Can Yahoo Revive Its Web Relevance? (NASDAQ: YHOO)
Questions have been raised about whether Yahoo will be able to make itself relevant in a web environment dominated by Google and Facebook. The company’s new chief executive, Scott Thompson, has faced additional pressure to provide a clear vision of what a revamped Yahoo will look like. Mr. Thompson has told analysts that he is considering moving Yahoo away from dependence on online advertising for revenue.
Yahoo was interested in selling back most of its 40% stake in Alibaba of China and all of its 35% stake in Yahoo Japan, potentially earning the company billions of dollars, but talks to sell its stakes in its Asian partners collapsed. Clay Moran, an analyst with the Benchmark Company, said, “It’s a significant disappointment, but I don’t think it’s the end of the line. This has been an ongoing saga and this is just another paragraph in a longer story.”
After several days of negotiations in Hong Kong, the talks to put together a tax-free transaction ended, according to people not authorized to speak publicly about the matter. The talks between Yahoo and Alibaba and Yahoo Japan’s majority owner, Softbank, were weeks away from being able to announce a deal. Yahoo still needed formal assurances from the Internal Revenue Service that the transaction would be tax-free.
One of the people briefed on the matter said Alibaba’s lead negotiator, Joe Tsai, told his Yahoo counterpart, Timothy Morse, that the two sides were at an impasse and would most likely need to seek a different deal. Questions about breakup fees payable if the deal fell apart appeared to hamstring the negotiations. The value of the company’s stake in Alibaba, about $12 billion as of December, could have been another factor in the breakdown of the negotiations.
Hedge fund Third Point disclosed that it planned to challenge Yahoo for four of the company’s eleven board seats hours after reports about the end of the talks emerged. Third Point’s nominees are the firm’s chief, Daniel S. Loeb; former chief executive of NBC Universal Jeff Zucker; former Treasury Department official and hedge fund executive Harry J. Wilson; and chief executive of the media consulting firm Activate Michael J. Wolf. Third Point is one of Yahoo’s biggest shareholders.