Enjoy (really):

After his unusually enthusiastic declaration at a Silicon Valley event last week that “we are very, very interested” in buying the “whole” of Yahoo, you might imagine Alibaba Group co-founder and CEO Jack Ma running out of the speech looking for a giant pile of cash to pay for it immediately.

Instead, according to sources close to the situation, what the Chinese entrepreneur got was a cold dose of CFIUS — or Committee on Foreign Investment in the United States, the federal interagency review process for foreign investment deals.

Translation: If you are from China and want to buy our U.S. companies, we are going to have to give you a major look-see and it is not going to be pretty.

Perhaps that’s fair, but the prospect that even a purchase such as Yahoo, a consumer business that seems to have little in the way of national security concerns, might enter the buzzsaw of U.S. politics apparently surprised Ma.

Thus, sources said, that while it remains very interested, Alibaba is now at least a little concerned about the feasibility of the deal and that Ma is “perplexed” about why the U.S. has such restrictive rules against foreign ownership of a consumer business.

That said, he has been in touch with Yahoo co-founder and board member Jerry Yang and is likely to make a more official visit soon with others involved in Yahoo’s strategic review.

In addition, sources said, rumors of an imminent Yahoo bid hook-up with DST Global and Silver Lake — which recently invested in Alibaba — are overblown. While Ma did say last week at his much-noticed speech at Stanford University that he was talking to a lot of buyers, Alibaba is not closely aligned with anyone as yet.

Of course, given that Yahoo owns a 40 percent stake in Alibaba, Ma will be a big player in any deal done.

That’s because of a 2005 agreement that stipulates that if there is a change of control, Yahoo must give Alibaba a 15-day chance to buy back its stake.

Still, after his effusive I-want-Yahoo-now speech that caught the Internet giant and its bidders off guard, dialing back the rhetoric a bit is probably no surprise given the delicate dancing now going on.

In other words, a case of wanna-be-buyer’s remorse.

While they are usually much less voluble than the chatty Web execs of Silicon Valley, the execs who run China’s fast-growing Internet companies seem to be keeping up just fine of late.

On Friday, for example, the Alibaba Group’s Jack Ma was positively effusive about wanting to buy all of Yahoo, a company which actually owns 40 percent of Alibaba. “We are very, very interested,” said Ma at an event at Stanford University.

Now, in an interview with Bloomberg, Renren CEO Joe Chen decided to take a smack at Ma over his disputed spinoff of its Alipay payments unit, which caused a high-profile ruckus with Yahoo earlier this year.

“It’s quite unfortunate,” Chen said to Bloomberg about disagreement, which has since been settled. “It caused a lot of uncertainty about Chinese Internet companies.”

Them’s fightin’ words, and a source close to Alibaba reacted with, well, reaction.

“Yeah, it shook confidence so badly that Silver Lake and DST [Global] just decided to put in billions to back Jack Ma,” referring to a recent funding deal by the large investors. “People shouldn’t try to blame their own lack of performance on others.”

Ouch!

Actually, Renren has bigger problems than Alibaba.

According to a substantive report in The Wall Street Journal yesterday, what’s really hurting Chinese Internet companies is the declining stocks caused by recent accounting scandals there, which may have attracted scrutiny from U.S. regulators.

Wrote the Journal: “A series of alleged accounting frauds this year at little-known Chinese companies listed in the U.S. has triggered a sharp shift in sentiment among investors, who are now worried about hidden business risks or financial problems.”

Hence possible investigations by the Securities and Exchange Commission that will surely drag Chinese stocks on U.S. exchanges down more.

And indeed, the stock of Renren — which had its own controversial issue with accurate data reporting at the time of the IPO of the social networking site earlier this year — declined 13 percent Friday, along with other Chinese companies listed here.

In answer to a direct question about whether his company was going to buy Yahoo at a forum at Stanford University in Silicon Valley this afternoon, Alibaba Group Chairman and CEO Jack Ma said: “We are very interested.”

Said Ma: “We are very interested in Yahoo. Our Alibaba group is important to Yahoo and Yahoo is important to us … All the serious buyers interested in Yahoo have talked to us.”

Finally, at least one crystal clear answer in the confusion at Yahoo. More importantly, it is the first time Ma has indicated that he wanted to be a principal player in any deal around Yahoo rather than an element of a buying group.

Later, in answer to a question I posed about how he was going to do that, Ma said he wanted the “whole” company, but that the effort was complicated and included a number of players.

Again, he said: “We are very, very interested.”

I also asked him if he had visited Yahoo in his trip to California, which Ma said he has not in 15 days here so far. He said he has mostly been sleeping and eating, as part of a longer-term visit to the U.S.

Ma’s declaration came as part of a lively closing keynote speech at Stanford University’s Graduate School of Business, where he talked about the Chinese Internet company’s growth, focusing on how China is the next great Web economy.

Talking about competitors such as eBay, which have tried to enter the huge Asian market, he joked that “eBay might be sharks in the ocean, but Alibaba is a crocodile in the Yangtze.”

Of course, given his presence in Silicon Valley, one topic of interest was whether Ma would be heading over to visit nearby Yahoo and what role he will play in the current internal debate over the company’s future in the wake of the ousting of its CEO Carol Bartz.

The disposition on Yahoo’s Asian assets, which includes 40 percent of Alibaba and a large stake in Yahoo! Japan, are critical to the current strategic review of the company, since they make up a large part of its market valuation.

In comparison, the value of its U.S. and other global assets are small.

When later asked about his experience of being involved with Yahoo, which made a very canny investment by Yahoo co-founder Jerry Yang in Alibaba many years ago, Ma also said that he would do it again, but not in the same way.

The same way has to do with the level of foreign ownership, which Ma has been trying to reduce in a number of ways and which Yahoo has thus far resisted.

To answer a question about the fight between Ma and Yahoo over its Alipay fight, when Ma spun it out of Alibaba, he said the situation was tense, but that today “the problem is solved and I am half-burnt.”

He was referring to a settlement, which will require a lot of growth from the still-nascent online payment business.

Ma was asked later about the biggest misunderstanding in the U.S. about China and vice versa. “Our job is not to solve the misunderstanding,” he said. “Our job is to change ourselves to solve the problem.”

In another query about his relationship with Yahoo’s Yang, Ma called him a lifelong friend and also said he appreciated how much that meant to Alibaba’s beginnings.

“But, this is business and not personal,” Ma said about the current situation. “While we appreciate yesterday, but we are looking for a better tomorrow.”

The first line, for those not mad fans of the classic movie like me, is from “The Godfather.”

The question is, though, will Ma make Yang an offer he can’t refuse?

Silicon Valley’s Silver Lake and DST Global of Russia, as well as Chinese private equity firm Yunfeng Capital, are leading a $1.6 billion tender offer for privately held employee and shareholder stock of China’s Alibaba Group, according to sources close to the situation.

Yunfeng, by the way, was co-founded by Alibaba Chairman and CEO Jack Ma, as well as other prominent Chinese entrepreneurs.

Along with DST, Silver Lake and Yunfeng, Singapore-based investment firm Temasek is also participating in the tender offer as an investor, but in a smaller way.

The deal, which has been discussed for some time, was signed earlier today and will be presented to its employees in an internal company blog, which will be in Chinese.

To get around persistent foreign ownership issues in China, sources said, DST and Silver Lake are ceding voting control of their stakes to Alibaba management.

If the tender is fully subscribed, that would mean a stake of just under five percent for the group, sources said, and it gives Alibaba a $32 billion enterprise valuation.

