Yahoo’s tax-free Alibaba spinoff up in the air as Marissa Mayer takes more hits

Yahoo’s spinoff of its $23 billion stake in Alibaba has run into a big stumbling block, putting more pressure on CEO Marissa Mayer.

In an SEC filing Tuesday afternoon, Yahoo disclosed that the Internal Revenue Service had rejected its request for a “private-letter ruling” on spinning off Aabaco Holdings tax-free. Although the company pointed out that the IRS didn’t explicitly say the spinoff was taxable, it looks like it could be back to the drawing board for the spinoff, devised by Mayer as a way to provide a return to Yahoo’s perpetually disgruntled shareholders.

Ronald Bell, Yahoo’s general counsel and corporate secretary, wrote in the filing that the board “will continue to carefully consider the Company’s options, including proceeding with the spin-off transaction on the basis of an opinion of counsel.”

A failed spinoff could be disastrous for Mayer, the Google executive who was brought in three years ago to revive a company that has struggled to compete for ad revenue against Google, Facebook and every other company that wants a piece of the advertising pie. Since then, Mayer has made some acquisitions including Tumblr, emphasized mobile and media, and managed to eke out small revenue gains. Reviews of Mayer’s tenure have ranged from mixed to terrible — the Alibaba stake has been seen as a saving grace amid continued weakness in Yahoo’s core business — and some have called for her ouster or for Yahoo to merge with AOL.

The latest to pile on is Scott Galloway, professor of marketing at NYU Stern School of Business, who dropped a couple of gems on the Bloomberg Surveillance TV show this morning:

“If she hadn’t announced she was pregnant with twins, she’d be out of a job within six months,” Galloway said, after indicating that he expected to get some backlash in his inbox for his statement. Mayer, who Galloway also said is “the most overpaid CEO in history,” announced her pregnancy last week.

The professor said Yahoo would look bad if it fired Mayer now, because the company wouldn’t want to be seen as “not leaning in.” That’s a reference to the Lean In movement advocating for women’s advancement in the workplace, popularized by the book of the same name written by Facebook COO Sheryl Sandberg.

We don’t have access to Galloway’s inbox, but he’s also getting blasted on Twitter. Here’s a reaction from Josh Elman, a partner at VC firm Greylock Partners:

But wait, there’s more: Galloway also criticized Yahoo’s board, and said “we should put a bullet in the head of this story called Yahoo. It is time to euthanize this thing.”

Yahoo shares, which fell sharply during after-hours trading Tuesday, are rebounding today amid a good day for tech stocks. They’re up 2.2 percent to $31.58.

 

Photo: Yahoo CEO Marissa Mayer in 2013. (NBC via Associated Press)

 

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