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Yahoo Nixes Spinoff as Aabaco Merchants Cope with Uncertainty

Merchants who host their stores on the Yahoo Stores platform went through the process of moving to new servers last month in advance of the planned spinoff from its parent company Yahoo, planned for next month.

But official word came on Wednesday that Yahoo’s board has suspended the spinoff of its Small Business unit (YSB) that includes Yahoo Stores and web-hosting services. Instead, Yahoo’s board is exploring a “reverse spin” that could take a year or more to complete, according to the company.

Merchants were first told of the YSB spinoff in January, and in August, merchants were told the new service would be called Luminate. But in November, Yahoo scrapped that name in favor of Aabaco, which it had always intended to call the new company. A soap opera writer couldn’t have scripted the drama any better.

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Yahoo explained yesterday that with its new plans for a reverse spin, its assets and liabilities other than the Alibaba stake would be transferred to a newly formed company, the stock of which would be distributed pro rata to Yahoo shareholders resulting in two separate publicly-traded companies.

Confused? We asked Yahoo what Wednesday’s announcement would mean for small merchants whose websites had moved from Yahoo servers to Aabaco servers last month (not without¬†some hitches).

Will Aabaco Small Business be renamed Yahoo Small Business, and will merchants have to switch servers again?

A spokesperson for Aabaco Small Business provided us with the following statement:

“For the time being, our organization will continue to be part of Yahoo, and our name will remain Aabaco Small Business. The Aabaco Small Business team remains focused on shipping exceptional products and delivering great value to our customers, especially during this busy holiday season.”

Former eBay executive Maynard Webb, now Chairman of Yahoo’s board, explained the decision in a press release along with Yahoo CEO Marissa Mayer.

Wall Street had pressured Yahoo over the transaction due to fears over the tax consequences of the Alibaba/Aabaco spinoff. Mayer, who came to Yahoo from Google, has been criticized for not turning around the company.

“In 2016, we will tighten our focus and prioritize investments to drive profitability and long-term growth,” she said. “A separation from our Alibaba stake, via the reverse spin, will provide more transparency into the value of Yahoo’s business.”

The news must be quite aggravating to merchants focused on the busy holiday shopping season, and must be frustrating for the Aabaco Small Business team as well.

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Ina Steiner

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. Send news tips to ina@ecommercebytes.com.


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