Instead, company officials said they were exploring a "reverse spin-off" of Yahoo's substantial Web properties, which include search, email, media and advertising units. By creating a separate company, the value of those businesses would be more apparent to investors -- and easier to sell.
"A separation from our Alibaba stake, via the reverse spin, will provide more transparency into the value of Yahoo's business," said chief executive Marissa Mayer.
Yahoo's board chair Maynard Webb added in a conference call with investors that there has been “no determination by the board to sell the company or any part of it.”
Despite having one of the largest online reaches in the United States -- 210 million users visited the site last month, comparable to Facebook or Google -- the Sunnyvale, Calif.-based Yahoo has been struggling to figure out how to translate its audience in a way understood by advertisers, investors or the public.
”Yahoo tried to be too many different things, rather than focusing on one clear identity,” said analyst Shar VanBoskirk with Forrester Research.
Still, Yahoo’s troubled core — if it is shopped around -- is expected to attract widespread interest. Yahoo's stock is up nearly 3 percent, ahead of the regular trading session.
Industry analysts have speculated for days that Yahoo could sell to a host of media giants, cable firms or telecom providers. Among these, the most vocal has been Verizon, which earlier this year snapped up another once legendary tech name in AOL for $4.4 billion.
Other analysts think Yahoo’s U.S. audience could be attractive to a Chinese buyer, such as tech companies Tencent and Baidu. Or Yahoo’s parts could be divvied up among different parties.
“’Fire sale’ sounds a little too negative,” said VanBoskirk. “But it’s probably a case of individual pieces sold off to different buyers until there’s no longer a Yahoo.”
A deal between Yahoo and Verizon could turn the telecom company into a media titan. Like Comcast-NBCUniversal, Verizon would own not only the broadband networks that grant access to the Internet, but also some of the valuable Web content that travels over those networks.
“If Yahoo is right, we might look at it,” said Verizon chief financial officer Fran Shammo at a New York conference Monday. Company chief executive Lowell McAdam reiterated Verizon’s interest Tuesday at a separate conference, saying that Yahoo is “so hot.”
A Verizon spokesman declined to comment.
Wednesday's announcement by Yahoo’s board came after it had received intense pressure from its investors, particularly the activist hedge fund Starboard Value.
The criticism fired off by Starboard was in many ways a judgment on the transformation plans of Mayer, the Google standout who was brought in to take Yahoo’ reins in 2012. At first hailed as a potential savior, she soon faced criticism for a sluggish strategy and questionable acquisitions, such as the purchase of Tumblr for $1.1 billion. Starboard openly questioned whether Mayer could turn around the company.
On Wednesday, Webb, the chair of Yahoo's board, said that it is standing by Mayer, who is due to have twins in the coming weeks. Mayer has said she would not take an extended maternity leave.
“I can assure you that we did not reach this unanimous decision hastily or without careful consideration,” said Maynard Webb, Yahoo’s board chair. “The board has compete confidence in the management team and leadership of Yahoo."
Yet Mayer appears to have failed to change Yahoo fast enough — or fast enough for investors eyeing Yahoo’s fortuitous holdings in Alibaba and another one in Yahoo Japan, which is likely to be spun off with the rest of Yahoo's Web properties.
In the end, Yahoo wrestled with Wall Street and appears to have lost. Activist investors have become more aggressive in recent years, looking for ways to push companies to maximize profits above all else.
Activist investors have launched 342 campaigns against corporations so far this year, up 61 percent since 2009.
About 20 percent of those campaigns have targeted tech firms, according to data company Factset.