The impetus for the tender offer, which begins today, appears to be trying to address a cash-out, paper-rich issue for Alibaba employees.

There are no active secondary private markets in China, as is the case for tech start-ups in the U.S., and there is also no IPO in the foreseeable future for Alibaba. Thus, management has been looking for a way to give its employees and also other shareholders some liquidity.

This tender offer is not a capital raise by Alibaba and is only aimed at eligible employees and shareholders. The purchase of the Alibaba shares is expected to close before the end of December.

It will be done via a special investment vehicle, specifically aimed at this purchase, that includes a spate of investors. Giant Interactive Group, a Chinese online game developer, for example, said it had committed $50 million to the fund.

It’s not clear what the implications are for Alibaba’s biggest shareholder, Yahoo, which sources said is not selling shares in the tender offer. Yahoo’s fully diluted Alibaba 39 percent stake is now worth $12.5 billion in the deal.

That’s discounted due to tax issues and also the inability of the Silicon Valley Internet giant to sell its Alibaba shares.

In other words, investors will likely welcome this higher valuation, but realize a public offering is farther away than ever.

But it is interesting in that it clearly shows a strong relationship between DST and Silver Lake, which have jointly been mulling a possible bid for Yahoo along with Silicon Valley venture firm Andreessen Horowitz, as I previously reported.

Some will speculate that Silver Lake and DST now have an in with Alibaba, which is important, since a large slug of Yahoo’s market valuation is due to its Alibaba and also Yahoo Japan! assets.

If Yahoo is sold, of course, the disposition of the Alibaba asset is an important part of the deal.

More to come, including the implications for Ma, who has been under siege of late around his spinning out of Alibaba’s Alipay payments service and the noisy battle that later ensued with Yahoo. Yahoo and Alibaba, as well as its other large shareholder, Japan’s SoftBank, settled that dispute earlier this summer.

His involvement in Yunfeng, which is buying the company’s shares in a special fund that Ma is not in, will likely attract some scrutiny, anyway.

Sources said Ma is a minority investor in Yunfeng itself, has no control rights and is not a director. In addition, Yunfeng has no relationship with Alibaba.

In another interesting twist, Alibaba rival Tencent has close ties with DST’s Internet affiliate that used to share the same name, having invested $300 million last year in the affiliate that holds major Russian Internet properties.

A range of major players interested in acquiring all or a large piece of Yahoo have been prepping possible bids and have been in touch with the Internet giant’s board over the last several days.

While Yahoo has publicly said it was not for sale, according to numerous sources both inside and outside the company, it has been receptive to the interest and its Chairman Roy Bostock and Co-founder Jerry Yang have spoken to several.

Among the possible players: Silicon Valley venture firm Andreessen Horowitz, which is working with private equity firm Silver Lake, in a deal that also might include Russia’s DST Global and Yahoo’s Japanese partner Masa Son; former News Corp. exec Peter Chernin, who is partnered with Providence Equity Partners; and the possibility that Yahoo’s Chinese partner, Alibaba Group, might consider entering the fray in what could be a reverse merger of sorts.

Also being rung up by some of the parties: Microsoft — Yahoo’s advertising and search partner — which is being seen as a possibly moneybags in any deal.

The movement among these investors is against a backdrop of increasing pressure for Yahoo’s board, after it fired CEO Carol Bartz last week. In the wake of the dramatic move, shareholders have upped criticism of Bostock and the board and have been looking hard for alternatives.

Today, that included hedge fund investor Daniel Loeb of Third Point, which has a 5.1 percent stake in Yahoo. In a filing this morning, he said he might increase that amount, and described a testy hour-long phone call he had earlier this week with Bostock that ended abruptly with a hang-up from Yahoo.

Sources said Loeb called Bostock a “fool,” among other not-so-nice names, on the call and asked for Yang’s help in dumping him.

This comes as exactly no surprise, given his previously strong letter in which Loeb called for Bostock’s ouster.

Loeb has been calling out Bostock — who is also on the boards of Morgan Stanley and Delta Airlines — for a series of gaffes at Yahoo since he became chairman in 2008 (he’s been on the board since 2003).

Those have included: Yahoo’s bungled effort to stave off a takeover by Microsoft several years ago; the too-long enthusiasm for Bartz, who was hired in early 2009 and fired last week; sitting unusually still as competitors such as Facebook, Google and more have out-innovated and outgrown Yahoo; and, of course, the falling knife of a stock, which has dropped precipitously since Bostock has been in charge of the board.

As Loeb wrote in a letter he sent to the company last week:

“It is time that certain members of this Board were held accountable for its past failures and their individual roles. Accordingly, we insist that Mr. Bostock, who championed Ms. Bartz’s hiring and led the charge against the Microsoft deal, promptly resign from the Board.”

Loeb is likely to add to that later today at a high-profile investor conference in New York, where the colorful but tough-talking investor is sure to add more logs to the fire.

But it not only him. Other major shareholders of Yahoo are also in touch with possible outside buyers, seeking a change at the long-troubled company, after its shares have remained in the doldrums, its attrition rate of employees has spiked and its product pipeline has slowed to drip.

This has all been taking place — of course — during one of tech biggest and most innovative booms, in which Yahoo competitors have grown strongly.

Enter Marc Andreessen, the well-known entrepreneur who has transformed himself into one of Silicon Valley’s most powerful venture capitalists.

He and his partner Ben Horowitz recently pulled off another similar deal — with Silver Lake — to take control of a then-troubled Skype. They later flipped it to Microsoft for a large return.

Sources familiar with the situation said the pair have become increasingly intrigued by the situation at Yahoo and believe that its assets and brand are still strong, despite its management turmoil in recent years.

One problem is the huge cost of almost any kind of takeover and also the complexity, given much of Yahoo’s $18.5 billion valuation is due to its Asian assets.

The sale of those shares, as well as the selling off of some of Yahoo’s less core properties, makes for a very complicated situation for anyone.

Said one person looking at the company: “It is one of the more massive hairballs around.”

That is a common sentiment among many of those looking at Yahoo, which has hired Allen & Co. to manage the process.

Also of worry is a bid that would include too many players. Yahoo has long been plagued by indecisiveness on the part of its execs and, mostly, its board.

But one thing all the possible buyers of Yahoo, as well as an increasing number of its shareholders, agree on: The Yahoo board needs a major shake-up.

As Loeb wrote last week, which many I interviewed also echoed:

“This letter details our principled demands for sweeping changes in both the Board of Directors (the “Board”) and Company leadership, and outlines the hidden value of Yahoo, which has been severely damaged — but not irreparably — by poor management and governance.”

After our grand tour of Asia last week — with stops in Korea and Japan — it seems like a perfect time to update the speaker list for our upcoming AsiaD conference in Hong Kong in October.

As Walt Mossberg and I said, we are trying to mix both U.S.-based speakers with a pan-Asian selection of speakers from across the region, and the new additions are just that.

For the international confab — this one will be held Oct. 19-21 — we’ve already announced a great lineup, including Alibaba’s Jack Ma; Google Android head Andy Rubin; Twitter inventor and product guru, as well as Square co-founder and CEO, Jack Dorsey; Nvidia founder and CEO Jen-Hsun Huang; and Asus Chairman Jonny Shih.

