Yahoo considering selling its core Internet business

Re/code's Kara Swisher also tweeted that there is "no process in place" for any sale and that the company has not any bankers, other than Goldman Sachs and JP Morgan, who were hired a year ago to fend off activist investors.

The board is mulling the move at an annual three-day board meeting that started on Wednesday.

In a research report in October, Cantor Fitzgerald analyst Youssef Squali valued Yahoo's core business at $3.9 billion, not including cash.

Since her appointment in 2012, chief executive officer Marissa Mayer has struggled to drag the internet giant out of a long period of stagnating growth, though she has brought some stability.

The fund has threatened a proxy battle for board control if Yahoo refuses to take bold steps and says in the letter addressed to Mayer and board chair Maynard Webb that it is frustrated by "your dismissive approach to our serious concerns".

She has promised to provide further details next month.

Yahoo's 15 percent stake in Alibaba is now worth about $32 billion, and its 35 percent stake in Yahoo Japan is worth about $8.5 billion, according to the Wall Street Journal. It will also eliminate the uncertainty around Yahoo's stake in the Chinese e-commerce behemoth.

In 2009, Yahoo signed an exclusive search partnership with Microsoft that saw Yahoo able to use Bing to power its search results, and Yahoo's sales force exclusively sell the Microsoft-Yahoo search and advertising platform.

Yahoo's business has declined in value largely because its net revenue has fallen under Mayer even though advertisers are pouring more money into digital marketing.

Yahoo had hoped to spin off its Alibaba stake tax-free, but the Internal Revenue Service has not given approval for such a plan. Verizon Communications Inc. (NYSE:VZ) and IAC/InterActiveCorp (NASDAQ:IACI) are some of the companies that have reportedly shown interest in Yahoo's core business.

Private-equity firms are expected to be among those taking a look at Yahoo's core business, people familiar with the matter said.

Investors have become increasingly disillusioned with the Alibaba spinoff because of the potential tax hit.