Yahoo weighing options in Japan

Firmis looking at selling valuable stake as sales fall

Yahoo Chief Executive Officer Marissa Mayer outlined plans to explore options for the company’s stake in its Japanese division as another report showed disappointing sales and profit.

The company has hired advisers to consider opportunities to maximize value for its stake of about 35 percent in Yahoo Japan, valued at more than $ 8 billion, Mayer said on a conference call Tuesday. Earlier, the company said first- quarter sales fell 4 percent to $ 1.04 billion, and gave a lackluster forecast for the current period.

Since taking the helm in 2012, Mayer has struggled to add users and woo advertisers by focusing on mobile, adding online channels and signing partners. The stock has risen during her tenure largely because of the value of the company’s Asian assets, including a stake in Alibaba Group Holding that the company plans to spin off later this year. Now, Mayer could seek to placate investors further with payouts from Yahoo Japan.

“Yahoo’s had a significant stake in a significant asset in Yahoo Japan for a long, long time — and there’s never been much of an expectation of investors getting to realize the value of that asset,” said Brian Wieser, an analyst at Pivotal Research Group in New York. “They’re laying the groundwork to monetize it one way or the other. The Alibaba juice is going to go away.”

Activist investor Starboard Value has been pushing for a spinoff of Yahoo’s Japanese investment. In March, Starboard said the Internet company could unlock $ 11.1 billion, or $ 11.70 a share, of stockholder value, in part with a tax- efficient spinoff of its stake in Yahoo Japan.

Yahoo’s shares

fell

1.2 percent to close at $ 43.98 on Wednesday, putting the stock down 13 percent this year. Mayer said the company will provide updates on the situation on future calls when needed. Yahoo Japan shares rose 2.7 percent in Tokyo.

Yahoo’s first- quarter sales missed analysts’ average prediction of $ 1.06 billion, according to data compiled by Bloomberg. Profit before some costs was 15 cents a share, the company said Tuesday in a statement, compared with projections for 18 cents.

By telling investors she’s looking at options for Yahoo Japan, Mayer may be seeking to buy herself more time to jump- start growth at the company she’s been working to turn around for almost three years. Unless she can expand sales, investors may eventually lose patience with the strategy and question her leadership. Some analysts speculated earlier this year that Yahoo could become a takeover target for a larger Internet company after it spins off the Alibaba stake.

Yahoo’s share of the U. S. online display ad market may slide to 3.5 percent in 2017 from 5.5 percent last year, according to EMarketer. Quarterly revenue growth has come in at less than 4 percent or negative since the end of 2012.