Now, to add to that terrific lineup:

Kazuo “Kaz” Hirai is widely considered the second in command at the consumer electronics giant Sony, in charge of its key computer entertainment division, as well as now serving as executive deputy president of the whole company. In that role, the dynamic exec is at the nexus of the Japanese company’s efforts around tablets, smartphones, gaming and more. As Sony struggles to reassert its dominance over the arena, Hirai will be a key player in that effort.

Bradley Horowitz — as head of product management for Google+, the search giant’s aggressive effort to break Facebook’s hammerlock on social networking — has a perfect perspective to talk about the fast-growing area and where it is going globally. With locally-based social companies springing up all over Asia, can Google establish one the whole world will use? It’s an important question and Horowitz’s job No. 1.

At Microsoft, Andy Lees is leading one of the software giant’s most important initiatives, as president of its Windows Phone division. His come-from-behind job includes mobile software and hardware, as well as its key partnership with Nokia. With Apple’s iPhone and Google’s Android far in the lead, Lees will need to win in markets globally, especially in Asia.

Peter Chernin is one of Hollywood’s top players and execs. The former top News Corp. exec is now a movie producer — his first effort, “Rise of the Planet of the Apes,” is a big hit. But he’s also been increasingly active in media investing in Asia of late, and has a lot to say about the global nature of entertainment in the digital age.

John Roese heads the North American R&D team for Huawei, the Chinese telecom giant making everything from heavy-duty gear for networks to mobile phones and tablets. The former CTO of Nortel, he’s heading up global development of Huawei’s cloud services for both businesses and consumers. Roese will also talk about the phenomenon of a Chinese-owned company emerging on the world technology stage.

Even in the midst of an economic downturn, there is no denying that it has been a golden time for Silicon Valley start-ups, which have enjoyed unprecedented growth and funding in the Web 2.0 era. But as they seek to expand beyond the U.S., a critical move for them all, we’ve assembled a panel of entrepreneurs to discuss it, including:

Brian Chesky is the CEO and co-founder of Airbnb, the popular online vacation rental site that recently got a huge dose of funding and an equally large amount of controversy. How Airbnb can take the company to the next level, including across the world, while dealing with the kinds of challenges the small management team has to face, will be an interesting topic for discussion.

After stints as president of Asia Pacific and Latin America operations at Google and co-founder of the online personal finance company Yodlee, Sukhinder Singh Cassidy is trying her hand at a small start-up again. She’ll talk about how the recently funded Joyus, a new premium video commerce site trying to pioneer a new way to shop online, plans to expand globally.

Finally, longtime tech exec David Goldberg is now running one of tech’s most successful start-ups at SurveyMonkey, the dominant online survey company. With stints as founder of music site Launch Media, which was bought by Yahoo, and as an Entrepreneur in Residence with Benchmark Capital, he is the perfect person to explain what it’s like being an entrepreneur today in Silicon Valley.

We have even more speakers for AsiaD we’ll be announcing in the coming weeks, so get ready for what’s next.

On our weeklong trip to Asia in preparation for our upcoming AsiaD conference in the fall — including a stop in South Korea earlier in the week — Walt Mossberg and I have spent the last few days in Tokyo.

That’s because while AsiaD will have a Chinese flavor — by virtue of its location in Hong Kong and given how increasingly important China is in the digital arena — we also want to make sure that the focus is pan-Asian.

Of course, Japan has always been one of the key centers of the digital world, especially in the area of consumer electronics, so it was interesting to see what it has been up to.

While here, we visited gaming firms such as Nexon (Korean-born, but HQed here) and Gree; met execs from companies such as Mixi, Japan’s largest social networking site (and not Facebook, which is still small here); and visited the big behemoths like Sony (which is up to some very innovative things, from what we saw this week, including the dorktastic head-mounted video device I am wearing above).

We also went to see what’s up with smartphones and other gadgets in the Akihabara area — often referred to as “Electric Town” — of this bustling city, which is one of my favorites in the world.

That’s why Tokyo’s digital companies will be a big part of AsiaD. We’ll soon be announcing even more speakers for the event, which takes place in Hong Kong Oct. 19-21.

Until then, here’s my video of our tour, which includes a look at the latest in rice cooking technology (you’d be surprised!):

And here is a video from a breakfast talk Walt and I did there:

]]> http://allthingsd.com/20110806/asiad-adventures-japan-edition-walt-and-kara-visit-digital-tokyo-video/feed/ 0 http://allthingsd.com/20110803/asiad-adventures-walt-and-kara-in-seoul-video/ http://allthingsd.com/20110803/asiad-adventures-walt-and-kara-in-seoul-video/#comments Wed, 03 Aug 2011 23:01:33 +0000 Kara Swisher http://allthingsd.com/?p=105743

This week, my AllThingsD partner-in-crime Walt Mossberg and I are in Asia as part of our planning for the upcoming AsiaD conference in the fall.

We’ll soon be announcing even more speakers for the event, which takes place in Hong Kong from Oct. 19-21.

And while AsiaD will have a Chinese flavor, by virtue of location and given how increasingly important the country is in the digital arena, we also want to make sure that the focus is pan-Asian.

Hence, our trip to South Korea — as well as to Tokyo, Japan — to meet companies, look at start-ups and get a feel for the key trends of these places.

In Seoul earlier this week, for example, Walt and I went to visit Samsung, the company that dominates most of tech in South Korea.

The giant conglomerate, which has been a major maker of televisions and other consumer electronics, is now aggressively competing in the smartphone and tablet arena.

It has partnered with Google Android as one of many handset and tablet makers using the mobile operating system. But from our talks with execs here, all Samsung seems to think about is Apple and its powerful iPhone and iPad, which it seems to consider its one and only rival.

We’ll be talking about all this and more at AsiaD, but until then, enjoy the video of our tour, which includes us as stars on the video wall at Samsung’s D’light exhibit in Seoul:

]]> http://allthingsd.com/20110803/asiad-adventures-walt-and-kara-in-seoul-video/feed/ 0 http://allthingsd.com/20110731/wassup-whats-down-is-more-like-it-as-china-settlement-fails-to-stem-yahoos-stock-decline/ http://allthingsd.com/20110731/wassup-whats-down-is-more-like-it-as-china-settlement-fails-to-stem-yahoos-stock-decline/#comments Sun, 31 Jul 2011 19:48:06 +0000 Kara Swisher http://allthingsd.com/?p=104653

You would think the settlement of a major dispute would goose the stock of a company, but Yahoo’s deal with its Chinese partner Alibaba Group on Friday did exactly the opposite.

Despite the clearing of an obvious overhang to its shares, the stock of the Silicon Valley Internet giant dropped almost three percent Friday to close at $13.10. While the ongoing federal budget wrangling was partly to blame, it was only a very small part with an overall market decline of under one percent.

A tepid reaction to the deal — in which Yahoo, Alibaba and Japan’s SoftBank came to terms over the spinoff of Alibaba’s Alipay payments unit after much wrangling over the move — came quickly from Wall Street analysts.

A report titled “Yahoo Inc: Alipay Agreement: Better than Nothing, But Not That Great,” by J.P. Morgan’s Doug Anmuth, was typical. Pointing to no clarity on an IPO of the Chinese assets of Alibaba and that “prior to the divestiture, Alibaba Group owned 100% of Alipay and all of its income, which is now reduced to 37.5% ownership of Alipay and 49.9% share of the pre-tax income,” he noted that Wall Street “has recently assigned no value to Yahoo!’s share of the asset.”

Well, less than zero, if the stock decline is taken into account, which means Yahoo’s market cap is now just over $17 billion.

