Yahoo is considering selling off its traditional web business as an alternative to spinning off its $33 billion stake in Chinese e-commerce group Alibaba, the sale of which could land Yahoo with a $10 billion tax bill.
Private equity firms and media companies have already shown interest in the possibilities presented by any potential sale of Yahoo's struggling internet operations.
Yahoo's board is understood to be considering the demands made by an activist shareholder for Yahoo to offload its core services instead of selling its stake in Alibaba. The discussions come at a time when Yahoo chief executive Marissa Mayer is under increasing pressure to boost performance and resurrect the company's tumbling share price, which has fallen by 30 per cent this year.
Yahoo stock did in fact jump in value by six per cent overnight on Wall Street in a positive reaction to the rumours, as investors favour plans to separate Yahoo and Alibaba without being hit by a punishing capital-gains tax demand.
New York hedge fund Starboard Value is looking to gain board support for a plan to sell Yahoo's websites, mobile applications, ad services and data analytics.
The board is considering the move during its annual three-day board meeting, which started on Wednesday.
Yahoo had been planning to complete its spin-off of theAlibaba business some time within the next month. Yahoo bought its investment in Alibaba a decade ago for $1billion. Its stake is now worth $33 billion as the e-commerce business has boomed.
At least three unnamed private equity firms have recently looked at buying Yahoo's internet business, according to the Financial Times. It is also thought that IAC, the media company behind dating sites Tinder and Match.com, is another interested buyer.
Mayer is working on a major overhaul of the Yahoo group, as revenues continue to decline, which may see it offload a number of unprofitable services leading in turn to hundreds of job cuts. Further details have yet to be announced.