Alibaba, seen by some as a potential buyer, is unlikely to be interested, according to the Wall Street Journal. Citing a person familiar with the matter, the Journal said Alibaba felt the core business is not attractive, "given the difficulties successive managers have had in turning it around."
Yahoo's board, which includes co-founder David Filo, Wal-Mart Stores Inc former Chief Executive H. Lee Scott Jr. and Charles Schwab Corp Chairman Charles R. Schwab, was also expected to discuss the planned spinoff of Yahoo's 15 percent stake in Alibaba.
Alibaba will be interested in buying back its shares from Yahoo only at a steep discount, the WSJ said, citing the person.
After earlier urging the company to spin off the Alibaba stake, Starboard reversed course. It had first urged the sale of the core business in a November letter to Yahoo.
It is unclear what the board's decision will mean for the future of Yahoo Chief Executive Marissa Mayer, who has pushed for the spin-off of the Alibaba stake but has not publicly commented on the possible sale of the core business.
Yahoo shareholders could end up paying billions in taxes if the U.S. Internal Revenue Service deems a spin-off taxable. The company had sought a private letter ruling from the IRS to confirm a spin-off would be tax-free, but the agency denied the request in September.
The board is "seriously considering" pausing on a spin-off until there is more clarity on the tax implications, Re/code reported, citing sources.
Yahoo had earlier planned to complete an Alibaba spinoff by the end of December. But the company said in October the transaction was expected to close in January.
Alibaba and Yahoo did not respond to requests for comment.
Yahoo's shares were down more than 4 percent in afternoon trading, and Alibaba was down more than 3 percent.