Should Yahoo Sell Alibaba Stake or the Web Business Where It Began?

Yahoo CEO Marissa Mayer. Credit: David Paul Morris/Bloomberg

Yahoo shares jumped the most in more than a month as the board meets and members consider a range of options including whether to sell a stake in Alibaba Group Holding.

In a series of meetings this week, one option the board is discussing is whether to stick to the company's plan to spin off its stake in Alibaba, a person familiar with the situation said. The board is also weighing whether it will seek to find a buyer for Yahoo's web businesses, the Wall Street Journal reported Tuesday, citing unnamed people familiar with the matter. Representatives for Sunnyvale, California-based Yahoo declined to comment.
Chief Executive Officer Marissa Mayer had planned to complete the spinoff by January and promised to update investors on her strategy for the rest of the ailing web portal. Ms. Mayer is facing renewed pressure from activist investor Starboard Value, which last month threatened a proxy fight if she doesn't make drastic changes to her plans, including selling the main search and display advertising businesses.
"Virtually any decision" is likely a positive, Robert Coolbrith, an analyst at CRT Capital Group, wrote in a note to investors.
In more than three years at the helm, Ms. Mayer has made little progress turning around the company, whose revenue is forecast to drop 8% in 2015. Most of the company's value is tied to its stake in Chinese e-commerce giant Alibaba. In a letter dated Nov. 19, Starboard estimated that Yahoo's enterprise value is $31.2 billion. Excluding the Alibaba stake, cash holdings and partial ownership ofYahoo Japan Corp., Starboard valued Yahoo's core business at about $2 billion.
Spokesmen for Alibaba and SoftBank Group Corp., the biggest shareholder in Yahoo Japan, separately declined to comment. Yahoo Japan would consider any options for buying back its shares, said Masaki Hanyu, a Tokyo-based spokesman. He declined to comment on the company's potential interest in Yahoo assets.
Ms. Mayer has been adding services for smartphones and tablets, new tools for advertisers and media content in a bid to attract audiences and marketers. Yet Yahoo has lost advertising market share in key areas such as mobile, where rivals such as Facebook and Google have gained ground. In October, Yahoo said it would update shareholders with a new strategic plan for the post-Alibaba era during its next earnings call, which is expected in January.