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Yahoo’s new plan: Spin off itself, not its Alibaba stake

Yahoo’s new plan: Spin off itself, not its Alibaba stake

AP Technology Writer

SAN FRANCISCO (AP) — Internet pioneer Yahoo, under pressure from unhappy shareholders and desperate to avoid a huge investment-related tax bill, will break itself apart — just not in the way it had previously planned.

The company will now aim to spin off its struggling Internet business — essentially, everything associated with the Yahoo brand name — into a new company. Yahoo itself would then become little more than a holding company for its $32 billion stake in Chinese e-commerce giant Alibaba.

For most of the past year, Yahoo had planned instead to spin off the Alibaba stake into a separate holding company called Aabaco. That corporate maneuver was designed to sidestep more than $10 billion in taxes Yahoo might otherwise owe. But the IRS jeopardized that plan by refusing to guarantee a tax exemption.

The about-face could mean big changes for hundreds of millions of users who rely on Yahoo websites, services like email and other mobile applications. CEO Marissa Mayer plans to outline a cost-cutting reorganization late next month; many analysts speculate that Yahoo may simply sell off that business if the latest overhaul doesn't bear fruit quickly The uncertainty and reshuffling threaten more distractions at a time when Yahoo is already struggling in digital advertising against rivals such as Google and Facebook.

'The bottom line is the saga continues,' Macquarie Securities analyst Ben Schachter wrote in a Wednesday note titled 'The Never-Ending Story.'

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