By Brian Womack
(Updates with share price in fifth paragraph.)
Feb. 14 (Bloomberg) -- Yahoo! Inc.’s discussions to sell its stake in Alibaba Group Holding Ltd. and its Japanese operations in a tax-efficient manner have reached an impasse, according to a person briefed on the matter.
Representatives of Alibaba and Softbank Corp., co-owner of Yahoo Japan Corp., are prepared to approach Yahoo Chief Executive Officer Scott Thompson to explore another arrangement that would let companies buy back their stakes, said the person, who asked not to be identified as the talks are private.
The value of the Asian assets is about $11.5 billion, according to Sameet Sinha, an analyst at B. Riley & Co. in San Francisco. Yahoo, based in Sunnyvale, California, is prepared to continue talks on potential deals that would create value for shareholders, a different person said.
A failure to reach a deal may put more pressure on Yahoo’s board, which recently endured a shakeup and has been reviewing its operations since last year. Investors such as Third Point LLC have urged the company to make changes to help improve the stock, which has dropped about 18 percent since a May 2011 high.
The stock fell 5.1 percent to $15.30 at 2:56 p.m. New York time after earlier sinking as much as 7.4 percent.
Dana Lengkeek, a spokeswoman for Yahoo, didn’t immediately return a phone message seeking comment. Technology blog AllThingsDigital reported the breakdown of talks earlier.
Yahoo, the largest Web portal, began the review following the ouster of Chief Executive Officer Carol Bartz in September. The company said this month that the board weighed proposals for equity investments and failed to receive an attractive offer. Yahoo said then that it continues to discuss a possible sale of its holdings in Asia and that it’s devoting “significant resources to these discussions.”
The company said Feb. 7 that Chairman Roy Bostock won’t stand for re-election, along with three other directors.
--Editors: Julie Alnwick, Elizabeth Wollman
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Sameet Sinha, an Internet analyst at B. Riley & Co., said one way for Yahoo to get closer to people’s “purchase decisions” and take a cut of transactions would be to acquire a company such as Bankrate Inc., which helps consumers find mortgages or other investments; Angie’s List Inc., which publishes reviews of contractors, doctors and other service providers; Yelp Inc., which also provides information on local businesses; or Trulia Inc., which helps people search for real estate.
Continue Reading >Alibaba.com Ltd. (1688) suspended its shares from trading in Hong Kong as the company prepares a statement about a transaction involving its parent, which is raising about $3 billion to buy back stock held by Yahoo! Inc. (YHOO)
Continue Reading >The Sunnyvale, Calif., Internet company, which is now shopping itself to potential buyers, on Tuesday said that its third-quarter profit dropped 26% from a year earlier while revenue fell 24%. Yahoo also reported its fourth consecutive quarterly slowdown in the growth rate of its display-ad sales—its most important business, which includes graphical, interactive and video ads. Display-ad sales revenue was flat from a year earlier.
Continue Reading >A focal point of board discussions are Yahoo’s Asian holdings—a 40% stake in China-based Alibaba Group Holding Ltd. and a 35% stake in Yahoo Japan—which represent one-third to one-half of Yahoo’s overall value, according to analysts from B Riley & Co. and Stifel Nicolaus & Co. Yahoo has a market capitalization of about $18 billion.
Continue Reading >Regardless of who follows Bartz, Sinha said the next CEO must focus on reinvigorating employee morale and updating technology. “[Yahoo] employees have been disheartened for the last four years,” he said. “There are so many fast-growing companies out there that tech employees can leave and get a job anywhere. They need to stop the exodus of people leaving Yahoo.” But he emphasized that breathing new life into a tech company past its prime has not proven to be an easy path. Numerous CEOs have tried—and failed—to revive Yahoo. Meanwhile, at competitor AOL, CEO Tim Armstrong is struggling through his own company’s rehabilitation. EBay is the rare company with a turnaround success, which was largely thanks to PayPal, Sinha said.
Continue Reading >“We are initiating coverage…with a Buy rating and a 21 price target. We believe the next 12 to 18 months should provide a win-win situation for investors: Either the management team will turn this company around, or the mounting investor discontent will force management to take steps to unlock value in its assets.”
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