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Yahoo Halts Alibaba Spinoff Plans (Report)

Company is weighing potential sale of core business, according to CNBC

Yahoo has scuttled plans to spin off its stake in the Chinese e-commerce company Alibaba, CNBC reported Tuesday, citing unnamed sources.

Yahoo has faced uncertainty over the tax implications of the spinoff, which was believed to be worth around $32 billion. The IRS told Yahoo earlier this year that it would not rule in advance on the tax hit it might take.

Citing unnamed sources, the Wall Street Journal reported that Yahoo directors will weigh whether to seek a buyer for the company’s Web assets, spin off shares in Alibaba Holding Group Ltd. or do both.

Yahoo’s future has been the subject of persistent speculation, much of it focused on embattled CEO Marissa Mayer. The website ReCode reported last month on a morale-boosting effort spearheaded by Mayer in which top company executives participated in a “Wizard of Oz”-themed photo shoot.

That story followed a disappointing third-quarter earnings report in October and subsequent $42 million write down — for which the company’s CFO Ken Goldman blamed Yahoo’s investment in original series programming such as “Community.”

By October, Yahoo investors such as Ader Investment Management’s Eric Jackson started publicly calling for Mayer’s ouster. In its third-quarter report, Yahoo saw a revenue drop of 8 percent compared to a year ago, earning $1 billion compared to $1.09 billion.

Yahoo also reported a loss from operations totaling $86 million compared to $42 million. Yahoo also reported a spike of 312 percent in traffic acquisition costs, to $223 million in the third quarter.

Yahoo drew 209,770,000 million unique visitors in September across its sites, which was down 4 percent year-over-year, according to comScore.

Yahoo shares went up 5.6 percent following the Wall Street Journal report on the possible sale last week, reaching $35.60 after closing flat at $33.71.