May 28, 2011

Yahoo CEO vows to clean up mess tied to spinoff in China

SAN FRANCISCO - Yahoo Inc. CEO Carol Bartz found herself in a familiar position Wednesday: assuring stock-market analysts that she will clean up a mess damaging the long-slumping Internet company's market value.

The latest challenge to confront Bartz in her nearly 2 1/2-year tenure emerged two weeks ago. That's when Yahoo jarred investors by informing them of an abrupt change affecting the value of its 43 percent stake in Alibaba Group, one of the leaders in China's rapidly growing Internet market.

Alibaba had spun off a potential jewel, its online-payment service Alipay, into a separate company controlled by its CEO, Jack Ma, without giving Yahoo anything in return.

Yahoo's stock price has plunged by 13 percent since the May 10 revelation, leaving Bartz little choice but to place the issue at the top of the agenda for a meeting that Yahoo had scheduled to provide an update on its turnaround strategy. The Associated Press monitored the San Jose meeting through a webcast because Yahoo wouldn't allow reporters to attend.

Although she provided few specifics, Bartz spent most of the first hour trying to reassure analysts that Yahoo will be "appropriately compensated" for the loss of Alipay from its investment portfolio.

Bartz made her points flanked by Yahoo's chief financial officer, Tim Morse, and company co-founder Jerry Yang, who also is a member of Alibaba's board of directors. Both men flew to Asia last week to discuss the Alipay matter with Alibaba's major shareholders, who include Ma and Japan's Softbank Corp. Bartz said all the key shareholders have committed themselves to negotiating a fair payment for the Alipay spinoff and preserving the value of another Alibaba asset, online auction site Taobao.

"This is a very complex situation," Bartz said. "We have approached this thoughtfully and methodically. We think this is the right path to protect shareholder interests."

Bartz wouldn't predict when the Alipay issue would be resolved.

Yang, who spent 19 months as Yahoo's CEO before being replaced by Bartz in January 2009, said the Alipay spinoff was necessary to ensure that Chinese regulators licensed the service. The licensing wouldn't have been possible if Alipay wasn't wholly owned by Chinese citizens, Yang said.

Yahoo said Alibaba notified it about the change in Alipay's ownership on March 31. None of the executives explained why Yahoo waited nearly six weeks to disclose it. "We believe our disclosure was timely and appropriate," Bartz said.

by Michael Liedtke Associated Press - May. 26, 2011 12:00 AM



Yahoo CEO vows to clean up mess tied to spinoff in China

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