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Yahoo executive retreat leads to ‘reverse spin off’ plan and Levchin’s resignation from board

In a major flip-flop, Yahoo has backed away from plans to spin off a holding company for the company’s stake in Alibaba and Yahoo Japan. Instead, the company will now undertake a ‘reverse spin off’, where the company’s core Internet business — Yahoo.com, Tumblr, Yahoo Mail, Flickr, and the like — will be spun out of the company, and Yahoo will become a holding company for Alibaba and other assets. The intent of this is to avoid tax issues relating to possible divestiture of Alibaba assets, estimated at $31 billion, as those of Yahoo Japan, pegged at $8.5 billion. Yahoo’s core business is estimated to be worth only $3-$8 billion.

Max Levchin, the co-founder of PayPal, and a major supporter of Marissa Meyer, has stepped down from the board, effective immediately, after the board’s offsite meeting. I have to read this as the blowback of a board dispute about how to direct the massive Alibaba resources. Should they be siphoned off as dividends, or separated from other assets, so investors can maximally gain from Alibaba’s rise? Or should they be invested into making Yahoo relevant again? My bet is that Meyer and Levchin lost — and lost big — at the board meeting.

Meyer is expecting twins, and plans to take a few months off after their arrival in January. I’m betting she resigns, citing her desire to spend more time with her family.

I admit that tracking Meyer is something of a guilty pleasure, and not for the best of reasons. When she joined Yahoo and almost immediately clamped down on remote work (see  Yahoo’s Mayer thinks that remote workers are… too remote), I thought her priorities misaligned with the benefits of remote work for workers. And the highest hubris was when she installed a personal daycare center for her own brood, around the corner from her office, a perq that the average worker could never get.

But the narrative about Meyer has moved beyond her odd OCD-like fascination with details — like working personally on a new Yahoo logo, and slowing down critical hires by wanting to review them personally — and the stark questions about her inability to lead the company back into a central role in the realm of Internet Giants like Google, Apple, Amazon, and Microsoft. As I said in a recent tweet, she appears more and more to be just an empty suit, incapable of turning the Yahoo around, despite the dozens of acquisitions she’s made.