James Perrin

Yahoo Cagey Over Alibaba Affair

26th May 2011 News, Industry News 2 minutes to read

Speaking at a Yahoo investor day, CEO Carol Bartz was evasive over the ongoing negotiations with Alibaba. The cautious answers given by the often forthright chief executive possibly indicates all is not going as swimmingly as she is suggesting.

Alibaba, the giant Chinese e-commerce group, recently shifted the ownership of its online payment company Alipay to a separate company. Yahoo, who partly owns Alibaba, was left in the dark over the move and fears have started to rise over the value of their stake in the Chinese retailer; no doubt further fuelled by the long-held belief that it is on the company’s prize assets.

Shifting of Ownership

As we reported [See: Yahoo’s Shares Drop after Sale of Alipay], Alipay was shifted from Alibaba, in which Yahoo possess a majority stake, to a separate company. This was done because of Chinese regulations stating that payment groups, who are not owned by banks and financial institutions, must be owned locally.

Incidentally, the current chief executive of Alibaba, Jack Ma, shifted the ownership of Alipay to another company that he actually owns. The move makes Alipay out of reach from Yahoo and seriously devalues their stake in Alibaba.

Valuation and Negotiations

At the time analysts feared what the shift would mean for Yahoo. Immediately their shares fell 7% and currently their shares have now dropped down by 12%. Therefore in two weeks, 12% of the valuation of the company has disappeared, that’s a whopping $2 billion wiped off their market value.

From Yahoo’s perspective, they want this issue resolved as soon as possible. This means entering negotiations with Alibaba and their shareholders, notably Softbank who are also a major shareholder. However speaking at the Yahoo investor day, CEO Bartz didn’t give too much away other than carefully choreographed answers over the negotiations.

Stick to the Script

Bartz assured investors and analysts that Yahoo were making ‘progress’ in their effort for ‘appropriate compensation’ as a result of the shifting of Alipay. As reported in the New York Times, she optimistically revealed, “We’re making progress… negotiations have a life of their own. They have speedy times and they have slow times.”

Diplomacy and rhetoric were common features in Yahoo’s dialogue as it appears they don’t want to rock the boat too much – they spent an hour explaining their intentions to get on with Alibaba. This in spite of Jack Ma’s publicised intentions of buying out Yahoo’s stake.

Yahoo’s Investment Choices

Since Bartz took over as CEO, her priorities have been on reviving Yahoo’s flagging revenue growth. As a result, many original investments have fallen by the wayside as the former search engine giant looks to streamline the company [See: Yahoo’s ‘Sunset’ Sale Begins].

However, the decision to focus on the Chinese markets by Bartz may prove to be another poor investment from the company who seem to be prone to them. How this is going to play out, we’re not quite sure – If Bartz’s answer are anything to go by, then neither are they. Appropriate compensation is wanted by Yahoo, whether they will get that, we will have to wait and see.

Share this post

1 Comment

What do you think?

London cityscape
Stacey Cavagnetto

The Best Digital Marketing Agencies in London

Stacey Cavagnetto
18th Jan 2023
Marketing Strategy
Gary Hainsworth

How To Write Ranking Content In 2023

Gary Hainsworth
16th Jan 2023
SEO Blog

Digital Ideas Monthly

Sign up now and get our free monthly email. It’s filled with our favourite pieces of the news from the industry, SEO, PPC, Social Media and more. And, don’t forget - it’s free, so why haven’t you signed up already?

Free Digital Marketing Audit

Are you a UK business that needs some expert help to uncover what’s holding your digital marketing back? Let us show you for free!


Call us on 0330 353 0300, email info@koozai.com or fill out our Contact Form.

Map of Hampshire Digital Marketing Agency
Hampshire Digital Marketing Agency
Merlin House 4 Meteor Way Lee-on-the-Solent, PO13 9FU, UK
Map of Lancashire Digital Marketing Agency
Lancashire Digital Marketing Agency
Cotton Court Business Centre Church Street, Preston Lancashire, PR1 3BY, UK
Map of London Digital Marketing Agency
London Digital Marketing Agency
Albert House 256 - 260 Old Street London, EC1V 9DD, UK

Unlike 08 numbers, 03 numbers cost the same to call as geographic landline numbers (starting 01 and 02), even from a mobile phone. They are also normally included in your inclusive call minutes. Please note we may record some calls.

Circle Cross