5. Yahoo!'s Punctuation Problem
Are we alone or does anybody else think it's long past time to yank the exclamation point from Yahoo! (YHOO - Get Report) and replace it with a question mark? Because it's a mystery to us how these guys continue to operate the way they do.
Alibaba Group, the Chinese internet giant which is 43% owned by Yahoo!, will potentially reap up to $6 billion in a spin-off of its Alipay e-payment division under a deal announced last Friday. Alibaba will pocket no less than $2 billion in proceeds if Alipay goes public or cashes out in some other type of "liquidity event." Shares of Yahoo! initially popped on the long-awaited transaction, but finished the day 3% lower as investors failed to figure out what's in it for them. And as we are constantly reminded, the market hates uncertainty.
As for us, we just hate stupidity. And from our vantage point this whole puzzling transaction seems tilted in that direction. Just to step back a bit. Yahoo! claimed in May that Alibaba's CEO Jack Ma had essentially stolen Alipay from under its nose in a so-called corporate restructuring. Alibaba disputed Yahoo!'s version, saying Jerry Yang, the former Yahoo! CEO and member of both boards, was indeed aware of the transaction, which blindsided current Yahoo! CEO Carol Bartz. Meanwhile, as a result of all this bewildering behavior, hedge fund honcho David Einhorn bailed out of his recently acquired chunk of Yahoo! stock stating: "This wasn't what we signed up for." Einhorn, like many others, originally bought into the stock on the belief that Yahoo! could capitalize on its Asian assets. And while last week's announcement explains how Alibaba can make good on Alipay, it unfortunately doesn't offer any real insight as to how Yahoo! can turn its Alibaba stake into cold hard cash. So mark our words Carol Bartz. Until you start answering some of these fairly simple questions, you better be willing to accept some nasty exclamations from your shareholders. Get the point?