Yahoo’s Board Is Said to Weigh Selling Off Core Business

As chief of Yahoo, Marissa Mayer has stabilized the company but faces thorny challenges. Credit Elijah Nouvelage/Reuters

SAN FRANCISCO — The board of Yahoo will discuss potentially selling off the beleaguered Internet company’s core business during a series of meetings this week, people briefed on the plans said on Tuesday.

Directors of the company will also discuss whether to move forward with plans to spin off Yahoo’s 15 percent stake in the Alibaba Group, the Chinese e-commerce giant. The board will weigh all its options, and it is unclear whether the directors will change course, said the people, who spoke on the condition of anonymity because they were not authorized to publicly discuss the plans.

Still, the discussions — which will take place at a regularly scheduled board meeting — highlight the difficulties that have long troubled one of the most prominent Internet companies.

The discussions are also sure to put attention squarely on Marissa Mayer, Yahoo’s chief executive, and the company’s direction under her leadership. Although Ms. Mayer is credited with stabilizing the company, which was in rapid decline, Yahoo has introduced no breakthrough products during her three years at the helm and has fallen further and further behind competitors like Facebook and Google in the battle for advertising dollars.

A representative of Yahoo declined to comment on the plans.

Begun as a simple website called Jerry and David’s Guide to the World Wide Web, Yahoo has grown into one of the biggest names in the Internet business.

Yet for the last decade, Yahoo has struggled to find its reason for being. Under the leadership of Ms. Mayer, a highly vaunted Google executive brought in to drive the latest turnaround effort, the company has spent billions of dollars on acquisitions like Tumblr and Polyvore that have yet to prove their value. And in October, the company announced it was writing off $42 million that it had wasted on an ill-fated foray into original video programming.

Hundreds of millions of people continue to use Yahoo, which was a pioneer on the Internet. So the core business could have value to a potential acquirer.

“The saving grace for Yahoo is that it still has a relatively large user base that is reliant on the platform so long as they maintain email addresses there. It also has a still relatively strong (and still relatively large) sales force,” wrote Brian Wieser, an analyst at Pivotal Research, in a note to clients Tuesday night. “As long as both of those factors remain in place, there would be time for an acquirer to establish new strategies and develop products while the property continues to generate cash flow.”

But by far the greater value to shareholders has come from Yahoo’s large stakes in Alibaba and Yahoo Japan, which is controlled by the Japanese investment firm SoftBank. Subtract the Alibaba and SoftBank stakes and the value of the remaining company is less than zero.

The planned board discussions were reported Tuesday evening by The Wall Street Journal. In an interview on Tuesday after news of the potential board talks was published, Jeff Bonforte, Yahoo’s senior vice president for communications products, said employees were continuing to work on new products and features as the larger discussions about the company’s fate continued.

“It’s clear that Marissa came in with a timeline of three to five years,” Mr. Bonforte said.

But he said that ultimately his team members did not have any control over how much time they would get to show results. “I just try to ship products that I’m not ashamed of,” he said.

The board’s deliberations are also taking place under pressure from a prominent activist investor, the hedge fund Starboard Value, which has spent more than a year trying to push Yahoo to take action to raise its stock price.

Last month, Starboard called on Yahoo to abandon the spinoff of the Alibaba stake after the Internal Revenue Service declined to bless the potential deal as tax-free. That could negate the rationale for the spinoff and lead to a tax bill of several billion dollars.

While Yahoo could fight a tax determination, Starboard has argued that the upside of winning that battle would be limited.

Should Yahoo put its core business up for sale, the operations are expected to draw takeover interest from other technology companies as well as private equity firms, analysts and investors have said.