Yahoo CEO reassures analysts about Alibaba stake
SAN FRANCISCO (AP) — 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 ½ 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.