Tags: Yahoo | CEO | Alibaba | Stake

Yahoo CEO Denies Interest in Selling Alibaba Stake

Wednesday, 15 Sep 2010 02:47 PM

Yahoo Inc. Chief Executive Carol Bartz does not want to sell the Internet search company's stake in Alibaba Group, despite persistent overtures from the Chinese Internet firm.

Alibaba "constantly" approaches Yahoo about repurchasing its stake, Bartz told Reuters in a wide-ranging interview on Wednesday, but Yahoo has no plans to sell it.

"It's very strategic," Bartz said, adding that it also is a great investment.

Bartz's comments come after a report that a deal is pending for Yahoo to sell its roughly 39 percent stake in Alibaba for between $8 billion and $11 billion.

In a note to investors on Wednesday, Susquehanna Financial analyst Marianne Wolk referred to a report on a Chinese Web site about such a deal.

Bartz told Reuters that Alibaba was a smart way to invest in China, the world's largest Internet market by users and a region that has challenged other Internet companies such as Yahoo's rival Google Inc.

She played down recent reports suggesting tension between Yahoo and Alibaba, noting that she recently sat next to Alibaba CEO Jack Ma all day during a Microsoft summit.

"I'm betting Jack Ma will do a great job in the company," Bartz said.

Yahoo shares rose 4.2 percent to $14.20 on the Nasdaq stock market.

Bartz became CEO of Yahoo in January 2009, replacing co-founder Jerry Yang, whose tenure was marked by Yahoo's rejection of a $47.5 billion acquisition offer from Microsoft.

A former chief executive of software maker Autodesk Inc , Bartz has moved to cut costs and sell underperforming businesses since she joined.

In July 2009, Bartz signed a 10-year search partnership with Microsoft. The deal shifts Yahoo's costly back-end Web indexing chores to Microsoft while combining Yahoo and Microsoft's Web audience to create a stronger rival to Google.

Bartz said that the transition of the company's Internet search advertising system to Microsoft Corp's technology would occur by the end of October, and that Yahoo was no longer considering delaying the transition until after the holiday season.

Bartz said that search advertising rates would pick up in mid-2011, following the transition to Microsoft's technology.

"After the transition, I think we'll see a dip for a while just because it will be inefficient for a while, but by mid-next year I think we'll see the RPS (revenue per search) come up on the site," Bartz said.

Investors credit Bartz with bringing a decisive management style and much-needed discipline to a company known for a culture of feuding fiefdoms and a lack of urgency.

Yahoo's operating margins have risen during Bartz tenure, reaching 11 percent of revenue in the second quarter, compared to 5 percent a year earlier.

But Yahoo's revenue has continued to stagnate: the second quarter's anemic 2 percent revenue growth marked Yahoo's strongest growth since mid-2008.

The company's shares have underperformed the market. Yahoo's stock has increased roughly 13 percent since Bartz took the reins in January 2009, compared to the Dow Jones Industrial Average's 24 percent rise and the Nasdaq Composite's 49 percent rise during the same period.

Bartz defended her record, noting that she took over during the recession, and noted that shares of other tech giants like Cisco Systems Inc , on whose board Bartz sits, Microsoft, Intel Corp , have been rangebound for 10 years.

"There's no miracle coming here. We're just running a good company and are going to run an even better company," Bartz said.

© 2017 Thomson/Reuters. All rights reserved.

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Yahoo Inc. Chief Executive Carol Bartz does not want to sell the Internet search company's stake in Alibaba Group, despite persistent overtures from the Chinese Internet firm. Alibaba constantly approaches Yahoo about repurchasing its stake, Bartz told Reuters in a...
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