According to numerous sources close to the situation, Yahoo has bid from $600 million to $800 million for the premium video site Hulu.

The reason for the wide range is due to the fact that the Silicon Valley Internet giant — similar to most bidders in the new effort to acquire Hulu — has proposed several different prices based on a variety of circumstances. That includes the length of the licensing rights for content and how much control the programming companies selling Hulu have over their media.

At the same time and separately, according to sources inside the company, Yahoo is also contemplating at least two other significant purchases — in the $150 million to $200 million range — each for a mobile and a communications company.

It’s certainly an ambitious and busy M&A agenda for Yahoo’s CEO Marissa Mayer, who just forked over $1.1 billion in cash to purchase youth-skewing blogging site Tumblr last week.

Presumably, she is interested in upping Yahoo’s longtime lackluster video efforts — it famously lost out at the last minute on the acquisition of YouTube many years ago to Google — as the arena becomes more critical to advertisers.

But, said sources, while allowing the bid to proceed, Mayer is more focused on the integration of Tumblr, as well as other acquisitions that will bolster other key product areas.

Thus, sources said that the Hulu effort is being led at Yahoo by Los Angeles-based Ian Weingarten, VP of corporate development, who works for M&A head Jackie Reses.

AllThingsD.com first broke the news of that deal, as well as Yahoo’s initial interest and subsequent bid for Hulu, which is owned by a trio of media giants: News Corp., Disney and Comcast.

The site, which has both a subscription and an advertising business, was on the market in 2011, with the hope for a bid of $2 billion that came with several years of programming rights. The sale was pulled after those higher bids did not materialize.

But Hulu is on the market again in the most advanced effort to sell it so far, with bids coming in from a range of suitors over the last week.

Yahoo’s Mayer and COO Henrique De Castro had met with Hulu’s team earlier this month for a get-to-know-you, just after an effort to buy a large stake in French video site Dailymotion was blocked by the government there.

Besides Yahoo, others interested in acquiring Hulu include: Separate bids from private equity firms KKR, Guggenheim Digital and Silver Lake (in conjunction with Hollywood talent agency William Morris Endeavor); Time Warner Cable; DirecTV; and the Chernin Group.

There could still be others, of course, though a deadline for initial bids has passed. Interestingly, so far, neither Google nor Amazon have made official efforts, perhaps because the pair already have robust video platforms.

Chernin’s bid, as had been widely reported, started in the $500 million range, which is interesting since the longtime media executive was once the COO of News Corp. and was critical to Hulu’s creation. Translation: He’d know just what the video platform is worth and how the place works.

Of course, low bids at the start are part of the normal process; sources close to the owners said that any bids under $1 billion are unlikely to be accepted.

One thing is certain: Now comes what will look a lot like a very noisy game of musical chairs, in which the various groups will vie for one-upmanship, even as they talk to each other about possible joint efforts. Who the most attractive candidate is, of course, will be much debated.

In addition, there is much disagreement over who and how Hulu should be sold by two of its owners, Disney and News Corp., which have squabbled over its direction from the start. (Comcast gave up its management rights as a concession to federal regulators a few years ago, so is sitting on the sideline twiddling its giant cable thumbs and doubtlessly wishing it could be a bidder, too.)

No matter the ceaseless bickering among giants, the trio of media conglomerates are providing Hulu’s most valuable programming, largely television shows from their broadcast networks. And that is the real point of the negotiating, according to many involved.

“Hulu is a very nice brand and technology, but the entire negotiation will be about the control and price of the content,” said one person close to the situation. “It’s the only thing that matters.”

I sent an email for comment to Yahoo, but expect no response.

(Full disclosure: News Corp. owns Dow Jones, which owns this site.)

According to sources close to the situation, Yahoo is among the companies taking a serious gander at TVGuide.com, the online entertainment listings, video and news site and mobile app.

Earlier today, Deadline Hollywood reported that its owner, Lionsgate, was in “advanced negotiations” to sell the site for about $20 million to one strategic bidder.

That’s the approximate price, my sources said too, who noted that Yahoo is only kicking the tires to determine if the site would add to its online media efforts and that such a deal is not in a final state.

But TVGuide.com is right in the wheelhouse of Yahoo’s acquisition efforts under CEO Marissa Mayer. She said the Silicon Valley Internet giant was looking at smaller purchases to round out its product line, especially in the mobile area.

Thus, its M&A point person, Jackie Reses, has been looking at “everything in the world,” according to numerous sources, across a large spectrum of arenas. TVGuide.com is in the media space, obviously — another she’s looked at is Los Angeles-based Maker Studios.

Hollywood studio Lionsgate last reported that TVGuide.com has upward of 24 million unique monthly visitors, and also has almost seven million mobile app users.

Lionsgate bought the site and television network in 2009, which also is owned in part by J.P. Morgan’s One Equity Partners.

At the the Silicon Valley Internet giant’s weekly Friday FYI staff meeting, Mayer told the crowd that Yahoo co-founder David Filo (pictured here) would be reporting directly to her — which I previously suggested would happen — and also that longtime legal exec Ron Bell would become permanent general counsel.

Filo has been an important part of Mayer’s arrival at Yahoo, and was a critical ally in her first days, emerging as a vocal supporter of her appointment from the start.

The typically retiring and taciturn product guru actually gave a quote in a press release, and did interviews when Mayer was hired.

Moving Filo close to her is an important morale booster, because while the founders of Yahoo have their definite ups and downs, as I have previously noted, the heart of the company is still with both Filo and also co-founder Jerry Yang.

