Sacking of Yahoo boss may spur buy-back

PUBLISHED : Thursday, 08 September, 2011, 12:00am
UPDATED : Thursday, 08 September, 2011, 12:00am


Related topics

The ousting of Yahoo's chief executive could pave the way for mainland e-commerce giant Alibaba Group to renew talks to buy back shares held by the struggling internet pioneer, analysts said.

Yahoo's board of directors yesterday fired chief executive Carol Bartz and named chief financial officer Timothy Morse as interim head, while commencing the search for a permanent chief executive and a comprehensive review of the company's business.

'We are committed to exploring and evaluating possibilities and opportunities that will put Yahoo on a trajectory for growth and innovation and deliver value to shareholders,' Yahoo's chairman of the board, Roy Bostock, said after Bartz's dismissal.

Allan Weiner, a vice-president at research firm Gartner, said: 'Yahoo has some great parts - messaging used by hundreds of millions of users worldwide, a sports brand that stands apart from other web properties, and strong content plays in news and finance.'

Yahoo, once the world's top internet search provider, continued to post weak financial results under Bartz and saw a further deterioration in its relationship with Hangzhou-based Alibaba, in which it has a 40 per cent stake.

Alibaba, the parent of Hong Kong-listed and mainland online retail leader Taobao, sold that stake to Yahoo in 2005 for US$1 billion and ownership of Yahoo China.

Alibaba submitted to Yahoo a firm proposal in May last year to buy back part of its shares in the mainland firm. No deal was reached after Yahoo countered with a proposal that Alibaba deemed unacceptable.

According to a Forbes report in May, Yahoo had also rejected a US$3.5 billion offer made earlier this year by an investment group led by Alibaba chairman Jack Ma Yun to acquire a 15 per cent stake in the US internet firm.

A new period for deal-making apparently looms for Alibaba, as Yahoo takes stock of its post-Bartz fortunes.

'Yahoo has set up an executive leadership council, consisting of co-founders David Filo and Jerry Yang, to review its past performance and strategy. When its permanent chief executive takes office, a dramatic adjustment in strategy is highly expected,' said analyst Liu Guanwu of EnfoCapital, part of mainland market research firm Analysys International.

'This [situation] will provide Jack Ma with a great opportunity to purchase Yahoo's stake and reduce the proportion of foreign investors' equity in Alibaba,' Liu said. 'I think local private equity funds or even China's sovereign wealth funds will assist Ma in this endeavour.

'For an industry leader like Alibaba, having a troubled foreign shareholder like Yahoo doesn't do any good or make any sense.'

Alibaba spokesman John Spelich declined to comment.

Credit Suisse research analyst Wallace Cheung, however, indicated it was too soon to speculate about Alibaba reviving talks for a share buy-back. 'We need to know who will be the next chief at Yahoo,' he said.