Yahoo's stock price spiked Wednesday morning, after reports surfaced that the tech giant's board of directors may be preparing to sell the company's core Internet business.
The Wall Street Journal, citing anonymous sources, reported late Tuesday that Yahoo's board is holding meetings this week to discuss what to do about the company's stake in Alibaba, and whether it's time to part ways with its once-dominant Internet business, which has suffered in a world now dominated by Google, but which still includes powerful brands like Tumblr and Flickr.
It's important to note, however, that these reports are still mostly hearsay. In fact, Re/Code is reporting that this week's meetings are nothing more than annual board meetings that Yahoo always holds in December. But judging by the stock spike, investors, clearly are hoping the rumors are true.
They have at least some reason to hope. Activist investor Starboard Value LP has been calling for Yahoo to offload its Internet arm, instead of selling off its stake in Alibaba and Yahoo Japan. In a letter written last month to Yahoo chairman Maynard Webb and CEO Marissa Mayer, the firm wrote that separating the Alibaba and Yahoo Japan stakes from Yahoo's search and display ad business "would unlock immediate value for shareholders and allow Yahoo’s Core Business to better recruit and retain talent."
The argument there is that as long as Yahoo's stock price is tied to Alibaba's performance, Yahoo can't compete for talent the way other tech giants can. "Yahoo is the only Silicon Valley company we know that currently has a stock price almost entirely driven by the value of an entity outside of its control," the letter reads. "Top talent wants to be able to directly contribute to, and be rewarded by, its company’s stock price performance."
Now, it seems, these investors may get their wish, and they're rewarding Yahoo in the form of a bump to Yahoo's stock, which is up over 7 percent this morning. Of course, we've seen this type of speculation surrounding Yahoo before. Before AOL sold to Verizon earlier this year, rumors of a merger between Yahoo and AOL were ever-present around tech circles. The company has also faced pressure to sell to Microsoft in the past.
None of these supposed deals ever panned out. Then again, years ago, back when Yahoo dominated the Internet, the company had a lot more to lose than it does today.