Interestingly, he’s actually been reporting for years to a variety of product and tech execs, despite owning more than 6 percent of Yahoo.

The elevation of Bell (pictured here), who was No. 2 to former GC Mike Callahan, is an interesting move. Having been at Yahoo since 1999, after working at Apple, the veteran lawyer played an important role in waging the Facebook patent litigation.

He was named interim GC after Callahan left in late June, by then-interim CEO Ross Levinsohn.

Levinsohn left at the end of July.

We’ll see who else will leave Yahoo this week and next — the fates of a wide range of top execs are in the mix, from CFO Tim Morse to media head Mickie Rosen to sales chief Michael Barrett.

Mayer has been trying to recruit her former Google staffer Katie Jacobs Stanton from Twitter for a big media job. And she has reportedly been making strong efforts to get Barrett — another former advertising exec at the search giant — to stay.

We’ll see about it all soon enough, and also what will happen to Yahoo shares this week.

The stock got pummeled last week, down more than 5 percent on Friday to close at $15.15, after the company revealed in a regulatory filing that there might be a change of plans for the more than $4 billion from the sale of its Alibaba Group stake.

Both Yahoo and one of its biggest shareholders and a director, Dan Loeb of Third Point, had previously said the money would likely be used for a stock buyback, or even a dividend.

Even though Loeb let it leak that he was A-okay with it all, to assuage other angry investors, Mayer will now need to come up with a solid plan for the dough, which could include some acquisitions.

And it might help if she could also perhaps finally land the long-troubled deal to get many more billions from its stake in Yahoo Japan.

While those negotiations have had their ups and downs, it was close to being struck in the summer. But sources said there are still apparently valuation differences.

(I would add comment or no comment from Yahoo, as I do with every other company I cover. But after numerous emails, I am still waiting to hear back from the company’s PR spokeswoman, whom I am sure has just been super busy.)

Mike Callahan, Yahoo’s longtime and powerful general counsel, is leaving the company.

According to an internal memo, which is embedded below, Callahan does not have another job. But sources said that he has been considering departing the Silicon Valley Internet giant since the beginning of the year.

Ron Bell, who is now deputy GC for products and the Americas region, has been named interim GC reporting to interim CEO Ross Levinsohn.

It’s all very interim (except me — I started covering Yahoo in the mid-1990s and I never go away!).

Callahan has been around a long time too, serving as the top lawyer at the company for almost a decade, after arriving at Yahoo in 1999. In his job, he has been in charge of legal affairs and public policy globally.

In addition, he has played a very powerful role on a range of strategic, corporate governance and transactional issues at Yahoo.

That has included everything from Yahoo’s nasty hostile takeover battle with Microsoft to its eventual search and advertising partnership with the software giant. He has also been a key adviser to Yahoo’s musical chair series of CEOs over the last few years.

Callahan has also been deeply involved in Yahoo’s current patent settlement negotiations with Facebook — which, by the way, he was integral to waging under former CEO Scott Thompson.

Those talks are ongoing, although complex, with a likely cross-licensing agreement at some point in July.

Sources said that Callahan’s departure has nothing to do with the current investigation into the circumstances around the fake computer science degree on Thompson’s bio that caused a firestorm at Yahoo.

Several directors are looking into the controversy, most especially how the false information got into Yahoo’s legal filings.

That aside, the quiet and self-effacing Callahan has certainly been one of the steadier members of the management team over the years and his departure from Yahoo is a major one.

Here’s the memo that Levinsohn just sent around to the troops:

From: “Yahoo! Inc.”
Reply-To: “Yahoo! Inc.”
Date: Fri, 29 Jun 2012 14:00:14 -0700
To: All Worldwide
Subject: Executive Changes

Yahoos:

I’m writing to let you know about a change in our executive ranks and to wish a long time Yahoo goodbye. After twelve and a half years with Yahoo!, and almost nine years as our General Counsel, Mike Callahan has notified me of his decision to leave Yahoo! so that he can move on to new opportunities. We would like to thank him sincerely for his time at the Company.

During his time as General Counsel, Mike helped structure, recruit and retain a world class global team of legal, public policy, intellectual property, compliance and other professionals. Mike and his team have set the industry standard for substantive excellence, business partnership, creativity and, importantly, have had fun doing it. The long tenure of many of the legal and policy team is a credit to the organization that Mike has built. He has focused on team building, communication, and trust between department members and they have been a great contributor to the company at large.

In my time with Yahoo!, Mike has been a leader and great partner to me and the entire executive team and we will miss his calm demeanor and practical, results oriented advice. Along with the Board, I would like to thank Mike for his loyalty and service, and wish him well in whatever comes next for him.

With Mike’s departure, I am pleased that another long time legal Yahoo, Ron Bell, currently Deputy General Counsel for Products and the Americas Region, has agreed to serve as interim General Counsel reporting to me. Ron joined Yahoo! in July 1999, and over that time has served in numerous senior roles in the legal department, including as a Deputy General Counsel for the last 9 years — and has made his mark on many of our most strategic deals and initiatives over the years. Please join me in thanking Ron for stepping up into this new role and welcoming him to the executive team.

Ross

ross
Levinsohn

Interim CEO
& Head of Global Media

And here is the regulatory filing on Callahan’s departure to make it officially official:

YHOO-20120629-8K-20120628

Yahoo’s board has hired Spencer Stuart in yet another CEO search, although sources close to the company said that interim leader Ross Levinsohn is the prime candidate for the position at this point.

“It’s Ross’s to lose,” said one person close to the situation.

