Yahoo Corporate Drama Deepens
Yahoo’s (NASDAQ:YHOO) much-anticipated deal to sell its stake in Alibaba Group has taken a turn for the worse as negotiations reportedly broke down. Irate shareholders, which include activist hedge fund Third Point LLC want to reconstitute Yahoo’s board, saying the changes earlier this month were not enough.
“The recently announced changes do not put the issuer on the right track towards maximizing shareholder value,” Third Point said in a filing yesterday. “Installing the hand-picked choices of the current board does nothing to allay investor fears that Yahoo is poised to repeat the errors of its past.”
Shareholders have been seething over the handling of the company’s operational and financial management, a particularly sore point being the failure to avail Microsoft’s (NASDAQ:MSFT) $47.5 billion takeover bid in 2008. Yahoo has also surrendered market share to rivals Google (NASDAQ:GOOG) and Facebook.
The negotiators are exploring other arrangements to implement the sale of the Alibaba stake. “ It is certainly possible that this is a temporary impasse,” Clayton Moran, an analyst with Benchmark Co. in Delray Beach, Florida, said in a research note yesterday. However, “the complex nature of this deal and the past performance of Yahoo’s board both limit our confidence.”
Here’s how shares of YHOO are reacting to the news:
Yahoo! Inc. (NASDAQ:YHOO): YHOO shares recently traded at $15.24, down $0.13, or 0.85%. They have traded in a 52-week range of $11.09 to $18.84. Volume today was 12,204,652 shares versus a 3-month average volume of 20,093,200 shares. The company’s trailing P/E is 18.59, while trailing earnings are $0.82 per share.
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