According to sources close to the situation, especially since Yahoo’s Asian assets make up more than $9 billion of that valuation, private equity investors and others are pulling out their spreadsheets once again about a possible takeover or privatizing of Yahoo.

Several months ago, for example, former News Corp. exec Peter Chernin had been contemplating a friendly bid with partners such as Providence Equity Partners and others. While there have been rumors recently that he has reengaged in that effort, that is unclear.

Sources also note that Yahoo’s top execs, especially CEO Carol Bartz, and also members of its board, are perplexed that the settlement in China — a positive development — had the opposite effect on the stock.

It’s part of a continuing decline. Yahoo shares are down almost 26 percent in the past three months. Most Web stocks — such as Google, Amazon and Microsoft — are strongly up in that period. The only other obvious laggard is AOL, which is down almost 16 percent in the past three months.

]]> http://allthingsd.com/20110731/wassup-whats-down-is-more-like-it-as-china-settlement-fails-to-stem-yahoos-stock-decline/feed/ 0 http://allthingsd.com/20110729/liveblogging-the-yahoo-alibaba-settlement-call-everybody-breathe/ http://allthingsd.com/20110729/liveblogging-the-yahoo-alibaba-settlement-call-everybody-breathe/#comments Fri, 29 Jul 2011 13:01:12 +0000 Kara Swisher http://allthingsd.com/?p=104149

As these companies are wont to do in the middle of the night, Yahoo, SoftBank and the Alibaba Group have reached an agreement in their nasty dispute around the Alipay payments unit, and they are ready to talk about it.

Well, not Alibaba’s CEO Jack Ma (pictured here), Yahoo’s CEO Carol Bartz or SoftBank’s Masa Son, but their functionaries are all set to discuss the deal.

The issue has revolved around the spinning out of Alipay by the Chinese Internet giant Alibaba, without the approval of large stakeholders Yahoo and Japan’s SoftBank, which the pair felt was a big no-no.

Much mishegas followed, but the trio has been hard at work on a settlement, which is here now.

Of course, had the three companies cooperated in the first place as joint owners and board members of Alibaba, this all would have been unnecessary.

5:48 am PT: The call starts without all kinds of regulatory info about what can and cannot be said, before being thrown to Yahoo CFO Tim Morse.

One interesting wrinkle is that SoftBank’s Ron Fisher cannot speak at all, due to some Japanese laws, which are unexplained. But, said Morse, he’s there to show his support.

Go, Ron!

Alibaba’s CFO Joe Tsai is up first to talk about the deal over Alipay, which he stresses does not really make much money now. As he says, it is “marginally profitable.”

Tsai walks through the facts that they have already outlined earlier today, including a variety of payments from Alipay to Alibaba, since — let’s be clear — it used to be part of Alibaba.

But Alibaba said it had to spin it out in order to get critical regulatory approvals from the Chinese government, which caused this mess.

Morse now comes on, noting the whole squabble really had “no direct impact” from a financial point of view on Yahoo or SoftBank at this time related to its Alibaba assets.

Well, shareholders of Yahoo might beg to differ, considering the huge hit the stock has taken due to the fight. Wall Street has long considered Yahoo’s Asian assets its most valuable part.

But Morse is pleased the complex agreement has finally been reached — I am guessing it was not easy to negotiate among three different countries with so much pressure.

5:59 am: Time for Q&A!

The first question is about more deets and also about the possibility of a liquidity event for Alibaba or its various units.

Tsai underscores that there might not be one or there might be one. In other words, the Chinese assets of Yahoo may or may not ever pay off.

The next question is about why Yahoo and SoftBank should have a cap on an asset they used to own 100 percent of. Good point!

Neither Morse or Tsai really answers the question, except for Tsai talking about how certain rules over foreign ownership of payment companies in China means it had to be like this.

“If you own 100 percent of the business that cannot operate, you own 100 percent of zero,” said Tsai.

Translation: That’s China, folks, so suck it up!

The next question is a promissory note, which Tsai says has value, even though it actually does not have value right now. China!

The analysts still are stuck on this fact that, under terms of the agreement, Yahoo will only get 37.5 percent of an IPO or other liquidity event, when it used to be owner of 100 percent of Alipay.

Good point: Will this happen to other Alibaba units, such as its Taobao commerce unit?

China is a good place to be, assures Tsai, which is cold comfort right now.

A lot of swirl around preferential terms in the deal for Alipay with Alibaba’s units, which seem to be the same as before. In other words, nothing has changed, except a lot of stock loss for Yahoo and less technical ownership of Alipay.

The Wall Street analysts on the line continue to be riveted to the idea of a liquidity event for Alipay and other Alibaba units, especially Taobao, and keep asking different versions of this question.

The last question is about more deets of the deal and new business ideas for Alibaba.

Tsai talks about a cloud-based system rolling out, for example.

The questioner moves to, you guessed it, a liquidity event.

“I don’t think we want to get into it at this point,” says Tsai.

Well, we do, but apparently Yahoo shareholders are not going to.

That said, the deal is finally settled, which has already given Yahoo shares a small bump today. And that’s not nothing.

]]> http://allthingsd.com/20110729/liveblogging-the-yahoo-alibaba-settlement-call-everybody-breathe/feed/ 0 http://allthingsd.com/20110729/china-solution-yahoo-softbank-and-alibaba-reach-agreement/ http://allthingsd.com/20110729/china-solution-yahoo-softbank-and-alibaba-reach-agreement/#comments Fri, 29 Jul 2011 11:50:57 +0000 Kara Swisher http://allthingsd.com/?p=104120

Yahoo, SoftBank and the Alibaba Group have reached an agreement in their contentious dispute around the Alipay payments unit.

The trio have been in extended talks since Alibaba’s CEO Jack Ma spun Alipay out from Alibaba without the approval of Yahoo and Japan’s SoftBank, which own large stakes in Alibaba.

At the time, he said he did so in order to get critical regulatory approvals from the Chinese government. The move prompted an ugly fight between Alibaba and its partners.

In a statement, the trio said:

“The agreement is consistent with the two agreed-upon principles established at the outset of the negotiations: structure the inter-company relationship between Alipay and Taobao in order to preserve the value within Taobao and, by extension, within Alibaba Group; and provide that Alibaba Group is appropriately compensated for the value of Alipay.”

Under terms of the agreement, the three companies said that Alipay will continue providing payment services to Alibaba’s Taobao commerce site and other subsidiaries; Alibaba will be paid almost half of Alipay’s pretax income; and Alibaba will get between $2 billion and $6 billion — or 37.5 percent of the total equity value — in the event of an Alipay IPO or other liquidity event.

Yahoo has also filed a very detailed account of the deal here with the Securities and Exchange Commission, which you can read here and especially here.

Yahoo’s stock has risen 3.6 percent on the news so far this morning, but it is still just below $14 a share.

There will be a call at 5:45 am PT to explain it all, which I will be liveblogging, but here’s the full press release:

alipay

]]> http://allthingsd.com/20110729/china-solution-yahoo-softbank-and-alibaba-reach-agreement/feed/ 0 http://allthingsd.com/20110719/liveblogging-yahoo-q2-earnings-call-whos-to-blame-for-the-revenue-rout/ http://allthingsd.com/20110719/liveblogging-yahoo-q2-earnings-call-whos-to-blame-for-the-revenue-rout/#comments Tue, 19 Jul 2011 21:02:54 +0000 Kara Swisher http://allthingsd.com/?p=100052

Yahoo turned in another weak performance in the second quarter, with yet another decline in revenue.