Levinsohn was appointed to the job on a temporary basis after the Silicon Valley Internet giant’s last CEO, Scott Thompson, was ousted after a resume-padding controversy.

At the time, the board indicated that there would be a search, although Yahoo Chairman Fred Amoroso said in an employee meeting that he was hoping Levinsohn would get the job.

Still, the move by the company’s directors could add more uncertainty to the already volatile mood at the Silicon Valley Internet giant, which has been rocked by a series of major changes in recent months.

Along with the Thompson fracas and a massive layoff, the board has had a massive turnover — including adding activist shareholder Daniel Loeb of Third Point and two of his colleagues, Michael Wolf and Harry Wilson.

Interestingly, all of the 11 directors are considered independent, according to a proxy filing Yahoo made earlier today.

And — in my humble opinion — they are also all pretty aggressive in their interest in helping run Yahoo beyond the typical board’s job of overall corporate governance.

Case in point: Several board members, along with Levinsohn, have been involved in serious negotiations to settle its patent infringement litigation with social networking giant Facebook.

Oh, it’s a very mouthy group — which is likely to give pause to any experienced exec who Spencer Stuart might query about the very difficult job of turning around Yahoo. (I truly feel for anyone who runs Yahoo, what with listening to all that expected backseat driving and kibitzing.)

The selection of Spencer Stuart is interesting, given that Heidrick & Struggles had done Yahoo’s previous search. But that talent search firm had gotten into it with Thompson, who accused Heidrick of adding a fake computer science degree to his bio. Heidrick vehemently denied the allegation.

The board members of the nominating committee in charge of the search are David Kenny, John Hayes, Thomas McInerney and Wolf. Kenny, who was once considered a Yahoo CEO contender (he now is CEO of the Weather Channel), is chair of the group.

Until we get some clarity, here is Yahoo’s proxy filed today, with all kinds of interesting info to chew on:

YHOO-20120604-DEF14A-20120712

Top execs at Yahoo and Facebook have been hammering out the outlines of a deal over the last several days to end their contentious patent infringement litigation, according to multiple sources close to the situation.

While that could change, sources said a settlement could happen in the coming weeks and that the advanced negotiations will put aside the lawsuits and counterclaims between the one-time close partners and return them back to what could be an even closer relationship.

The key terms being discussed, said sources, include a massive cross-licensing of patents between the Internet giant and the social networking kingpin and an even deeper integration of Facebook into Yahoo and vice versa, which has been a key element of improved engagement of late on Yahoo.

One possible glitch: While Facebook has indicated a willingness to perhaps buy some of Yahoo’s valuable patents, sources said the company is not likely to fork over a massive cash payment to Yahoo as part of a deal.

In a slap to Yahoo’s lawsuit, Facebook recently paid Microsoft $550 million to both buy and also license key patents that the software giant had acquired from AOL, and sources said it is unlikely to do the same for Yahoo.

“Facebook paid a lot of money for patents already, just not to Yahoo,” said one person close to the situation.

That could be a tough reality to swallow for Yahoo, especially since its lawsuit was predicated on the notion that it could get a huge payoff from Facebook in any settlement.

That was the argument used by former CEO Scott Thompson, under whose leadership the legal action was first filed, to convince Yahoo’s board to move forward. The lawsuit caused much consternation in Silicon Valley, but Yahoo’s directors had been told that success could mean many billions of dollars from Facebook to end the fight.

But Thompson was recently ousted from his job over a resume-padding controversy, and it appears that Yahoo board members who pushed for the lawsuit are now distancing themselves from its filing.

In other words, it was all Scott’s fault, so now that he’s gone: Bygones!

Let’s be clear: It wasn’t his doing alone by any means, but Yahoo is now facing an uphill and long-term battle in the case to win anything at all.

That’s why its new interim CEO, Ross Levinsohn, along with several board members, including Third Point’s Daniel Loeb, have stepped up talks.

(Yahoo’s on a bit of a goodwill mission, recently adding activist shareholder Loeb as a Yahoo director after settling its proxy fight with him, as well as finally completing a complex asset sale deal with China’s Alibaba Group.)

Interestingly, for Yahoo’s side, this negotiation now appears to be more of a group effort — with board members actively involved — than a solo performance by Levinsohn as the company presses for a solution now.

Facebook is also very motivated to get rid of the problem, especially because its recent borked IPO has taken up a lion’s share of the media and investor perception and attention. Sources said execs there hope that a successful settlement with Yahoo — as well as an expected announcement of an integration with Apple’s iOS at the Worldwide Developers Conference in mid-June — will return the focus to forward momentum by Facebook.

To underscore the importance of settlement, the discussions are being led by the social networking site’s powerful COO, Sheryl Sandberg, along with its VP of partnerships, Dan Rose.

Sandberg and Levinsohn (and his posse of hey-can-I-help-too Yahoo directors) talked in depth about the settlement at the recent 10th D: All Things Digital conference earlier this week, after a number of previous discussions had already taken place.

Yahoo is in the final stages of selling a large chunk of its stake in the Alibaba Group back to the company — in a complex deal that is set to include a multibillion-dollar share buyback to investors of the Silicon Valley Internet giant and an eventual IPO of the Chinese company — according to multiple sources close to the situation.

The deal has yet to be officially approved by the boards of both companies, but sources said it is likely to be, and could be announced as early as Monday.

This all could change, of course, since negotiations between Alibaba and Yahoo have taken place in a variety of ways in recent years, without success and with much acrimony. Talks over a tax-free deal — also involving Yahoo’s Japanese partner, SoftBank — collapsed in February, for example.

