14 DAY TRIAL // Yahoo is one of the big players online, but it's hardly news that the company hasn't been doing great for the past several years now. In fact, something that it's all that flattering but is true nonetheless, Yahoo's worth is largely made up of two big stakes in Asian investments, Yahoo Japan and Alibaba Group, not the myriad of Yahoo products the company is mostly known for.
There's been a lot of speculation about the fate of those Asian stakes, there's been pressure, especially from the Chinese Alibaba, for Yahoo to offset its shares, but the company has been reluctant to do so, with good reason.
Things may be changing though, it looks like Yahoo may be close to getting out of its Japan joint-venture and get rid of its big stake in Yahoo Japan, for as much as $8 billion, according to a new report from Reuters.
The report says that Yahoo has been in talks to sell its 35 percent stake to the largest shareholder, the tech giant Softbank, which already owns 42 percent of the company.
Softbank is no fan of Yahoo and has criticized the direction Yahoo as a whole is taking as well as its lack of innovation or progress. It's not as outspoken as Alibaba founder Jack Ma though.
In recent months, Yahoo Japan made the decision to start using Google to power web search rather than opt for Bing, like its US counterpart. It justified this by saying that Google Japan offers much better support for the local script and is better suited for the local market.
The deal would give Google a de facto control over the vast majority of the search market in Japan since it already has a big chunk with its own localized search engine.
Yahoo's market cap is largely dependent on its Asian stakes. Depending on valuations, since not all properties are publicly listed, as much as 80 percent of Yahoo's value comes from the two stakes.
Yahoo has been looking at its various options for cashing in on the Japan stake, but selling it on the open market is out of the question, mainly for tax reasons.
According to the latest rumors, it is in advanced talks with Softbank, and, while these may fall apart yet, they could reach a conclusion within weeks.
That said, it's unclear what Yahoo would do with the cash infusion since it hasn't been particularly active on the acquisition or innovation fronts lately and is mostly cutting costs to drive up profitability of its existing products, while getting rid of under-performing ones.