This time it was five percent, compared to last quarter’s six percent. In other words, at least things are looking up as they go down!

While earnings per share rose smartly, Wall Street is still looking for strong sales growth from the Silicon Valley Internet giant, which seems unable to provide it.

Blamed most this time for the revenue fall: Yahoo’s changes in its display sales operations in the key Americas region, reasons for which were largely unspecified in the initial company press release. (You can see the damage in this slide deck from the company here.)

Maybe Yahoo CEO Carol Bartz will explain it all in its upcoming conference call with analysts (or she could try the I-don’t-know approach taken by News Corp. CEO Rupert Murdoch in PhoneGate hearings in Britain earlier today!).

2 pm PT: It starts with the usual regulatory blah-blah, which I always enjoy.

Bartz gets right into it, opening with the key problems with China’s Alibaba Group, as well as its display and search revenue weaknesses.

The fight with Alibaba is over its Alipay payments unit, which was spun out of the Chinese company without Yahoo’s say-so. Yahoo is a big shareholder.

Bartz says that the company was working on a settlement night and day.

But she quickly gets onto how display did not perform as expected in its key Americas arena. “Obviously, I am not happy,” she said.

Obvi! Neither are shareholders, Carol.

She says it was not about new competitive development. It was not about the economy. It was not about engagement.

So what was it? Changes in its sales leadership and organization, says Bartz, which has included talent walking out the door in droves.

A lot more than Yahoo expected, but no surprise to anyone who has been paying any attention to the brain drain at the company.

Bartz promises a new approach to sales, part of its endless turnaround, which is beginning to feel like a digital version of “Waiting for Godot.”

Search revenue, though, says Bartz, was better than expected.

2:11 pm: CFO Tim Morse is on now, running through the numbers and the display shortfall in the Americas region.

“We simply did not have appropriate coverage,” says Morse, noting consumer products, tech and autos as weak spots in the advertising market.

Thank goodness, then, for the guarantees from search revenue in the Microsoft partnership deal.

More numbers and then it is back to Bartz to talk about search, which is going better than the last quarter, when it was the culprit for the revenue decline.

She says that Microsoft and Yahoo were working together to improve the issues.

“We’d like to be further down the road,” says Bartz about the goal of search revenue per search growth, as well as settling all the other problems, such as the Asian issues.

And, by further, I am presuming she means actual forward movement, which is what roads are actually for.

2:27 pm: Q&A time, the part of our program where Wall Street analysts do not ask the questions that need asking (and where I win fancy journalism awards for pointing this delta out!).

Therefore, Bartz is first thanked for providing “color” about the display disaster and is not asked about more specifics of the disaster itself.

The second question still does not get to it either, but she does note Yahoo’s sales force has to sell beyond “Gee, we’re big” and come up with better ad solutions.

“The issue is we did not have enough sales people in front of the big clients,” says Bartz.

That’s because all those former Yahoos are now working at Groupon, LivingSocial, Facebook and on down the line and now in front of big clients for those hotter companies.

2:34 pm: Question about its Asian assets. Yahoo’s talks with Yahoo! Japan and Alibaba are separate, says Bartz, although I would add that they have non-movement in common.

And also a question about Yahoo’s interest in the acquisition of the Hulu premium online video service.

Bartz winks verbally and says nothing, which translates into: Of course, it is interested.

More on the reasons for the display fall-off, which Bartz makes clear is not due to big competitive threats, but internal issues.

Maybe she’s saving big competitive threats as the reason for a revenue decline in the third quarter!

I look forward to the quarter I get the finger pointed at me for causing revenue to fall, due to my snarky posts.

Now, we are into softball questions about improvements in engagement. It’s up, but no one asks why Yahoo is still not doing anything very cutting edge in product innovation compared to competitors.

I believe Google has launched at least 14 new social networks since this Sunday, along with its strong quarterly performance last week. And Apple, well, blew away its quarter today as it is about to release more cool new stuff later this week.

And that might be the crux of the issue for Yahoo, which might not solve its woes by throwing a more focused sales army at the issue.

That’s because Yahoo’s products are simply not nearly has social as Facebook or even Google right now, which might be the true problem as old customers move on to new advertising solutions.

Whatever the reason, Yahoo clearly needs a refresh of its ad products and how it sells them, especially in its fast-growing mobile, video and communications products.

Bartz talks about getting better expertise, a tighter regional focus and other issues of going to market, which is perhaps something she might have realized many, many quarters ago.

After all, she’s been in charge for a while, and these issues are not new.

In fact, in an earlier quarter, Bartz was stressing “tentpole” events and anchor media properties and the power of the size of Yahoo as a selling point.

This was in April, in fact, in the first quarter of this year.

As I wrote then:

“CEO Carol Bartz excited was the Silicon Valley Internet giant’s traffic gusher for big tentpole events such as the Super Bowl and the Oscars. In fact, Bartz practically sounded like a gushy “Entertainment Tonight” flunky when talking to Wall Street analysts about Yahoo’s Oscar news, games and other offerings. She proudly noted the site’s efforts generated more than a billion pages views.”

Now big is out! Moving on!

The last question is another about Yahoo’s talks with its Asian partners.

“It’s complex,” says Bartz.

You can say that again.

]]> http://allthingsd.com/20110719/liveblogging-yahoo-q2-earnings-call-whos-to-blame-for-the-revenue-rout/feed/ 0 http://allthingsd.com/20110617/with-yahoo-shares-dropping-below-15-will-shareholder-patience-collapse-too/ http://allthingsd.com/20110617/with-yahoo-shares-dropping-below-15-will-shareholder-patience-collapse-too/#comments Fri, 17 Jun 2011 13:32:25 +0000 Kara Swisher http://allthingsd.com/?p=87397

First, let it be said that Yahoo shareholders are a long-suffering group, enduring year after year of mishaps and mishegas with unusual patience.

Still — with the stock of the Silicon Valley Internet giant continuing a worrisome downward movement, closing just below $15 a share both Wednesday and again yesterday — could some of its major investors decide to get angry at Yahoo management and its board at next week’s annual meeting?

So far, a mass shareholder withholding of votes for board members, as has happened before, is not likely, despite some serious recent missteps in China, a continued talent drain and worries about Yahoo’s search deal with Microsoft.

And, of course, there is Yahoo’s lackluster stock, which closed at $14.77 yesterday. That’s nearly a three percent fall for the week and a 6.5 percent decline for the month, losses in value that outpace most other Web companies.

It is not entirely clear exactly what is causing the fall. Culprits may include: An overall weak market; continued uncertainty about Yahoo’s Chinese assets and their worth; recent aggressive moves in the display advertising market by Google; and, well, investor dissatisfaction with its current management.

It will be interesting to see what the mood of the Yahoo annual meeting is next week, which is taking place next Thursday morning at a Santa Clara, Calif., location near its Sunnyvale HQ.

Also on the agenda, a big strategy meeting by Yahoo’s directors, who will apparently be querying its execs, especially CEO Carol Bartz, about the vision and growth plans to get the company’s share price cooking again.

Which is actually a meeting shareholders might like to watch.