But the 324th time is apparently the charm — so here are the details of what looks to be a nearly complete agreement that I have ferreted out thus far from lots of relieved sources familiar with the situation:

Yahoo will sell half of its roughly 40 percent stake in Alibaba, in a taxable deal. The transaction is likely to value that portion of Yahoo’s holdings at about $7 billion — or 20 percent of Alibaba’s $35 billion enterprise valuation. Alibaba is in the midst of raising capital to fund the sale.

After taxes of upward of 35 percent are paid on the long-term gains — remember that Yahoo bought the now-lucrative Alibaba stake for a fraction of that, many years ago — the company will likely use the funds to buy back its own shares. That stock has been caught in the mid-teens doldrums for quite a while.

A shareholder dividend is also being considered. It’s not clear if some of the cash will be held back for acquisitions by Yahoo, sources added, but it is unlikely.

As part of the deal, sources said, incentives have been put in place for Alibaba to move forward with a public offering, which sources stressed is without the contractual obligation or a time frame. Alibaba execs have already been publicly indicating such a direction recently, but this will put them more firmly on that path.

In return, Yahoo has agreed to sell the remaining quarter of its current holdings when that IPO does occur. It would then have an only 10 percent stake of Alibaba, which it could sell at any time after the IPO.

If finally struck, the transaction will finally bring to an end one of the more protracted and disputed relationships in the Internet world.

Once close, the pair have been wrangling over the large Yahoo ownership, which Alibaba CEO Jack Ma has been trying to dislodge in a variety of nice and not-so-nice ways. It has resulted in a number of very public disagreements.

That included a nasty back-and-forth over its Alipay unit with now-fired CEO Carol Bartz, threats of takeover of Yahoo with private equity firms and, more recently, making friendly with its just-ousted CEO, Scott Thompson.

Those talks with him in recent weeks, which included a visit to China by Thompson, led to the new deal, which was negotiated primarily between Yahoo’s CFO Tim Morse and legal head Mike Callahan and Ma and Alibaba’s Joe Tsai.

The talks continued even as Thompson was suddenly engulfed in a controversy over a fake computer science degree on his resume that quickly led to his departure from Yahoo on Sunday.

Ironically, the error was first discovered by activist shareholder Daniel Loeb, who will now vote on the deal as a newly named director of Yahoo, after successfully helping to oust Thompson.

He owns almost 6 percent of Yahoo, and is expected to approve the transaction.

But the final decision to approve the deal will be in the hands of a very new board of Yahoo, which has been drastically reshaped in recent weeks. It is meeting tomorrow and perhaps over the weekend to vote on it.

While the deal with Alibaba looks to be nearing an end, Yahoo’s talks to sell its 33 percent stake in Yahoo Japan is not part of this agreement. That’s due to what Thompson had called a “valuation gap,” which sources said is still an outstanding issue.

New interim CEO Ross Levinsohn has not been involved in the Alibaba deal in any significant way. But he certainly will benefit from its halo effect, if approved, especially given that it will likely boost Yahoo shares.

Next up for Levinsohn, who has just rejiggered Yahoo management again, other sources said, is an effort to settle the patent-infringement lawsuit with Facebook, and also to renegotiate its search deal with Microsoft.

And, oh yes, fix Yahoo’s rocky core-advertising business, which is still in distress and needs a major overhaul to push it back to growth.

But that, as they say, is yet another episode of Yahoo’s ongoing reality show.

While he has only been CEO of Yahoo for less than five months, in the next several days Yahoo CEO Scott Thompson is facing perhaps the most critical moment of his short tenure.

According to sources with knowledge of the situation, the board of Yahoo is not likely to take long in assessing whether he will stay or if he will be let go, due to a controversy around how a non-existent computer science degree got on his bio and also in Yahoo regulatory filings.

A special committee of independent directors is now investigating the matter, including trying to assess the damage has had on Thompson’s ability to lead the Silicon Valley Internet giant.

How quickly the board moves is likely to be a sign of their intent. If within the next days, it is likely to let the former president of eBay’s PayPal payments unit go and replace him with a current company exec; if it waits longer and shows some public support of him — which the board has not done since the scandal erupted — Thompson’s chances are better that he will only be given some sort of censure.

One important task is also closely considering the impact of possible legal problems related to Thompson and others signing documents with the Securities and Exchange Commission that were not accurate.

One thing is clear from interviews with multiple sources, many members of the board have not been happy with how Thompson has handled the matter since activist shareholder Daniel Loeb of Third Point uncovered the problem a week ago.

While first tossing the borked bio as an “inadvertent error,” Thompson was then largely silent about the issue with staff, despite being in close meetings with them, which caused stress among key execs.

Then, he made a public announcement in which he apologized for only the “distraction” caused by the incident and not the error itself as some had hoped he would.

Yesterday, apparently feeling it was time to try to explain things face-to-face, Thompson made another attempt to explain what happened in two separate meetings with his direct reports and then his senior staff, apparently trying to get through to employees that he did not fake his resume nor did he give an inaccurate bio to Yahoo when he was being hired for the job earlier this year.

Thompson thought it was time — now that the board investigation was underway — to answer questions directly, said a source.

Among other things, Thompson gave a somewhat convoluted explanation that it appeared in his bio due to a misunderstanding during an interview with a headhunting firm. And that he never noticed it once it proliferated And that when an NPR interviewer asked him directly about his CS degree, he did not want to correct her in mid-discussion — although others report he said he did not hear the question fully.

