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Yahoo's Board Debates Selling Company's Core Business


This week, the board of Yahoo is meeting. And reportedly, things at the company have gotten so bad they're talking about whether they need to sell off big chunks of the core business - the parts that make Yahoo, Yahoo. Here to discuss that is NPR's tech reporter, Aarti Shahani. Good morning, Aarti.


WERTHEIMER: So we're hearing reports that Yahoo might sell things we know and use - the search engine, email, Yahoo sports and finance - true?

SHAHANI: Well, The Wall Street Journal, citing unnamed sources, says that several companies, including Verizon, News Corp and Time Inc., are eyeing different parts of Yahoo. One big selling point is how many people still use it. While it's true that Yahoo's got the number three search engine - it's behind Google and Microsoft's Bing - the company's still touting about a billion monthly active visitors, which is not chump change. Yahoo may also want to sell shares that it has in other companies as well, by the way. It has big stakes in two companies in particular. There's Alibaba, the Chinese e-commerce giant, and Yahoo Japan. But one big kink with Alibaba is Yahoo wants the Internal Revenue Service to agree in advance that they can sell without paying taxes. It's through a tax-free spinoff of the company, which can sometimes happen. And the IRS won't make a ruling until after the sale.

WERTHEIMER: Aarti, on paper, Yahoo's business is worth negative dollars - less than zero. I mean, how is that possible?

SHAHANI: Yeah, it's a very interesting point. The company's total market cap - meaning what it's worth overall on the stock market - that's about $34 billion. Now, if Yahoo were to sell Alibaba and Yahoo Japan, it's estimated that those sales would roughly amount to 40 billion. So that makes the core business 34 minus 40, which is negative 6 billion on paper. Now obviously, Yahoo's Internet assets, they're not worth less than zero, otherwise no one would want to buy them. But the fact that the stock is so low right now - it just goes to show how weak Yahoo's reputation is on Wall Street with investors.

WERTHEIMER: Would it be a good idea for Yahoo to sell those big parts of the company - email, the search engine - the stuff that gives it name recognition?

SHAHANI: You know, on the upside it could be - you know, they get cash. But there are reasons it's also a very, very bad idea, and not just the reasons you might think. First, there is the brand issue which you're hinting at. As a former Yahoo employee put it to me, think of Yahoo as a house - email is the living room, search is the kitchen, say the weather app is the den. If you just sell off bits and pieces, then the house isn't as inviting, and people don't want to live there anymore. They don't want to hang out there.

WERTHEIMER: What about Yahoo selling the whole house?

SHAHANI: Well, the problem with that - another person who's currently at Yahoo explained this to me - the house is also a laboratory. All the visitors, what they do there, the things they're looking for and clicking on - that gives Yahoo tremendously powerful data, data that's essential - and that's the words of the employee, not me - data that's essential to a process called machine learning. Machine learning is a very hot, cutting-edge way that Google, Facebook, Microsoft, the big Internet companies track user behavior to targets adds and services better on smartphones, make money on mobile advertising. So if Yahoo loses its Internet business, it becomes really hard to compete as a technology company.

WERTHEIMER: NPR's Aarti Shahani, thank you very much for joining us.

SHAHANI: Thank you. Transcript provided by NPR, Copyright NPR.

Aarti Shahani is a correspondent for NPR. Based in Silicon Valley, she covers the biggest companies on earth. She is also an author. Her first book, Here We Are: American Dreams, American Nightmares (out Oct. 1, 2019), is about the extreme ups and downs her family encountered as immigrants in the U.S. Before journalism, Shahani was a community organizer in her native New York City, helping prisoners and families facing deportation. Even if it looks like she keeps changing careers, she's always doing the same thing: telling stories that matter.
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