Yahoo reverses course on spinoff, but is it really just spinning its wheels?

Giving in to investor demands, Yahoo said it will explore spinning off its core business instead of its Alibaba stake. But is Starboard Value, which last month called on the company to cancel its Alibaba spinoff and explore selling its Internet business, really getting what it wants?

Separating the Alibaba business will give more “clarity” about the true value of Yahoo, CEO Marissa Mayer said in a Wednesday morning TV interview on CNBC. But Chairman Maynard Webb, who also appeared on CNBC, insisted the company is not for sale — although he said of course the board has a fiduciary duty to hear out any suitors.

Webb said the Sunnyvale company remains committed to working on its Internet business, which he says is undervalued. He also pledged support for Mayer, with whom investors such as Starboard have expressed frustration.

“I’ve never met anybody that works harder, that’s smarter and cares more,” Webb said on TV. “So we want to help her return this great company to the iconic place where it belongs.”

What this all means: Not much yet. Yahoo is canceling the Alibaba spinoff because of the tax implications. When Mayer pushed for the more than $30 billion spinoff, the company thought it would be tax-free. But the IRS has indicated it may not be.

“Among other factors, we were concerned about the market’s perception of tax risk, which would have impaired the value of Aabaco stock until resolved,” Webb said in a company press release today. (Aabaco is the name of the Alibaba spinoff.) Spinning off Yahoo’s Internet business instead might take less time, Mayer indicated — about a year, compared to longer “uncertainty” over an Aabaco spinoff.

So Yahoo becomes the latest big tech company to explore a split to solve its problems — in this case, slowing growth and declining investor confidence. But it’s going to involve more waiting, and from what Mayer and Webb said on TV this morning, more of the same. They both insisted that things are coming right along at Yahoo, with Mayer repeating a couple of times how proud she is of the progress she’s made since coming on board as CEO in 2012.

“All of our revenue streams were in decline when I joined,” Mayer said on TV. “Today we have futuristic monetization opportunities.”

We’ve emailed Starboard for comment.

Yahoo shares are down more than 2.5 percent to about $33.95.


Photo: Yahoo CEO Marissa Mayer has the board’s confidence, according to Yahoo Chairman Maynard Webb. (Eric Risberg/Associated Press)


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  • benT

    Is it not the prerogative of the CEO to change her mind??