Finally it appears Yahoo!
While some investors might shudder at the thought of an additional $8 billion capital infusion for a company that is notorious for bungling acquisitions, it shows that management is willing and ready to unlock value in some of its investments where the company has been much more successful. In fact, the Japanese version of Yahoo! is still the leading search engine in Japan with 50% of the search queries, compared to Google's
While I think even Charlie Sheen would agree that a sale of Yahoo! Japan is a win for Yahoo! investors, I believe an even bigger win for Yahoo! is the 40% stake it built in China's leading e-commerce business Alibaba. These assets include Taobao and Alipay, China's version of eBay
The sale of Yahoo!'s Japanese assets doesn't necessarily mean that its Alibaba stake is next, but it does free management to work on building a tarnished relationship with the Chinese powerhouse that was formed between departed Yahoo! co-founder Jerry Yang and Alibaba founder and Chinese business legend Jack Ma. It also gives potential Yahoo! acquirers one less difficult relationship to manage as the focus can be placed extensively on unlocking the value of Yahoo!'s most prized asset, Alibaba.
Another potential pitfall to the completion of a meaningful deal for shareholders is that SoftBank also has a large 30% stake in Alibaba. The company would likely prefer to buy Yahoo's Alibaba share, but so would Jack Ma. The companies have discussed a deal among all three parties on a number of occasions but have been unable to agree to a deal. While the two Asian companies have maintained a strong relationship, Yahoo! has significantly complicated matters, and both would like to see Yahoo! out of the picture as soon as possible. This might create a greater position of strength for Yahoo! at the bargaining table, but investors need to remain patient, as any deal involving Alibaba is going to take awhile to play out. The good news is Yahoo!'s core business seems to be improving, and management appears ready to make some shareholder-friendly moves.