Is this the end for Yahoo?

by Matt Klassen on December 10, 2015

yahooIn what is quickly shaping up to be a desperate attempt to create some value before sinking below the surface, Yahoo has announced this week its intention to spin-off its core business. The move comes as a reversal of its original plan, as in an effort to create more value for its stakeholders, earlier this year Internet pioneer Yahoo announced it would spin-off its greatest asset, a $31 billion stake in Chinese e-commerce titan Alibaba, into its own entity, but recently hit a snag when it was unclear whether or not such a move would be subject to taxes.

So instead the company is pursuing the exact opposite of that course of action, exploring “alternative transaction structures” that would see the company keep the stake in Alibaba under the Yahoo moniker, while shuffling all of the company’s core products and services into something else.

Now you may be wondering why Yahoo would be doing this at all, and the answer is not hard to find: the business world has just discovered what the rest of us have known for a decade now; Yahoo has nothing to offer anyone, anywhere.

Oh how the mighty have fallen. In the early days of the Internet Yahoo stood as a veritable titan of the fledgling industry, and practically the only one from that era to survive this long. In fact, in June of this year longstanding rival AOL, which brought the Internet to millions for the first time with its early dial-up service, was bought by Verizon, joining a long list of memories like Netscape and Napster and a host of other once familiar names of a bygone time that have slipped from view.

Granted Yahoo CEO Marissa Mayer, hired in 2011 to turn around the company’s flagging fortunes, has done an admirable job at trying to evolve the Yahoo brand, migrating from a PC-centric company to a mobile-centric one, and overhauling many of its properties like Yahoo mail, news, and sports, the fact of the matter remains that the company has struggled to generate hype, certainly nothing comparable to what we’re seeing from its competitors.

“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.”

“We have made no determination to sell the company or any part of it,” Webb said. “We believe that we are tremendously undervalued, and we think the best path to unlocking that value is by separating the Alibaba assets from our operating businesses and also by turning around the performance of the operating businesses.”

While it could be argued that Yahoo has been largely irrelevant for many years now, the momentum generated by this lumbering behemoth has been able to propel it this far, but its attempted spin-off and now the announcement of its attempt reverse spin-off of its assets is clear evidence that the company’s brain-trust knows the end is near, and that stripping down the company in this way is an attempt to drive up the company’s value and make Yahoo more acquisition-friendly.

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Written by: Matt Klassen. Follow by: RSS, Twitter, Facebook, or YouTube.

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