Yahoo is considering putting its Internet business up for sale.
Two decades past its heyday as an Internet pioneer, Yahoo says it will spin off its core business after failing to convince people that its products are still worthwhile.
The Sunnyvale, California, company said Wednesday that it will scrap its plans to spin off its stake in Chinese e-commerce giant Alibaba, worth more than $30 billion. Instead, it will reverse course and look at “alternative transaction structures” to separate the stake. That could make it easier to ultimately sell off the core business.
“Informed by our intimate familiarity with Yahoo’s unique circumstances, the Board remains committed to accomplishing the significant business purposes and shareholder benefits that can be realized by separating the Alibaba stake from the rest of Yahoo,” Chairman Maynard Webb said in a statement. “To achieve this, we will now focus our efforts on the reverse spin off plan.”
A sale of Yahoo’s Web business might have more symbolic significance than anything else. The once-mighty trailblazer, founded in 1995 by Stanford University students Jerry Yang and David Filo, is one of the last independent titans of the early Internet. In June, AOL, which helped many people get onto the Internet for the first time through its early dial-up service, was bought by Verizon. Also now just memories of that earlier era are Netscape, Napster and many of the other services that taught us, while stabbing in the dark, how to surf, listen and live online. Yahoo was once the brightest star of the bunch.
A sale of Yahoo’s core business would mean the company that Yang and Filo co-founded could be stripped down to an entity that’s of more interest to investors than everyday computer users.
Yahoo’s homepage though the years
GIF by James Martin/CNET
Of course, it could be argued that most of us largely lost interest in Yahoo a long time ago.
When Mayer, a former Google executive, was named CEO in 2012, she was tasked with turning around the already lumbering company.
To do that, she’s tried to remake the company for the mobile era as more consumers migrated from PCs to smartphones and tablets. She’s refreshed each of the company’s mobile properties, including Yahoo Mail, Weather, Finance and Sports. She has also tried to make the company a premier media destination, hiring well-known personalities such as journalist Katie Couric and acquiring the rights to high-profile shows like the sitcom “Community.”
But she hasn’t been able to replicate the excitement around products that many of Yahoo’s fiercest rivals have been able to ignite. Once one of the most powerful brands on the Web, Yahoo has been overtaken in search and email by Google, and beaten in media by Netflix and Amazon. (Later on, Yahoo admitted it never found a way to make money off “Community.”) Facebook and even newer players like Snapchat have won over users that Yahoo covets for its messaging apps too.
Brett Sappington, director of research at Parks Associates, said one of Yahoo’s biggest mistakes was not making bets in new and innovative areas, like Google and Amazon have.
“In the world of the Internet, which is diverse and incredibly unpredictable, you have to be adaptable and open to change,” said Sappington. “Yahoo in contrast really defined their business very tightly.”
Possible buyers for Yahoo’s main business could include private equity firms, big media companies, or telecommunications companies. On Monday, Verizon Chief Financial Officer Fran Shammo said the wireless carrier would explore buying Yahoo’s Internet business if it “makes sense,” according to Bloomberg.
Yahoo expects any transaction to take up to a year to complete.
This isn’t the first time Yahoo has been caught up in talk of a sale. In a saga that dragged on for months, Microsoft in 2008 bid $44.6 billion on the company, though then-CEO Jerry Yang balked.
Yahoo’s planned Alibaba spinoff was designed to let Yahoo off the hook for a tax bill worth billions of dollars. But in May questions began to pop up about the spinoff, after the Internal Revenue Service proposed new rules around taxing corporate spinoffs.
Activist investor group Starboard Value, which owns less than 1 percent of Yahoo, was originally behind the spinoff, but in November told Mayer to jettison Yahoo’s Internet business instead.
CNET Senior Editor Rochelle Garner contributed to this report.