Sources said Thompson — who is on the midst of initiating changes across a large and troubled organization, after laying off 2,000 employees — thought the sessions went well, that he clearly communicated that he was taking blame for the problem and its repercussions. Those sources also noted that he received support for doing so after the talks.

But, more than a dozen others I interviewed who were listening remotely — some of whom I sought out and some who contacted me directly — thought Thompson’s complex explanation was deeply problematic and that he tried to foist the blame on others rather than on himself.

Every one of these people expressed the need for him to step down to allow Yahoo to move forward.

What the board thought about the performance is still not clear, said sources, but things are coming down to two distinct scenarios.

The first is a quick parting of the ways with Thompson, within days, either for cause or via a negotiated settlement. Others at Yahoo involved with perpetuating the mistake in the bio are also at risk.

This option is perhaps the more likely at this moment, unless the scandal dissipates and employees continued rancor over the situation can be assuaged soon.

In this case, sources said, Thompson will be replaced by a current board member or a member of the top staff. When directors fired Carol Bartz last fall, CFO Tim Morse became interim CEO and he is one of the likely candidates for the job again.

The second scenario centers on needing Thompson to complete a number of complex transactions related to the sale of Yahoo’s Chinese assets and its re-negotiations with Microsoft over its troubled search partnership, among other things.

In that case, Thompson will be censured in some manner by the board and will also probably have to endure some punishment for allowing false regulatory documents to be filed by Yahoo. Others at Yahoo will also be subject to the same treatment in such an outcome.

How will it turn out?

Only board member Patti Hart has so far paid for her faulty vetting of Thompson, stepping down from the board earlier this week.

But whether she will be the only shoe to drop in what has turned out to be a bizarre wildfire that as raged across Yahoo’s troubled landscape remains to be seen.

Thus, most definitely watch this space this weekend.

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Mr. Falcone’s compromise is expected to prompt LightSquared’s lenders to approve a one-week extension on a debt-term violations waiver that expires Monday morning, the people said.

Read the rest of this post on the original site »

According to sources close to the situation, Yahoo has instituted a hiring freeze across the company and is considering a reduction in force in support units of the company.

While the details of any layoffs — which are expected to be small and selective for now — are still being worked out, sources said that the stricture not to fill hundreds of open positions is the first step toward significant cost-cutting initiatives across the Silicon Valley Internet giant, in the wake of what it expects to be another weak quarterly report next week and a looming proxy fight.

Yahoo reports its fourth quarter earnings Tuesday. While the company has managed to improve the results in the last part of the quarter, sources said they will still show continued weakness in its key businesses and consumer usage.

That’s as competitors such as Google and Facebook have been showing significant growth, especially in the display advertising market.

Thus, new Yahoo CEO Scott Thompson appears to be zeroing in on costs and managing for margins, said multiple sources, much as his predecessor Carol Bartz did at the start of her tenure.

But many think Yahoo needs even more drastic changes, including massive cuts in staff and also product arenas, to give the company new life.

That includes shifts in leadership at the top levels too. In a major move this week, co-founder Jerry Yang stepped down from the company’s board and all roles there. More directors are expected to leave soon, too.

That will likely come after negotiations to sell part of its lucrative stakes in both the Alibaba Group and Yahoo Japan are successfully completed.

While not a certainty, Yahoo’s board hopes that will happen sometime before activist shareholder Daniel Loeb initiates a proxy battle against the company in the coming month.

Sound complex?

It is, and also troubling to Yahoo’s long beleaguered rank and file, who have been worried about more layoffs.

The Yahoo troops have been under intense pressure and have suffered from ongoing attrition. Just yesterday, for example, Yahoo lost one of its top advertising execs, Seth Dallaire, to Amazon.

The company can ill afford such departures of key talent, even as it seeks to pare employee numbers in other parts of its business.

At the end of its last quarter, Yahoo reported that it had 13,700 staffers, down from 14,100 in the previous year.

Yahoo, of course, declined comment.

Yahoo co-founders David Filo and Jerry Yang

Yes, he jumped, even though being pushed was surely looming on the horizon ahead.

But the decision of Yahoo co-founder, former CEO and director Jerry Yang to leave Yahoo was indeed sudden, with the board meeting just this morning about the issue.

It was so sudden, in fact, that Yahoo’s key execs — including its communications arm — had only a few minutes heads-up to what is arguably one of the more momentous events in the history of the Silicon Valley Internet giant.

In fact, newly installed CEO Scott Thompson was in Los Angeles in a previously planned visit to meet his new staffers, said multiple sources, forcing him to participate in the board meeting from there.

As it turns out, according to numerous sources, Yang had had enough, and had finally realized that perhaps the many players in the ongoing Yahoo drama inside and outside the company had also had enough of him.

As I wrote last week about the possibility of Yang stepping down from the board, such a move of a founder from its board is unusual, although it was possible in this case:

“While Internet company founders usually stick on boards, it’s not a given, especially with all the turmoil at Yahoo, some of which is related to Yang.”

In fact, as the pressure has mounted on Yahoo to right its ever-listing ship, a lot of the rancor was being piled atop Yang, whether deserved or — in some cases — undeserved.

That’s because, even after the rough time he had as CEO of Yahoo, Yang had remained unusually active in its affairs, joining internal meetings and being part of discussions about its strategic alternatives.

And while he might protest that he was doing what was asked of him by the board, his status as the company founder made it hard to minimize his clout.

“It’s hard to ignore Jerry Yang,” said one exec. “He has an impact on everything, even if he thinks he does not.”

