mayer is in the process of drastically
slimming the company down – closing global
offices and making around 15% of its entire
workforce redundant.
Yet despite its troubles, around a billion
people still turn to Yahoo’s core services each
month – 60% by using their mobile phones.
And so, much like sprucing up your house
before putting it on the market, Ms Mayer’s
goal of late has been to cut costs to such a
point that Yahoo looks like a good purchase for
a bigger company looking to seize that
audience.
Who would be interested? Names like Disney
and Verizon have been thrown around, but the
sense here is that a foreign company seeking to
increase its presence in the US would see
Yahoo as a massive opportunity.
With Yahoo looking to spin off its 15% stake in
Alibaba from the rest of what Yahoo does,
some think the Chinese commerce giant will
want to buy that 15% back, and then perhaps
the rest of Yahoo with it.
One alternative is for Yahoo to be picked apart
bit-by-bit. It owns services like Tumblr and
Flickr, valuable web properties in their own
right.
Although Yahoo is still one of the best-known
names on the Internet, and has around one
billion users, it has fallen behind Google in
Internet search.
The poor performance has led some
shareholders to call for the management team
including Ms Mayer to be removed.
Paul Kedrosky, a California based venture
capitalist, says the break up of the company is
inevitable and that many investors were
surprised when the firm failed to say as much
at its last quarterly report.
He said: “The most valuable asset at Yahoo is
its shareholding in Alibaba which is worth in
the region of $25bn (£17.5bn). The Chinese
internet company may buy it [the stake] back
or there will be other interested parties.”
“But the core business is likely to be split into
two or three separate businesses.”
Yahoo value
He said it was unlikely that one buyer would be
found for the whole business.
Yahoo’s market value is currently around $
28bn.
In February 2008 Microsoft offered to buy the
company for $44bn.
In October 2011 it offered less than half that
at $18bn.
Both offers were turned down.
Yahoo has appointed Goldman Sachs, JP
Morgan and PJT partners as its financial
advisers.
The California tech group said it would not be
making any further comment on the matter
until an agreement had been reached.Read related stories >>>

Source bbc

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