Muted Yahoo

By: | Updated: December 5, 2015 12:49 AM

Weird as Yahoo selling sounds, it is a good way to unshackle the company’s “non-core” assets

One of the tallest from the dotcom era, Yahoo, is now moribund. With its board debating whether to sell off its core (internet) business—activist investors have mooted the proposal—or not, it is only a matter of time before Yahoo passes into history as a once-great. While the company’s internet business includes the website and mail, search and news services among others, any such business not preceded by the word “Google” has a tough chance of staying alive today.

Most of the company’s value now rests with the 15% stake it holds in Alibaba, the Chinese e-commerce giant, and Yahoo Japan. Activist investors like Starboard Value LP believe these assets would be more attractive if they were not shackled to the web properties. Though Yahoo had earlier tried freeing up the Alibaba asset by spinning it off into a separate company, the US taxman played spoilsport—the Internal Revenue Service (IRS) refused to opine on the tax implications of the spin-off, a broad hint that it will only act if the spin-off eventually happens. As if that uncertainty wasn’t enough, some in the IRS have questioned whether the planned spin-off looks too much like avoiding a significant capital gains tax burden. Thus, the call for letting go of the  “core” business has been getting louder, inside and outside the Yahoo boar room.Doesn’t Yahoo selling off sound absurd, particularly given how many believe the core business to be “worthless”? Well, it may not prove so, if it means a release for the non-core assets.

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