The recent negotiations with Yahoo’s Asian partners is a case in point. While board member Brad Smith and others have been a key part of the talks to sell off parts of its stakes there — which are critical to Yahoo to complete — execs at both China’s Alibaba Group and Japan’s SoftBank both pointed to a too-strong influence of Yang in the deal as a possible stumbling block.

Yang served on both the boards of Alibaba and SoftBank’s Yahoo Japan, so his interest would have been obvious. But sources involved in the talks would often blame him for their rocky nature and difficulty.

“Jerry just does not want to sell,” one said to me last week.

Maybe he didn’t or maybe he did, but one thing was clear: Yang had become a lightning rod for a lot of the trouble Yahoo has gotten into over the years.

That was true with major investors, who have been more loudly saying of late to its board that his continued presence was a problem. The most vocal, of course, was Yahoo’s activist shareholder Daniel Loeb, who has called for Yang’s ouster, and has been contemplating a proxy fight to make it so.

Loeb was out in Silicon Valley last week, talking to possible alternate board members, many of whom have been longtime colleagues and even friends of Yang, and took the meeting anyway.

Worse, perhaps, was the prospect that Yang has also been losing his most ardent fan base: Yahoo employees.

With all the mishegas over recent years, they had also begun to question his role as a leader in the company, many voting with their feet by leaving in droves.

With a new CEO in place, and the possible chance that its Asian problems were moving in the right direction, it had to have sunk in for Yang that it had finally become time to make peace with the present by abandoning his future at Yahoo.

Thus, he wanted to leave on his own terms, even if — in the end — the man who is most definitely one of the Internet’s most important pioneers did not have much of a choice.

If you thought things were going to quiet down with Yahoo now that it has installed new CEO Scott Thompson in place, think again!

That’s because of a very unusual — well, to be fair, unusual for most companies, but not for perpetually storm-tossed Yahoo — confluence of important events about to take place all at once over the next six weeks.

And, like a very dicey game of corporate Jenga, each has the ability to upend and impact the other significantly, either for the good or, well, for the bad.

Here are the four horsemen of the possible Yahapocalypse, all riding into town very soon:

Q4 Results: Yahoo will report its fourth quarter earnings on January 24th, after the markets close. While sources said the company has managed to turn around what was looking like a first-class disaster, it’s still not going to be a pretty picture when it comes to advertising growth, consumer engagement and other key metrics.

Simply put, Yahoo needs to show investors a fast-growing business. Instead, sources said the Q4 results will likely come in at the bottom of the expected range, which should be unimpressive, even though this has been business as usual at Yahoo for some time.

If Google and others have strong reports, of course, it will make the situation worse.

Along with goosing its ad business again, Yahoo needs to spur innovation and intro some cool new products in new arenas to make Silicon Valley and others perk up.

Proxy Fight?: Weak results will give a nice lift to potential efforts by activist investor Daniel Loeb of Third Point — a major Yahoo shareholder — to wage a proxy fight for control of the company. He’s already here in Silicon Valley this week searching for possible board members for an alternate slate of directors.

As I wrote earlier today, the earliest nominations for directors can be submitted is February 24. Loeb then has a month after that to submit a competing roster.

Worse for Yahoo, many of Yahoo’s major investors are mulling backing Loeb if he initiates a battle for control of the company.

There’s no doubt that Loeb is and means to be a thorn in Yahoo’s side — he already made a lot of noise about its consideration of partial investments from private equity firms, due to low share prices — until major changes take place at the company.

And by major, Loeb’s intent seems to be along these baseball lines: Throw the bums out!

Board in Flux: Speaking of the board, it’s not the pretty picture of solidarity as you might think.

Actually, no one in their right mind thinks that. This board is about as dysfunctional as they come. (It’s like that group on “American Horror Story,” minus the bald dwarf in the basement.)

Right now, several sources report, various factions are jockeying over which board members go and which stay. The Wall Street Journal reported last week on a formal search for new board members to replace outgoing ones, but it’s much more complex than just that.

While some departures seem most obvious — longtime board members Vyomesh Joshi, Arthur Kern and Gary Wilson — the really interesting part will be the possible exit of Chairman Roy Bostock.

While it now is more of a when rather than an if, many sources report, how it goes down is the key part of the move. And who will be the chairman then will be the big conundrum — either an internal candidate, such as David Kenny, or a fresh-eyed outsider.

Another question mark: Whether co-founder Jerry Yang could also move along off the board with Bostock. While Internet company founders usually stick on boards, it’s not a given, especially with all the turmoil at Yahoo, some of which is related to Yang.

For now, make no mistake, Bostock is still in charge of the board and Yang is the only real power behind that power, despite the recent influence of director Brad Smith.

But, with all the pressure by shareholders, some sources suggest that it might finally be time for some significant change at the board level, starting with the pair most associated with all its troubles.

Or, um, not.

If there is going to be any action at all, expect it before February 24th — when Loeb can start making real trouble.

Asian Solution: A lot of the above hinges on whether Bostock and Yang can deliver the promise of a deal with its long disgruntled Asian partners, Alibaba Group and SoftBank.

The trio is now engaged on negotiations about a tax-free deal, in which Yahoo would sell back some of its stakes in its Asian properties and get money and other operating assets in return.

While it’s good news that the talks are finally proceeding with some level of normal functionality, it’s still a complex situation and one with a lot of outstanding questions.

Most important: Which operating assets will be bought in the deal to hand over to Yahoo? And also, what will the valuations be?

