Washington :Yahoo flipped its reorganisation plan today, announcing it would keep its stake in China’s Alibaba but spin off its core Internet business – creating new uncertainties for the struggling tech giant.
The new plan shelves one in the works to spin off Yahoo’s vast holdings in ex-commerce giant Alibaba – which could have exposed it to a huge tax bill – but the tech firm still intends to separate out its activities under the new structure.
The move could open the door to a sale of Yahoo’s core online operations – amid speculation the group may be headed for a break-up – but the company denied this was on the cards as it reaffirmed its confidence in chief executive Marissa Mayer’s ability to revive its fortunes.
Board chairman Maynard Webb said during a conference call that “there is no determination by the board to sell the company or any part of it,” and added that Yahoo is “tremendously undervalued.”
Asked on CNBC if the board retains full confidence in Mayer after her three years at the helm, Webb said:
“Absolutely… I’ve never met anybody that works harder, that’s smarter, and cares more.”
“So we want to help her return this great company to an iconic place where it belongs,” Webb said.
When asked if Yahoo would entertain an offer to buy its online operations, Webb told CNBC that Yahoo’s board would have a fiduciary duty to consider it.
But he told the New York Times that if a bid were to emerge, “it would probably be a lowball offer.”
Some reports say there could be interested buyers for some Yahoo assets, and Verizon’s top executive this week suggested the telecom giant may be interested in parts of Yahoo that could fit with its newly acquired AOL unit.
Mayer told a conference call Yahoo is readying a new strategic plan which would be unveiled early next year.
“I remain convinced that Yahoo is on the right path,” she said.
The new direction is expected to sharply cut back some of Yahoo’s operations and likely reduce the workforce of some 11,000.
The plan would create “greater transparency to ensure that Yahoo’s business operations are accurately valued,” Mayer said.
Yahoo’s market value based on its share price is more than USD 32 billion, but most of that is based on the value of its Alibaba holdings.
Yahoo bought a 40 percent stake in Alibaba in 2005 for USD 1 billion. The current stake of some 15 percent is now worth around USD 30 billion.
PTI