]]> http://allthingsd.com/20110617/with-yahoo-shares-dropping-below-15-will-shareholder-patience-collapse-too/feed/ 0 http://allthingsd.com/20110616/jack-ma-takes-his-own-advice-for-yahoo-alibaba-splits-taobao-into-three-parts/ http://allthingsd.com/20110616/jack-ma-takes-his-own-advice-for-yahoo-alibaba-splits-taobao-into-three-parts/#comments Thu, 16 Jun 2011 08:42:17 +0000 Kara Swisher http://allthingsd.com/?p=87398

In an interview I did with him at the recent ninth D: All Things Digital conference, Alibaba Group CEO Jack Ma suggested that Yahoo would be better off splitting itself up into smaller pieces.

Today, he did that for one of the key units of the Chinese Internet giant, cleaving its Taobao e-commerce unit into three new companies.

Said Alibaba:

Alibaba Group is reorganizing Taobao into three separate companies to capture the Chinese consumer e-commerce opportunities. Effective June 16, 2011, the three companies, which remain wholly-owned subsidiaries of Alibaba Group, will begin operations as: Taobao Marketplace (www.taobao.com), China’s leading consume-to-consumer (C2C) platform; Taobao Mall (www.tmall.com), China’s leading business-to-consumer (B2C) shopping site; and eTao (www.etao.com), a product search engine designed to make it easier for consumers to find goods and services offered by all e-retailers.

We believe this move will benefit our customers, as each of the three companies will be able to focus on its own unique consumer experience. The board of Alibaba Group is fully behind this decision, as the move will create more value to shareholders by fostering innovation and capturing more opportunities in China’s fast-growing e-commerce sector.

Interestingly, the move means no massive IPO for Taobao, which some investors have been hoping for.

Here is Alibaba CEO Jack Ma’s email to employees on the change:

Ma Letter on Taobao Reorg –

]]> http://allthingsd.com/20110616/jack-ma-takes-his-own-advice-for-yahoo-alibaba-splits-taobao-into-three-parts/feed/ 0 http://allthingsd.com/20110604/full-d9-interview-video-alibaba-groups-jack-ma/ http://allthingsd.com/20110604/full-d9-interview-video-alibaba-groups-jack-ma/#comments Sat, 04 Jun 2011 19:01:32 +0000 Kara Swisher http://allthingsd.com/?p=82693 As we have in the past, AllThingsD.com will be posting the videos of all the onstage interviews from the ninth D: All Things Digital conference, which was held last week in Palo Verdes, Calif.

The first is one I did with Jack Ma, the CEO and co-founder of the Alibaba Group, the giant Chinese online commerce company.

Ma has most recently been in the news for a fight Alibaba has been in with one of its biggest shareholders, Yahoo, over the transfer of its Alipay online payments unit out of the company.

Ma addressed this–including advising Yahoo CEO Carol Bartz to split up the company–and other issues in the interview.

The interview is subtitled in Chinese for our Asian readers, especially since our next conference–AsiaD–will be in Hong Kong in mid-October.

Here’s the Ma video:

]]> http://allthingsd.com/20110604/full-d9-interview-video-alibaba-groups-jack-ma/feed/ 0 http://allthingsd.com/20110531/the-myspace-sweepstakes-drag-on-another-bid-deadline-today-as-sale-deadline-looms/ http://allthingsd.com/20110531/the-myspace-sweepstakes-drag-on-another-bid-deadline-today-as-sale-deadline-looms/#comments Tue, 31 May 2011 07:54:43 +0000 Kara Swisher http://allthingsd.com/?p=79970

Yes, Myspace is still for sale.

But, no, no one has yet made a good enough bid–in other words, at the more than $100 million level its owner, News Corp., has sought–to knock out anyone else.

And who knows who will, as those working on the deal gave a deadline today for any revised bids for the social entertainment hub.

Among those remaining in the running: two strategic bidders, although the CEO of the Vevo music service has denied interest; several private equity players, including Criterion Capital Partners, which bought Bebo from AOL for a song; and an aggressive inside effort by CEO Michael Jones, which would include venture investors and a possible continued smaller ownership by News Corp. (News Corp. also owns Dow Jones, which owns this Web site.)

News Corp. is holding out for a few more bids today from those who had expressed initial interest, said sources close to the situation, after the company provided additional information about long troubled service.

That included data showing some increased user engagement from a recent Facebook artists profile app launch and a new music playback system, among other efforts to revive Myspace.

But, added sources, this is likely to be the final call for bids, since News Corp. reportedly would like to complete the deal and get Myspace off its books before end of its fiscal quarter this month.

“I think somebody with some brains and guts could do pretty well with the property,” said one News Corp. insider, noting that the Chinese social site Renren is smaller than Myspace in both size and revenue, even though it now has a $5 billion valuation after its recent IPO.

Perhaps, but such a windfall seems about as unlikely as Myspace winning back its once-might social networking crown.

Thus, finally settling on a decent bidder is Myspace’s best–and perhaps only–hope going forward.

]]> http://allthingsd.com/20110531/the-myspace-sweepstakes-drag-on-another-bid-deadline-today-as-sale-deadline-looms/feed/ 0 http://allthingsd.com/20110526/bad-share-day-yahoo-stock-limp-after-investor-day-and-googles-swiping-of-its-ad-title/ http://allthingsd.com/20110526/bad-share-day-yahoo-stock-limp-after-investor-day-and-googles-swiping-of-its-ad-title/#comments Thu, 26 May 2011 19:07:15 +0000 Kara Swisher http://allthingsd.com/?p=78951

Apparently, reassurances about its relationship with Chinese partner Alibaba Group and some lively presentations by top execs at a six-hour investor day yesterday did almost nothing for Yahoo shares.

The stock of the Silicon Valley Internet giant continues to stay mired on either side of $16 a share today, as it has been since it got into a very public fight with Alibaba over the spin-out of its Alipay online payments unit.

Alipay got its license from the People’s Bank of China today, due in part to moving the unit to the ownership of Alibaba founder and CEO Jack Ma, but that also did squat for Yahoo shares.

Also dragging the stock down: An IDC report released today that shows that Yahoo has lost its number-one display advertising title to Google. The search giant’s share of that market in the U.S. rose to 14.7 percent in the fourth quarter of 2010, while Yahoo’s declined to 12.3 percent.

That’s not good news, even though both Yahoo’s Chief Product Officer Blake Irving and its U.S. media and advertising head Ross Levinsohn both gave energetic presentations at Yahoo’s investor day yesterday.

The two execs–one sporting a natty blazer and the other his patented hair-tastic ’do–trotted out a lot of can-do stats and fancy plans for the audience, which was mostly preoccupied with Yahoo’s China problem.

In contrast, CEO Carol Bartz, CFO Tim Morse and co-founder Jerry Yang were mind-numbingly rote on that thorny issue, noting that negotiations with Alibaba were ongoing and would remain private.

(As if–if I have anything to say about it!)

Bartz told the group of investors and Wall Street analysts yesterday that Yahoo “really believe[s] we are working towards protecting the value of Alibaba Group. The emphasis is on discussion. [We're] not going to get into a public back-and-forth.”

Having already done that in a ham-handed way the week before, that’s probably a most excellent idea for the shoot-from-the-hip exec.

In any case, investors don’t seem to want to take Bartz’s word for any of it until she delivers–both a China solution and, more importantly, turbocharging of both its core search and display advertising businesses.

]]> http://allthingsd.com/20110526/bad-share-day-yahoo-stock-limp-after-investor-day-and-googles-swiping-of-its-ad-title/feed/ 0 http://allthingsd.com/20110524/yahoo-preps-for-investor-day-tomorrow-while-investors-prep-for-a-yahoo-grilling/ http://allthingsd.com/20110524/yahoo-preps-for-investor-day-tomorrow-while-investors-prep-for-a-yahoo-grilling/#comments Tue, 24 May 2011 17:05:33 +0000 Kara Swisher http://allthingsd.com/?p=76947

The execs at Yahoo were huddled yesterday and also today, getting ready for its investor day tomorrow morning.

