Scott Thompson's First Yahoo! Moment?

NEW YORK (TheStreet) - It looks like the deal for Yahoo!(YHOO) to unlock the value in its Asian assets has collapsed, at least for now.

It's not clear yet which side stopped the talks, though Yahoo negotiators catching some blame for what they were expecting from the deal, which was reportedly to be structured as a complex cash-rich split that save the company a tax hit.

Yahoo! CEO Scott Thompson

There is some sentiment among investors and analysts that the cash-rich split deal never had much of a chance of working out because of its complexity and speculation that the Internal Revenue Service may not have given approval of the deal being a non-taxable event. That hasn't stopped the market from punishing the stock though, with Yahoo! shares off 5.8% to $15.19 on massive volume of nearly 80 million just ahead of the close.

One hedge fund analyst who declined to be named said that the IRS won't disclose its opinion of a transaction until the deal is signed, so there was risk that the government wouldn't necessarily see the transaction in the same light as the deal makers.

Thompson, formerly the President of PayPal, a subsidiary of eBay(EBAY) may have decided to focus on the long-term value in AliPay, which Alibaba Group majority owns. Yahoo! owns 40% of Alibaba, and with Thompson's background in payment services, perhaps he feels the $17 billion valuation that was reported for the stakes in Alibaba and Yahoo! Japan just wasn't enough.

Yahoo!'s entire market cap was sitting just under $19 billion before Tuesday's sell-off though, so Thompson was in a tough spot to make the argument that the Asian assets are worth much more. Perhaps he plans to wait until Yahoo!'s core operations have turned around and are operating at higher efficiencies. That could translate to a higher market cap for the company as a whole, and help him get the value he likely believes the stakes deserve.

Chairman Roy Bostock had been leading the negotiations on the sale, but he is also stepping down from the board of directors, undermining his sway at the negotiating table.

This could mean that Thompson is already exerting more control over Yahoo! than many have initially thought; that he's not just Bostock's pet. If it comes out that Thompson killed the deal in its present form, the new CEO will be taking a step toward setting a bold new course for the company.

And if it turns out that the stakes are eventually monetized at a much higher valuation, Thompson may be the one that Yahoo! investors -- no doubt disgruntled right now at yet another instance where an expected deal fails to come to fruition -- have to thank.

Interested in more on Yahoo!? See TheStreet Ratings' report card for this stock.

--Written by Chris Ciaccia in New York

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