Yahoo: Spinoff Marissa Mayer

The cluster-fucking circle-jerk going on at Yahoo right now is pure foolishness. Shares are up 7% on the hopes that either Marissa Mayer is forced out or that the company keeps Alibaba and spins off the core business. Wait, what? Yahoo is officially the master of pipe dreams. A complete 180 from the “we’re going to spin out this Alibaba stake tax-free and save shareholders billions” story we heard last year.

So the Alibaba spinoff idea has gone to shit thanks to the IRS. Regulatory risk ain’t nothing to fuck with. Still – for everyone that’s been burned by Yahoo, activist investor Starboard Value included, they deserve it. This has been billed as one of the greatest sum-of-the-parts stories in a long time. One of those, do the math no brainers. But even with the tax uncertainty, media goers and sell-siders are still selling the SOTPs feel-good story. Now – unless you’re running a multivariate model and have more a decent understanding of probabilities, you have no business opining on Yahoo – it’s that simple.

I hope all the longs in Yahoo go broke. It’s well deserved. In truth – anyone who uses a SOTPs thesis deserves to make the hobo village under the Manhattan bridge their hometown.

In all likelihood, Yahoo pushes ahead with this haphazard spinoff of Alibaba, which is likely be taxed because they don’t can’t find enough of an operating business to spin off with it. The boss of tax-advantaged spin-offs, John Malone, commented on the Yahoo spin, noting, “We’ve never spun off anything that naked.”

Or, the other option, is to keep Alibaba and spin out the core business. WTF. The company can’t even spinoff Alibaba correctly, how complicated do you think it’s gong to get when they start trying to carve out the core business for a spinoff?

Smells of desperation. Firing Marissa Mayer and bringing in a Sheryl Sandberg doesn’t help Yahoo here. There is no free lunch. Either spinoff Alibaba, pay the piper, and sell the core business to anyone (hell even Microsoft would work at this point), or you start stripping this thing apart piece by piece. Keeping Alibaba around isn’t an option – what happens when Alibaba turns out to be a fraud?