It’s probably a good idea, especially since the Silicon Valley Internet giant has to come up with a good answer to how it is settling the recent kerfuffle with Chinese partner Alibaba Group.

A settlement announcement over the spinoff of Alibaba’s Alipay payments unit would be the best thing Yahoo could deliver by tomorrow, of course.

All parties–Alibaba, Yahoo and Japan’s SoftBank–I spoke to said a resolution was still being worked on, but one assumes reaching one sooner than later would be a big coup for Yahoo.

Barring that, China will surely be Question No. 1–and likely Nos. 2 through 23–from about 200 Wall Street analysts and big shareholders gathered from 8 am to 2 pm at the Fairmont Hotel in San Jose to hear about how Yahoo is doing in 2011.

Given that the China problem has kept Yahoo stock stuck in the $16 doldrums for weeks now, after it had seen some progress before that, Yahoo CEO Carol Bartz and the passel of top execs presenting–Ross Levinsohn, Blake Irving and Tim Morse, among others–will have to scratch that itchy itch first before moving on to other questions.

In the interests of making the day interesting–and because press is not invited–I am here to help those investors without a clue of what to ask.

Thus, my list, in no particular order:

* Now that a newish management structure is in place, what is the big vision for Yahoo going forward?

* Please explain in detail the issues raised in the recent earnings call with the search and online advertising partnership with Microsoft, and should the deal be re-negotiated?

* Do you need to make more cuts in staff–which seems to have creeped back up in size?

* Why is Yahoo still in search in such a significant and expensive way, especially since market share is declining?

* How is the display market faring and how does Yahoo plan to innovate its flagship advertising business?

* Engagement is a key metric these days, so how is Yahoo going to improve its customer relationships, besides saying it will?

* What new and innovative products are in the pipeline–and you may not trot out Livestand for the umpteenth time as an example, unless you want me to start calling it Not-Flipboard–and when will they launch?

* Has Yahoo considered other ownership options that would better reward long-suffering shareholders?

* And, oh yes, China. Let’s not forget about China.

(Although media is not invited to the investor confab, I will be covering it via a live stream Yahoo is offering–you didn’t think I would miss it?)

]]> http://allthingsd.com/20110524/yahoo-preps-for-investor-day-tomorrow-while-investors-prep-for-a-yahoo-grilling/feed/ 0 http://allthingsd.com/20110513/yahoo-addresses-alipay-mess-forget-it-shareholders-its-china/ http://allthingsd.com/20110513/yahoo-addresses-alipay-mess-forget-it-shareholders-its-china/#comments Fri, 13 May 2011 07:03:58 +0000 Kara Swisher http://kara.allthingsd.com/?p=43899

Back in April of 2009, like all the rest of the parts of the Chinese Internet giant Alibaba Group, its Alipay unit was listed this way on its Web site: “Alipay is wholly owned by Alibaba Group.”

And right now, describing the online payments platform? (my italics): “Alipay is an affiliate of Alibaba Group.”

Memo to Yahoo CEO Carol Bartz: You might have noticed that critical change in Alipay’s corporate status, which happened last August, given the company you lead owns 43 percent of the Alibaba Group.

More to the point, Alipay accounted for $1.7 billion of Yahoo’s valuation.

Not surprisingly, Yahoo shares are down more than six percent in after-hours trading, likely in reaction to an unusual statement by Yahoo yesterday, in which the company said it had no idea until March 31 that Alibaba CEO Jack Ma had transferred ownership of the Alipay unit to a separate entity.

Sources said that apparently happened in a letter from Alibaba to Yahoo’s accounting department. Since then, the company said it has been trying to figure it all out.

Said Yahoo:

On March 31, 2011, Yahoo! and Softbank were notified by Alibaba Group of two transactions that occurred without the knowledge or approval of the Alibaba Group board of directors or shareholders. The first was the transfer of ownership of Alipay in August 2010. The second was the deconsolidation of Alipay effective in the first quarter of 2011.

Yahoo! disclosed this restructuring in its 10-Q after discussions with Alibaba Group and obtaining a better understanding of this complex situation.

Yahoo! continues to work closely with Alibaba and Softbank to protect economic value for all interested parties. We believe ongoing negotiations among all of the parties provide the best opportunity to achieve an outcome in the best interest of all stakeholders.

Translation: Alibaba’s Ma–who cites upcoming new rules about foreign ownership from People’s Bank of China related to operating its payment business–just snookered us and we need to play dumb until we decide whether a lawsuit will be one disaster too many for our much-beleaguered investors.

Really pissed off shareholders is more like it–BoomTown has been on the receiving end of an explosive series of calls from Yahoo’s investors today asking a variety of questions.

They include:

1. How could Alibaba have reported its results with Alipay consolidated in, even though it was a separate entity since last year? And does that spell trouble for Yahoo, since it used those numbers in its own regulatory filings in the U.S.?

2. How could Ma initiate such a transaction without approval from shareholders and its board, as Yahoo claims?

3. In any case, why weren’t Yahoo execs paying more attention to the swirling changes related to foreign ownership in China, especially since Yahoo co-founder Jerry Yang is on the Alibaba board, anticipating that there could be real problems ahead?

4. Why did Yahoo execs not tell shareholders about the situation immediately or even at its April earnings call? Or perhaps before David Einhorn’s hedge fund Greenlight Capital hedge fund took a big position in Yahoo last week, specifically noting the value of the company’s Asian assets as highly attractive.

5. Does this move mean that those pretty Chinese assets Yahoo has touted are not so pretty after all, given that these kinds of things can happen there?

6. Should U.S. investors remove themselves from that Chinese market, given that these kinds of things can happen there?

7. Is Bartz’s extraordinarily tense personal relationship with Ma a big part of the problem, creating a distasteful public feud over issues better left to quiet backroom negotiations?

There will be plenty more, of course, especially around Yahoo’s disclosures to investors.

Yahoo execs will argue that it did disclose in the proper manner from a filing point of view and that it did not reveal the fissure so as not to put its negotiations with Alibaba over the situation at risk.

But–especially given the myriad of continued missteps by Bartz that have worked investors’ last nerve–that probably is not going to fly.

In fact, that irked sentiment will surely be on display at Yahoo’s upcoming investor day on May 25.

Yahoo had hoped to show off its new team of execs and talk about some legitimate momentum the company is making.

Now, it will doubtlessly all be about China and what happened there.

So, Bartz has to have a better line than a take on a Hollywood classic: “Forget it, Wall Street. It’s China.”

Maybe so, but it’s her problem to solve now.

And here’s my favorite version of that line:

]]> http://allthingsd.com/20110513/yahoo-addresses-alipay-mess-forget-it-shareholders-its-china/feed/ 4 http://allthingsd.com/20110324/groupons-andrew-mason-talks-about-no-not-exec-shakeup-but-groupon-now/ http://allthingsd.com/20110324/groupons-andrew-mason-talks-about-no-not-exec-shakeup-but-groupon-now/#comments Thu, 24 Mar 2011 13:04:19 +0000 Kara Swisher http://kara.allthingsd.com/?p=41962

Yesterday, BoomTown had a cheap Chinese lunch and a chit-chat with Groupon CEO Andrew Mason in Silicon Valley–but not about what most people want to talk to him about.

