Fading Internet portal Yahoo! (NASDAQ:YHOO) has abandoned plans to hive off its stake in Chinese e-commerce behemoth Alibaba.
Shares in the pioneering Internet company shed 3.6% to US$33.60 in morning trading, as the company said it would retain the stake and spin off the rest of its assets into a new company.
Plans to cash in on its stake in Alibaba, worth around US$30bn at current prices, were called off once it became apparent that the company would face a massive tax liability.
Yahoo! as a whole is valued at just US$32.8bn, so the Alibaba stake is not just the jewel in the crown, it is virtually the whole crown.
Shareholders were concerned that Yahoo!, which lost its dominant position in the web-o-sphere long ago to Google, would face a tax bill of around US$10bn if it hived off its Alibaba stake.
The Yahoo! name still has plenty of brand recognition and the eponymous web portal still has a lot of visitors to its site, but the advertising dollars tend to go to Google, and former Google luminary Marissa Mayer's attempts to revive the company's fortunes during her three-and-a-half year stint as chief executive have largely failed.
Yahoo! said its new plan, assuming it gets the thumbs-up from shareholders, would likely take more than a year to complete.
Pundits suggested that the company's web assets, past their sell-by date though they may be, could be of interest to telecoms players such as AT&T (NYSE:T) and Verizon Communications (NYSE:VZ).