|Benjie Batanes |||Dec 02, 2015 04:15 AM EST|
(Photo : Getty Images/Daniel Zuchnik) The board of directors of Yahoo may be planning to sell the company's main assets, including is stake in Chinese ecommerce company Alibaba.
Share prices of Yahoo rose by more than 5 to 7 percent on Tuesday's after hours trading due to a recent media report that claims the company's board is mulling plans to sell its main assets.
CNBC reported that Yahoo's board of directors is considering selling the company's online business or its shares in Alibaba or both of them.
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The stock market immediately reacted to the report. Around 300,000 Yahoo stocks have been sold at a price ranging from $35.60 up to more than $36 in the after hours trade. Yahoo share was priced at $33.71 when the market closed.
Many financial analysts believe that if Yahoo sells its main assets, the company will cease to be a viable business. Tigress Financial Partners CIO Ivan Feinseth told reporters that should Yahoo decide to sell its Alibaba holdings and Mavens units, it would probably be the end for the once popular search engine giant.
Feinseth also said that Chinese tech company Alibaba may make a move on Yahoo's core assets.
AXA Investment representative Mark Tinker said Yahoo's substantial holdings in Alibaba is the main perceived advantage of the company against its competitors because of its potential access to China, which currently has more than 600 million internet users. If Yahoo decides to sell its Alibaba shares, this advantage would evaporate. Ten Years ago, Yahoo was able to acquire around 40 percent ownership of Alibaba for $1 billion.
Marissa Mayer, Yahoo's CEO, is yet to turn Yahoo back to profitability after four years at its helm. Adding to her troubles are the recent exit of several company executives and the uncertainty of qualifying for tax free status should Yahoo transfer its Alibaba holdings to a new company - Aabaco.
Financial analysts point out that Yahoo's net income has fallen in recent years. The company's income this year is estimated to be around $4 billion as compared to more than $5 billion seven years ago.
A number of Yahoo investors such as Starboard Value are not in favor of the proposed Alibaba sale. They would rather prefer the sell of the search and online ads units of the company.
Standard & Poor's has recently downgraded Yahoo's outlook from stable to negative due to the perceived financial difficulties of the company.
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