Sources close to the situation said that the talks remain slow-going and frustrating — “The stop-and-go of all time,” joked one person involved. But they are moving forward, which is no small thing when it comes to these three.

That’s critical for Yahoo, which can ill afford to disappoint shareholders if no lucrative, cash-rich deal happens in Asia. And, it needs to happen before Loeb can act on a proxy fight too, since a successful end to its Asian issues will negate his momentum dramatically.

Oh Yeah, Running the Core Business Stuff: As usual, a full and fraught month for Yahoo and its directors, who have other things to do, I assume.

But not me and not new CEO Thompson. By the way, the former eBay exec will presumably be very busy doing some significant rejiggering of the core Yahoo business in the meantime.

Could that mean a new product direction for Yahoo, for example, around data? Could it mean a passel of new execs? Could it mean layoffs?

Or, could it mean Thompson will finally solve the ultimate sword-in-the-stone question: What is Yahoo?

And that, in the end, will be the real victory.

Yahoo shareholders felt a little giddier earlier this week, when it seemed as if the company had finally decided to make a deal with its Asian partners.

But the happiest crew might end up being the Silicon Valley Internet giant’s outside counsel, Skadden Arps — and especially Leif King, the fantastically named legal eagle who has been advising Yahoo on the deal.

That’s because today the Yahoo board approved continuing the negotiations to come to a final agreement over the stake, sources said, which should take six to eight weeks.

It’ll surely be happy holidays for billable hours!

As costly as the legal bills will be, if it all goes well, an Asian solution will mean one major problem solved, with a possible pile of cash and new assets coming in to Yahoo.

To get there, the company signed a term sheet earlier this week with Japan’s SoftBank to sell back all its holdings there, and with China’s Alibaba Group to sell off more than half its stake (moving from a 40 percent stake to a 15 percent one).

The deal values Yahoo’s total shares in both companies at about $17 billion.

While it gets a pretty accounting name — “cash-rich split “– the vehicle to unwind it all is essentially a complex tax dodge finally cooked up by the trio, in which cash, new assets and stock will be moved around until everyone gets what they want (except the U.S. government).

I would explain it — but I am on vacation, and would rather drink eggnog and sleep — so here is The Wall Street Journal’s version, which I like because it sounds like Alibaba and SoftBank are giving Yahoo a hugely loaded Starbucks card for Christmas:

“As envisioned in the scenario, Alibaba would create a subsidiary into which it would put several billion dollars of cash, plus an operating asset that Yahoo wants to buy using additional cash from Alibaba, almost like giving Yahoo a prepaid card for an asset of its choice, the people said.”

Everyone is hoping there will not be any hiccups in the deal, which has been spearheaded by Yahoo board member and Intuit CEO Brad Smith, and Jerry Yang, who is also the company’s co-founder and a major shareholder.

Alibaba CEO Jack Ma and CFO Joe Tsai, both co-founders of that company, were the point men for the Chinese company. And for SoftBank, it was its founder and CEO Masa Son and his main U.S. exec, Ron Fisher.

Now, said sources, Yahoo’s board is hoping to still keep the bids from a pair of private equity firms — Silver Lake and TPG Capital — alive.

While initially the focus on the action, the PE bidding for partial Yahoo stakes has recently been sidelined by the Asian deal.

Now, sources said, Yahoo is hoping the new infusion of cash and assets will allow it fend off shareholder unrest — stock buybacks and dividends, anyone — to solicit higher prices from the firms to make strategic investments.

Yahoo had considered the initial bids too low, as did some very pissed-off activist shareholders.

Still, it’s not clear if those firms will jack their offers now, although sources said Silver Lake is still interested in some sort of deal that would give it influence over remaking Yahoo.

Silver Lake and others think the long-troubled company could be revived with some effort, and become a much more lucrative Web property.

But those negotiations might run into roadblocks over who gets to pick leadership for the company. Yahoo has accelerated its efforts to hire a new CEO, after firing Carol Bartz in September.

The PE firms, who would buy a large stake in Yahoo, also have wanted some level of control, including CEO and board approval, in order to be able to make massive changes at the company to turn it around.

Wall Street seems to like the Asian part of the deal, at least, since it shows some sort of forward momentum at Yahoo, and from its often-lugubrious board.

Shares are up almost 7 percent in the last few days, although they are not popping as they might be, given that new valuations based on a successful Asian deal put the stock at a much higher price.

In other words, investors like what they see, but are watching and waiting for more.

Earlier this week, Google and Mozilla said they had struck a deal to renew their search royalty agreement for another three years.

What the pair declined to add: The search giant will pay just under $300 million per year to be the default choice in Mozilla’s Firefox browser, a huge jump from its previous arrangement, due to competing interest from both Yahoo and Microsoft.

Sources said this total amount — just under $1 billion — was the minimum revenue guarantee for delivering search queries garnered from consumers using Firefox.

Google’s main rival in the bid, sources said, was Microsoft’s Bing search service, which was aggressively trying to hip-check it from the main search spot on the browser.

That’s because the software giant has been spending a lot of money in efforts to grow Bing’s market share in the search market.

Microsoft, of course, also owns the still-dominant Internet Explorer browser, but Google’s Chrome has recently been making major gains over both IE and Mozilla’s Firefox.

Still, Mozilla’s recent negotiations with both companies was about search market share.

Yahoo was also in the mix, even though Microsoft powers its search technology, because a hookup with Firefox was considered a plus in holding on to its declining search market share.

But the deal, which was being pushed hard by Yahoo’s Chief Product Officer Blake Irving and its search head Shashi Seth, was determined to be too costly for Yahoo.

