After months of sustained pressure, Yahoo (YHOO) finally unveiled plans to spinoff its stake in Alibaba (BABA) last week during its earnings call. A spinoff was chosen for its tax efficiency and in order to accomplish that goal, the company said that a small operating unit would need to be included as part of the transaction. At the time, the company did not divulge which business it would be, only that it generates ~$50m of EBITDA. Word is out now that its small business group was the one chosen for the noble task of delivering shareholder value. It doesn’t get a lot of press, but the small business unit offers a bunch of tools for small business owners to sell online including hosting, a merchant platform and marketing help.
With the spinoff of its Alibaba stake, Yahoo’s core business is coming into focus and it seems that CEO Marissa Mayer is honing on a few key areas such as mobile, native ads, video and social. Apparently, the small business unit didn’t fit into those plans and now it will be sacrificed liberated in a bid to placate shareholders. The spinoff is expected to be completed during Q4 after Yahoo’s lockup period expires and I expect we will learn much more about the small business unit and its possible future as the spinoff progresses.
Disclosure: Author holds no position in any stock mentioned.