Yahoo has been determined to complete a tax-free spinoff of its stake in Alibaba, even after the IRS said it might not fly. Now, pressure from the market seems to have finally convinced them to back down. A projected battle over tax liabilities also played a role in convincing the board to call the deal off. It sounds like they still want to do something with that stake though. The idea is that they might create two separate businesses somehow - one being the Alibaba stuff and the other being the "operating business," which includes basically everything.
There's a nice article in the NYT about it with some history. Farhad Manjoo also wrote something for State of the Art about the disappointment surrounding Marissa Mayer's efforts at Yahoo. He calls her "boring," saying that she took too many low to medium risk gambles and never really went big:
"Three years ago, when Ms. Mayer first took over, she sparked excitement about the future of a company that had, by then, put everyone to sleep...Ms. Mayer seemed courageous enough to shed [Yahoo's] legacy business and start something new. Few were betting that she would succeed, but just about everyone inside and outside the company thought it would be fun to watch her try."
Ouch! I guess she didn't dance well enough for Wall Street's amusement? Sort of cruel, no? I suppose that's just how it is. But the game's certainly not over yet.