Less than ten years ago, Yahoo was a pioneer of the Internet, but now its high noon has passed, and the company’s board decided to spin off its core business after unsuccessful attempts to attract Yahoo users back.
According to one of Yahoo shareholders, the company’s board will dial back its plans to spin off its share in Chinese e-commerce giant Alibaba. Just to remind you, Yahoo’s stake in this company is estimated to be more than $30 billion. Instead, Yahoo wants to look at another transaction structures in order to detach the share. The main goal of this is to sell the spun-off core business in the long run.
Despite Yahoo board of directors having already voted for the reverse spin-off plan, it will take more than a year to get all necessary paperwork done. The company’s decision should be approved by U.S. regulators, Yahoo shareholders, and business partners.
Founded in 1995 by Jerry Yang and David Filo, Yahoo was the groundbreaker in the early Internet. Today, it still remains one of the independent titans on the market. The dial-up service of AOL helped many users get onto the Web for the first time. And everyone remembers such services as Napster, Netscape, and many others, that shown us how to surf the Internet, watch movies and listen to music online.
Undoubtedly, Yahoo was one of the most significant search engines.
Struggle to adapt to smartphones
Marissa Meyer, president and CEO of Yahoo, has already tried to adapt the company to the needs of smartphone and tablet users. She updated all the company’s apps to mobile versions, including Yahoo Weather, Sports, Mail, and Finance. Besides, she took measures to make Yahoo a leading media company by attracting famous persons, e.g. journalist Katie Couric and purchasing the rights to demonstrate popular sitcoms such as “Community”.
Nevertheless, Meyer has not managed to repeat the success of products, developed by Yahoo’s business competitors. The company is lagging behind Google in mail and search and was overtaken in media by services delivered by Amazon and Netflix. Even the most loyal users forgot about Yahoo when Facebook and Snapchat appeared on the horizon.
According to experts, Yahoo lost its clients because the company did not make investments into development of new and innovative areas, unlike its rivals such as Amazon and Google. They are sure that the Internet market is so unpredictable and versatile, that the players have to be adjustable and open to meet new challenges.
The way of transformation
The company’s representatives reiterate their intention to sell Yahoo business or a part of it. According to them, the best way out of the current situation is to improve the operating business and separate Alibaba assets from it. Among the possible buyers of the company’s main business, there are, allegedly, large media and telecommunication companies. For example, Verizon Wireless spokesman confirmed that they would like to explore the possibility to purchase Yahoo’s Internet business.
The reason why Yahoo intended to spin off Alibaba was to avoid payment of a tax bill that amounts to over billion dollars. But after the Internal Revenue Service set the new regulations on taxation of corporate spinoffs, and the company’s investors proposed Mayer to sell Yahoo’s Internet business instead of China startups.
Besides, there are changes in the company’s board of directors. Max Levchin, who is a co-funder of PayPal and the first director in Yahoo after Mayer, made public his decision to leave the company. As Yahoo spokesman explained, Levchin resigned because he wants to focus more on his online startup Affirm.
However, Yahoo board members are fully confident in the company’s leaders and mangers and believe that they are making progress in transforming Yahoo. Mayer also confirms that they are taking steps to prioritize the company’s investments for further Yahoo growth. She is completely sure that now she is leading a very different company from the one she started three years ago. Today Yahoo offers better products, has improved business partnerships and has more dedicated employees. Besides, Yahoo market value has increased, as the company gets more revenue from its mobile users and employs modern marketing technologies to meet the needs of its customers.