Yahoo CEO reassures analysts about Alibaba stake (AP)

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 that has damaged the long-slumping Internet company's market value.

Bartz's latest challenge in nearly 2 1/2 years on the job erupted 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, and Yahoo hadn't received anything in return.

Yahoo's stock price has plunged by 12 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 her turnaround strategy.

Although she provided few specifics, Bartz spent nearly the first hour trying to reassure analysts gathered at a San Jose, Calif., hotel that Yahoo will be "appropriately compensated" for the loss of Alipay from its investment portfolio. She made her points flanked by Yahoo's chief financial officer, Tim Morse, and a 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 other major shareholders, which include Ma and Japan's Softbank Corp.

"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 spin-off was necessary to ensure Chinese regulators license the service. The licensing would have been delayed, or might not have happened at all, if Alipay wasn't wholly owned by Chinese citizens, Yang said.

Yahoo said Alibaba notified it about the change in 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.

Bartz's damage control didn't have much impact on Yahoo's stock price. The shares had gained 8 cents to $16.21 in Wednesday's afternoon trading.

Bartz, 62, and her top lieutenants spent the rest of Wednesday's meeting trying to show Yahoo is finally headed in the right direction after years of misguided decisions and aimless execution.

The recurring problems have crimped Yahoo's revenue growth and held down its stock price at a time when other major Internet companies like Google Inc., Amazon.com Inc. and Facebook are thriving.

"We have rolled up our sleeves and we have done the hard work that Yahoo needed to do to be positioned as a premier digital media company," Bartz said Wednesday.

Bartz could be running out of time to win over Wall Street.

With a little more than 19 months left on her four-year contract, Bartz still hasn't been able to reach the goals that the company's board set for Yahoo's stock price when she was hired. Her contract awarded her 5 million stock options that won't vest unless Yahoo shares close at average prices ranging from $17.60 to $35.19 for at least 20 consecutive days.

It looked like Yahoo's stock might finally stay above the first vesting threshold until the disclosure about the Alipay spinoff wiped out nearly $3 billion in shareholder wealth this month.

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Yahoo says makes headway in Alibaba talks (Reuters)

SAN FRANCISCO (Reuters) – Yahoo Inc said it had made significant progress in negotiations over compensation for a Chinese online payment company spun off from the Alibaba Group that Yahoo partially owns.

Yahoo co-founder Jerry Yang and Chief Financial Officer Tim Morse flew to Asia last week to engage Alibaba and investor Softbank about the issue, though Yahoo Chief Executive Officer Carol Bartz admitted the situation was complex.

"There're a lot of moving parts but we're making progress," Bartz told investors at an annual analysts' meeting on Wednesday. "We're not going to get into a public back and forth."

Investor attention has been squarely focused on Yahoo's Asian assets, which include a 43 percent stake in Chinese e-commerce giant Alibaba and a 35 percent stake in Yahoo Japan Corp. Some investors believe those assets could potentially be worth as much as Yahoo's entire current market value.

Yahoo's stock rose as much as 5.3 percent on Wednesday but later retraced its steps and was up 0.5 percent at $16.22 in early afternoon trading on Nasdaq

Bartz, who joined Yahoo as CEO in 2009, also said the management team was focused on reviving the stalled revenue growth within Yahoo's core business, which includes a vast collection of websites and its Web-based email service.

Yahoo is one of the most popular destinations on the Web and the No. 1 provider of online display ads in the United States, but the company is facing increasing competition from social networking service Facebook and continuing pressure from search leader Google Inc.

"I know it's somewhat very popular to say Yahoo is not turning around. But we have 14,000 people and a management team that's working very, very hard to do just that," Bartz said. "I would insist that you give us some credit for turning this company around," she later added.

Bartz cited the improvements in operating margins and earnings in recent years, as well as in improving the company's Web publishing infrastructure, but said that the company's number one priority was to boost revenue.

"I want to make sure you understand that we're not running this company based on cost. We are running this company for growth," she said.

While a landmark search partnership with Microsoft Corp has failed to deliver the expected lift in ad rates, Bartz reiterated previous comments that revenue-per-search rates will start to rise in 2012.

