Many sellers were stunned to learn in January that Yahoo planned to cast off its ecommerce business, including Yahoo Stores, as part of a spinoff of the Yahoo Small Business unit (YSB). And in August, they learned the new name of YSB: Aabaco Small Business LLC, with the brand itself to be called Luminate.
This week, Yahoo revealed that the spinoff may be delayed until January. The spinoff is part of Yahoo’s plan to unload its shares in Alibaba, and the move to include YSB along with the shares was originally designed to minimize the tax impact – but that’s not a certainty thanks to scrutiny by the IRS.
Wall Street analyst Shyam Patil of Susquehanna (SIG) said after listening to the corporate post-earnings presentation on Tuesday, “Despite not having a PLR (private letter ruling) from the IRS, management reiterated that it will continue to pursue the Aabaco spin, which we view as the key near-term catalyst for the stock. The spin could be delayed until January (vs. 4Q15 previously) due to SEC processes, final board approvals, compliance with various other requirements, and 4Q holidays.”
Analyst John Blackledge of Cowen and Company said Yahoo management is striving to complete the spin in Q4, “but note due to many moving pieces (SEC requirements, board approvals, holiday market closures) it may not be completed until January ’16.”
And in his report titled, “Weak Fundamentals Continue but Aabaco Spin On Track,” Mark May of Citi noted Yahoo’s announcement of a new partnership with Google, “under which Yahoo could monetize a portion of search ads via Google’s AdSense for Search, which could improve RPS (revenue per search) over time.”
In its earnings release on Tuesday, Yahoo had this to say about the deal with Google: “In October, the Company reached an agreement with Google that provides Yahoo with additional flexibility to choose among suppliers of search results and ads. Google’s offerings complement the search services provided by Microsoft, which remains a strong partner, as well as Yahoo’s own search technologies and ad products.”
While Yahoo Stores’ parent unit YSB may be about to be spun off, it’s not going away, and early this month, Yahoo Small Business’ Amer Akhtar announced three key new hires for the team.
“Providing the best possible experience for our customers is our biggest priority at Yahoo Small Business,” he wrote, “and an important part of that is making sure we hire the best talent. Leading up to the expected separation and the introduction of Luminate later this year, we’re continuing to focus on expanding our executive team, which is why I’m very excited to let you know about three key additions to the team: Chris Wayne, our new head of IT and Infrastructure, Matt Cokely, our new head of Customer Care, and Brandon Cruse, our new head of HR.”
Wayne and Cokely are Yahoo veterans, while Cruse comes to YSB from Intuit. Akhtar couldn’t resist making puns relating to the new brand name Luminate, writing, “These three new key hires ensure we have the best and the brightest to engage our customers and our employees. Our future is looking luminous.”