That would be the departure of the Chicago-based social buying site’s President and COO Rob Solomon and who is on the very short list of candidates the hot start-up will replace him with.

Oh, I tried to get him to ‘fess up about all that, but Mason would not bite, except on his Kung Pao Chicken.

Instead, all he wanted to talk about and show off is Groupon’s latest real-time deal innovation, which it is calling Groupon Now–and which Mason has been touting a lot of late.

“It’s deals in a time window linked to a location,” said Mason. “Until now, no one has had the assets to fix a merchant problem that was viciously subject to a chicken-and-egg situation.”

By that metaphor, Mason means real-time deals by location, rather than via emails, doled out and paid for immediately, taking advantage of perishable retail inventory.

And, of course, using the burgeoning smartphone phenom via an app with only two buttons:

“I’m Hungry” and “I’m Bored.”

Which pretty much covers most of humanity’s main complaints.

The company is rolling Groupon Now out to thousands of merchants in early April, first in Chicago, San Francisco and Washington, D.C.

“Even the most popular restaurants and businesses are never completely full,” said Mason. “Groupon Now can help them even out the flow of customers.”

It’s this push and pull that Mason hopes will move “Groupon 1.0″ to the next level.

More importantly, Groupon Now is the start-up’s attempt to thwart rivals hot on its heels, as well as grow into the gazillion-dollar valuations being bandied about for its possible IPO.

But all of those competitors have moved into the real-time space too, from LivingSocial Instant to offerings from OpenTable, SCVNGR to Yelp to Foursquare. And, of course, there are also big efforts coming from both Facebook and Google, whose $6 billion offer Groupon turned down.

Now, no surprise, everyone is second-guessing that decision, putting a lot of pressure on both Groupon and, especially, Mason.

Who–despite all the hype and attention he has received–still has that prenaturally calm Midwestern affect.

“It is more important that we are the ones bringing relevant deals to consumers from our merchants,” he said. “That is all that matters.”

]]> http://allthingsd.com/20110324/groupons-andrew-mason-talks-about-no-not-exec-shakeup-but-groupon-now/feed/ 0 http://allthingsd.com/20110221/alibaba-group-jack-mas-internal-email-on-alibaba-com-management-shakeup/ http://allthingsd.com/20110221/alibaba-group-jack-mas-internal-email-on-alibaba-com-management-shakeup/#comments Mon, 21 Feb 2011 18:33:56 +0000 Kara Swisher http://kara.allthingsd.com/?p=40921

Earlier today, the top management of Alibaba.com, the fast-growing Chinese e-commerce site resigned after an internal company investigation determined that thousands of fraudulent sales were taking place.

Out the door: CEO David Wei and COO Elvis Lee, who took the blame a “systemic breakdown of [Alibaba.com's] culture of integrity.” The company, which is publicly traded, is largely owned by the Alibaba Group.

As many know, Yahoo owns a large stake of the parent company, which is one of the most significant in the critical China market. The Alibaba stake makes up a big chunk of its market valuation.

“Over this past month, I’ve experienced a lot of torment, a lot of frustration, a lot of anger…This is the pain we suffer as we develop, a price that we pay as part of our growth, and it hurts!,” wrote Alibaba.com Chairman Jack Ma in an internal email to employees–called Alirens–today, which you can see below.

Jonathan Lu, who heads Alibaba Group’s Taobao retail e-commerce unit, was named to take over for Wei.

Here is an internal email, obtained by BoomTown, Ma (who will be, as it turns out, appearing at the ninth D: All Things Digital conference in June):

Fellow Aliren:

As we have announced today, the B2B board of directors has accepted the resignations of B2B CEO David Wei and COO Elvis Lee. Additionally, former senior VP of B2B HR Kangming Deng has resigned his post as Chief People Officer of Alibaba Group in acceptance of responsibility and will be demoted to a different post.

Several months ago, we discovered that some of our B2B China Gold Supplier (CGS) members were suspected of fraudulent activity. What made it shocking was evidence indicating that certain members of the CGS sales team knowingly allowed, or in some cases even helped, these fraudulent companies join the Alibaba.com marketplace.

We formed a special task force to investigate the situation. According to the preliminary results of a month-long inquiry, we found 1219 CGS (1.1% of all Gold Suppliers) who joined in 2009 and 1107 CGS (0.8% of Gold Suppliers) who joined in 2010 were engaged in fraudulent activity. These fraudsters had joined the Alibaba.com marketplace for the sole purpose of exploiting the platform that we’ve labored to build up over the past 12 years to defraud overseas buyers. At the same time, the investigation confirmed that nearly 100 CGS sales staff knowingly allowed fraudsters to become CGS members so that they could “make their numbers” and receive commission income.

Any tolerance of this type of affront to business ethics and company values is a crime against the rest of our customers and Aliren who remain honest. We must take measures to safeguard the values of Alibaba! All the colleagues who were directly or indirectly involved must be held responsible; more importantly, B2B’s management team must assume primary responsibility. We have already terminated the storefronts of all 2,326 CGS members suspected of fraud, and we have asked law enforcement authorities to assist us in our investigation.

Since the day that Alibaba was established, pursuit of profit has never been our main goal. We have no interest in turning the company into a mere money-making machine. Rather, we have long held firm to our mission of “making it easy to do business anywhere.” When we say “customer first,” we mean that we’d rather sacrifice growth than do anything that would jeopardize our customers’ interests, much less be a part of any blatant fraud.

Over this past month, I’ve experienced a lot of torment, a lot of frustration, a lot of anger…

This is the pain we suffer as we develop, a price that we pay as part of our growth, and it hurts! But we have no choice. It is not possible for us to be mistake-free; we may from time to time commit errors of judgment, but we will absolutely not err by compromising our principles. If we do not face up to reality and find the courage to take painful action, Alibaba will no longer be Alibaba and our pursuit of our 102-year dream and mission will become nothing but a joke!

This world does not need another Internet company, much less another company that can make money;

What this world needs is a company that is more open, more transparent, more sharing, more responsible, more global;

What this world needs is a company that is grounded in society, serves the interests of society, and accepts the responsibilities of society;

What this world needs is a culture, a soul, a belief and an acceptance of obligation. Because these are the only things that will allow us to go further, do better, act with confidence on the challenging path of entrepreneurship.

What comforted me is learning that the overwhelming majority of our CGS sales colleagues upheld their principles in the face of temptation. To these colleagues, I salute you! More importantly, we thank the colleagues who have the courage to stand firm and fight against what is wrong. From their actions we witnessed the courage and power of upholding integrity and principles. In them we see Alibaba’s future and hope! And we need more Aliren like them! Those who do the extraordinary must assume extraordinary responsibilities!

The resignations of David and Elvis are tremendous losses to the company. For me this is extremely sad and hurtful. But I think their willingness as Aliren to step up and accept responsibility is most admirable. On behalf of the company, I want to express my sincere gratitude to the both of them for their unrelenting dedication and contribution to the company.

Fellow Aliren, the B2B board of directors has appointed Jonathan Lu as B2B CEO; the Group has appointed Lucy Peng as Chief People Officer of Alibaba Group. I hope everyone will fully support the work that lies ahead and believe we can make a difference!

This is an era full of promises and an era that no one wants to miss out on. Only through holding onto our ideals and our principles will we be able to become the pride of this era!

If not now? When?

If not me? Who?

Jack Ma
2.21.2011

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