Yahoo to review strategy post-Bartz

Yahoo’s board of directors plans to take a fresh look at at the internet group’s strategic options after the ousting of Carol Bartz as chief executive, with the sale of assests in Japan and China as one possiblity.

Although the priority for the board is recruiting a successor to Ms Bartz following her departure, Yahoo also will carry out a strategic review.

The board is expected to consider strategic partnerships and significant acquisitions but will also consider proposals from outsiders, which might include bids for the entire group, people familiar with the company’s thinking told the Financial Times.

The company has yet to hire a CEO-search firm, yet it expects the next leader to come from outside its ranks. Tim Morse, chief financial officer, was appointed interim chief executive late on Tuesday, after Ms Bartz told Yahoo employees in a companywide email that she had been fired.

The board moved against Ms Bartz amid shareholder agitation over a stock price that remains near its level when she joined the company two and a half years ago. Shares rose 5 per cent by on Wednesday to $13.61.

Despite the depressed price, bankers said the prospects for an outright sale were weaker now than four years ago, when Microsoft made overtures that led to a bid of above $30 a share. In particular, Ms Bartz reduced Yahoo’s options by agreeing a limited deal with Microsoft under which the software company generates Yahoo’s algorithmic search results and shares advertising revenue.

At a more fundamental level, Yahoo’s long reign as the top online display ad vendor in the US is expected to end this year as users spend more time on Facebook and other more innovative sites.

Senior people at the company said it was more likely now to unload the company’s minority stakes in Yahoo Japan, which is controlled by Softbank, and Alibaba Group, the largest e-commerce company in China. “We are not a financial investment company and they are of tremendous value”, one of them said.

While there was no final straw in the deliberations that led to Ms Bartz’s dismissal, the latest blow was her role in the resolution of a heated dispute with Alibaba, where Yahoo has a 43 per cent stake and board representation.

After Alibaba sold off its prized online payments unit to a group controlled by Alibaba founder and chief executive Jack Ma, Yahoo had to fight for Alibaba to get compensation that could be as little as $2bn. Those terms and the long-frayed relationship with Mr Ma disappointed Yahoo stockholders.

People close to Alibaba, which has been interested in buying back Yahoo’s stake, expressed cautious optimism that a change at the top at Yahoo might offer the chance for a fresh start.

“There has been bad chemistry between her and all the people she would have needed to work with,” said a person familiar with Alibaba’s ties with Yahoo. “Now they’re sending some interesting signals when they talk about ‘strategic opportunities’.”

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