* Yahoo executives in Asia last week for negotiations
* Yahoo CEO defends disclosure relating to Alipay transfer
(Adds executive comments, updates stock price)
By Alexei Oreskovic
SAN FRANCISCO, May 25 Yahoo Inc (YHOO.O) said
it has made significant progress in resolving a dispute over
the online payments unit of Alibaba Group, a Chinese Internet
search company whose founder took control of the prized
Yahoo co-founder Jerry Yang and Chief Financial Officer Tim
Morse flew to Asia last week to thrash out the issue with
Alibaba, which is 43 percent-owned by Yahoo. Another Alibaba
investor, Japan's Softbank (9984.T), also participated in the
The revelation this month that Yahoo's Chinese partner had
abruptly handed Alipay -- one of Alibaba's crown jewels -- to a
company controlled by Alibaba founder Jack Ma sent the U.S.
company's shares tumbling 12 percent.
"There're a lot of moving parts but we're making progress,"
Chief Executive Carol Bartz told investors at an annual
analysts' meeting on Wednesday. "We're not going to get into a
public back and forth."
Investor attention has focused squarely on Yahoo's Asian
assets. Yahoo also owns 35 percent of Yahoo Japan Corp
Yahoo and Alibaba have sported a somewhat turbulent
relationship. Observers say Yahoo has bristled at the way it
has been sidelined on major decisions -- the surprise move to
separate off Alipay being the latest example -- while Ma's
company has been rebuffed by Yahoo in attempts to buy back some
of the U.S. company's invested stake.
Some investors believe those assets could potentially be
worth as much as Yahoo's entire current market value and are
betting that an IPO by privately held Alibaba, or one of its
subsidiaries, could boost Yahoo's valuation. In the past,
investors have also called for Yahoo to sell off part of its
investments and buy back its own shares.
Yahoo's stock rose as much as 5.3 percent, or 85 cents, on
Wednesday but ended the regular trading session up a penny at
ALL ALIPAY, ALL THE TIME
Yahoo executives spent the first 45 minutes of the
company's annual analyst day event addressing the Alibaba
situation before proceeding to planned presentations about the
strategy for Yahoo's core, U.S.-based Internet business and its
efforts to revive stalled revenue growth.
Bartz, who joined Yahoo as CEO in 2009, said the company
had made progress in its efforts to revitalize the Internet
"I know it's somewhat very popular to say Yahoo is not
turning around. But we have 14,000 people and a management team
that's working very, very hard to do just that," Bartz said.
"I would insist that you give us some credit for turning this
company around," she later added.
Still, executives conceded that problems with a partnership
with Microsoft were crimping search advertising revenue and
weighing on the company's long-term financial targets.
CFO Morse said Yahoo could achieve its targeted 7 percent
to 10 percent revenue growth range in 2012 and 2013, even
though he acknowledged that Yahoo was behind on its goal of
hitting the target growth rate this year.
The revenue shortfall means that Yahoo is also not making
as much progress as it expected toward its target of 27 percent
to 33 percent adjusted operating margins by 2013, even though
margins have expanded in recent years.
Yahoo is one of the most popular destinations on the Web
and the No. 1 provider of online display ads in the United
States, but the company is facing increasing competition from
social networking service Facebook and continuing pressure from
search leader Google Inc (GOOG.O).
Morse also said the company was making progress with plans
to "unlock value" from its stake in Japan, noting that Yahoo
was exploring three scenarios: creating a tracking stock,
spinning off its investment and an unspecified "other" option.
Executives described the process as complex, echoing
separate negotiations under way with Alibaba.
Alibaba has said that the Alipay transfer was done to meet
Chinese regulations regarding foreign ownership of online
Yahoo executives repeatedly stressed that all parties in
the negotiations agreed on basic principles, particularly to
ensure that Alipay would continue to be a driving force behind
auctions site Taobao -- Alibaba's key strategic asset -- and
that the payments system would be among the first to win an
operating license from the Chinese government.
Bartz also said all agreed that the Alibaba Group -- and
hence Yahoo -- would receive adequate "compensation" for
Feeling the pressure from complaints that Yahoo was too
slow in announcing the asset transfer, Bartz said its
disclosure was "timely and appropriate."
And she stressed, with a hint of exasperation in her voice,
that Yahoo was genuinely trying to resolve the "problem" with
its various Asian assets.
"I would like nothing more than for you to focus on Yahoo
Inc...us... because that's what this management team is working
so hard for," she told the analysts at the event.
"It's very hard to come to a meeting and 50 minutes of it
is Asian assets and 10 minutes is Oh yeah, what's Yahoo
(Additional reporting by Edwin Chan; Editing by Gerald E.
McCormick, Tim Dobbyn, Bernard Orr and Steve Orlofsky)