ALIBABA ASSET TRANSFER

Yahoo's shares have fallen roughly 12 percent since early May, when the company disclosed that Alibaba had transferred its popular online payment subsidiary Alipay to a separate entity controlled by Alibaba founder Jack Ma, potentially diminishing the value of Yahoo's stake in Alibaba.

Alibaba said the transfer was done in order to meet Chinese regulations regarding foreign ownership of online payment companies.

Bartz spent the first 45 minutes of Yahoo's analyst day flanked by Morse and Yang addressing Alipay and fielding questions from analysts.

The CEO, feeling the pressure from complaints that Yahoo was too slow in announcing the asset transfer, said its disclosure was "timely and appropriate."

The trio of executives repeatedly stressed that all parties in the negotiations were agreed on basic principles, particularly to ensure that Alipay continue to be a driving force behind auctions site Taobao -- Alibaba's key strategic asset -- and that the payments system be among the first to win an operating license from the Chinese government.

Bartz also said all were agreed that the Alibaba Group -- and hence Yahoo -- receive adequate "compensation" for Alipay.

"Alipay needs a license to be worth anything," Yang said.

(Reporting by Alexei Oreskovic and Edwin Chan; Editing by Gerald E. McCormick, Tim Dobbyn and Bernard Orr)

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Yahoo, Alibaba: We're "committed to" negotiations (AP)

By CHRISTINA REXRODE, AP Business Writer Christina Rexrode, Ap Business Writer – Sun May 15, 8:07 pm ET

NEW YORK – Yahoo Inc. and Chinese Internet company Alibaba Group tried to present a united front Sunday as they worked on a dispute that has caused tension in their already strained relationship.

But the two tech giants offered few details, releasing only a one-sentence statement saying they were in "productive negotiations" to resolve "outstanding issues related to Alipay," which is Alibaba's online payment service.

Yahoo, which owns a 43 percent stake in Alibaba, saw its stock tumble last week after it announced Tuesday that Alibaba had spun off Alipay. The announcement caused investors to worry that Yahoo's stake in Alibaba will become less valuable, and also brought into clearer focus the rockiness of the two companies' relationship.

Yahoo spokeswoman Dana Lengkeek declined to answer questions about who was involved in the negotiations or what Yahoo wants from them. She noted that Sunday's statement was the first issued jointly by Yahoo and Alibaba.

"Alibaba Group, and its major stockholders, Yahoo! Inc. and Softbank Corporation, are engaged in and committed to productive negotiations to resolve the outstanding issues related to Alipay in a manner that serves the interests of all shareholders as soon as possible," the statement said, in its entirety.

It echoed an equally vague statement from Tuesday, when Yahoo said it was engaged with Alibaba and Softbank in "ongoing discussions regarding the terms of the restructuring and the appropriate commercial arrangements related to" Alipay.

Representatives for Alibaba and Softbank, a Japanese firm that is also a longtime investor in Alibaba, didn't return messages for comment on Sunday.

Yahoo and Alibaba also disagree over when Yahoo was informed of the spinoff, which transfers ownership of Alipay to another company owned by Alibaba Group's CEO, Jack Ma. Yahoo says the transfer occurred last August, but that it wasn't notified until March 31. Alibaba says Yahoo's board was informed of the ownership change during a July 2009 meeting

In Tuesday's regulatory filing, Yahoo said Alibaba had spun off Alipay so it could more quickly obtain "an essential regulatory license." Ma has become more antagonistic since Carol Bartz, a brash Silicon Valley veteran, became Yahoo's CEO in January 2009. With Alipay under his control, analysts believe Ma could have more negotiating power if Yahoo tries to sell its stake in

Alibaba is one of China's most powerful Internet companies, and its success has helped bolster Yahoo as the Sunnyvale, Calif., company has struggled to keep up with Google Inc. The six-year investment has also been a way for Yahoo to keep a toehold in fast-growing China after it and other companies, including Google, have had a hard time growing their own businesses in the heavily regulated and politicized country.

In the first quarter, Yahoo's net income fell 28 percent. The net income of Alibaba.com, the flagship company of Alibaba Group, rose 37 percent.

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