By deciding to shed its Internet business, Yahoo is moving to take on a different business focus amid a rapidly changing online landscape.
The move heralds the end of an era for a onetime Internet pioneer.
"As an industry, this signifies the end of the static Web," said Patrick Moorhead, an analyst with Moor Insights & Strategy. "Yahoo popularized categories and directories, which was then replaced by search, which is being replaced by mobile. Yahoo completely missed search and entered mobile too slowly. Now it's in flux."
Early Wednesday, Yahoo announced that it was reversing its initial plan to spin off its $31 billion stake in Alibaba, the popular Chinese e-commerce company. Instead, Yahoo will keep its Alibaba stake and spin off everything else.
The reversal means that Yahoo's core Internet business will be pushed off to a new company.
Maynard Webb, chairman of Yahoo's board of directors, noted that the company is not actively looking for buyers for the Internet business, though it is open to offers. But Webb's statement leaves open the possibility the company will rid itself of its lagging Internet business.
"That tells me it's not a strategic directive for the company," said Brad Shimmin, an analyst with Current Analysis. "That business is not going to get investment dollars and certainly won't attract talent. In this industry, that's what it's all about. It's not a vote of confidence. It's not a vote of dedication and strategic interest."
Shimmin also noted that Yahoo's decision to hold onto its shares in Alibaba could help it avoid a great tax liability and indicate plans to focus on online retailing with the weight of Alibaba behind it.
"Yahoo has been making some very strange noises and some odd moves - from talk of restructuring to executive shakeups -- indicating that it's been unsure about its direction," said Shimmin. "Probably this new move may leave a lot of people scratching their heads, but at least it lends some clarity as to who they are as a company. They are not an online destination for checking your email and sports scores, but an online destination for an ecosystem of sellers, like Amazon."
Yahoo was an Internet pioneer. Coming to the forefront of the online explosion 20 years ago, the name Yahoo was synonymous with the then-new world of online search, email, Web surfing and the growth of digital presence.
That era of early Titans may be over, as Yahoo follows other once-dominant companies like Netscape, AOL and Napster.
"This move by Yahoo may be the end of an era," said Jeff Kagan, an independent industry analyst. "The next big question is what's the future for Yahoo? There are still more questions than answers and it'll be that way for a long while to come."
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