Costly indeed, since the new price is much higher than Google had previously ponied up to Mozilla. In 2010, Google contributed 84 percent of Mozilla’s $123 million in revenue.

A previous version of the partnership had expired at the end of November, and the new talks were done against a backdrop of simmering tension between Google and Mozilla over Chrome.

As Liz Gannes wrote earlier this week:

Since the first search royalty deal was signed in 2008, Google’s own Chrome browser has become a significant competitor. Just last month, Chrome overtook Firefox in global usage for the first time, according to StatCounter. Both browsers — software which is used to navigate the Internet — have about 25 percent market share.

Even with the new default deal with Google, Mozilla still also has partnerships with other search providers, including Bing, Yahoo, Yandex, Amazon and eBay.

Of course, everybody declined to comment on my queries to hand over all the financial deets stat.

But Google’s SVP of Search, Alan Eustace, said in a statement: “Mozilla has been a valuable partner to Google over the years and we look forward to continuing this great partnership in the years to come.”

Great, perhaps, but also much more expensive — so presumably Firefox is worth it.

Mozilla is set to announce that it has signed a new three-year agreement for Google to be the default search option in its Firefox browser.

It’s a critical renewal for the Silicon Valley software maker, since its earlier deal with the search giant has been a major source of revenue to date.

The companies said the specific terms of the commercial agreement are not being released. But, in 2010, Google contributed 84 percent of Mozilla’s $123 million in revenue.

A previous version of the arrangement had expired at the end of November. Mozilla said at the time that it was in “active negotiations” with Google.

The relationship has not been without some tension of late. Since the first search royalty deal was signed in 2008, Google’s own Chrome browser has become a significant competitor. Just last month, Chrome overtook Firefox in global usage for the first time, according to StatCounter. Both browsers — software which is used to navigate the Internet — have about 25 percent market share.

Mozilla also has partnerships with other search providers, including Microsoft’s Bing, Yahoo, Yandex, Amazon and eBay.

Here’s the full announcement Mozilla will soon put out:

Mozilla and Google Sign New Agreement for Default Search in Firefox

We’re pleased to announce that we have negotiated a significant and mutually beneficial revenue agreement with Google. This new agreement extends our long term search relationship with Google for at least three additional years.

“Under this multi-year agreement, Google Search will continue to be the default search provider for hundreds of millions of Firefox users around the world,” said Gary Kovacs, CEO, Mozilla.

“Mozilla has been a valuable partner to Google over the years and we look forward to continuing this great partnership in the years to come,” said Alan Eustace, Senior Vice President of Search, Google.

The specific terms of the commercial agreement are confidential and are not being released.

Maybe get something cooking in the whole what-will-Yahoo-do stakes, now that one of Yahoo’s more active board members is back.

And by “back,” I mean that Kenny — no longer a candidate for CEO — has no further need to recuse himself from the strategic process in which the Silicon Valley Internet company finds itself.

In an interview with Advertising Age last week, Kenny — the well-regarded online ad exec who recently stepped down as president of network infrastructure giant Akamai — released an unusual statement:

As a matter of policy, I do not comment on matters related to Yahoo as a Yahoo director. However, as a personal matter, I want to clarify that I believe Yahoo is a great company with enormous potential, but I am not — and will not be — a candidate for the CEO position. I look forward to my continued service on the Yahoo Board of Directors.”

By removing himself from the fray, that means, according to several sources, that Kenny will be diving back into sleeve-rolling duties at Yahoo, as one of its — how can I put this? — less comatose board members.

In fact — until he was sidelined by the obvious conflict of interest inherent in wanting to be CEO, while also directing the fate of Yahoo for shareholder value — Kenny had been deeply involved in a lot of the changes that had taken place of late, after a long period of board inaction.

That included the ouster of CEO Carol Bartz, who was fired for a number of reasons, including lack of strategic vision. It was relatively new board member Kenny — he became a director in February — who led the strategy committee that had asked Bartz for her road map, which she did not deliver to their liking. Obviously.

Because of the swirl around his possible CEO candidacy — Kenny was a noticeable inside candidate, since he is well known in the Internet advertising world for running and then selling Digitas to the Publicis Groupe for $1.3 billion in 2006 — he gave up leadership of the committee to Intuit President Brad Smith.

Sources said it is unlikely Kenny will get that top job back, but he remains a member of the transactions committee, which is leading the strategic review of the company.

That’s the key slot for the independent board members of Yahoo, who must ultimately be the ones to determine what path or offer the company will take.

One plus: Kenny has close relationships with most of the bidders — largely private equity firms — looking at Yahoo, and also is well known among the media and tech companies poking around, too. He also has advertising — and now tech — experience, which will be much needed as Yahoo explores its options.

Most importantly, Kenny is an independent director, which will be very important to the process going forward, especially since a lot of the spotlight has fallen on Yahoo co-founder and director Jerry Yang.

Yang — who has been a bit of a Yahoo lightning rod at times — has been involved in some of the meetings with those interested, along with interim CEO Tim Morse. The company recently noted that this was at the behest of the board.

While these were only informational meetings so far — and not negotiations, as some reports have surmised — Yang’s involvement will likely have to be more curtailed, at least publicly, especially if any of the deals include using his own large stake in Yahoo.

“This process has to be above board, since it is so easy for those wanting a better deal to try to cause all kinds of trouble,” said one source. “The company is already under attack in that regard.”

That’s a reference to a recent salvo by hedge fund activist Dan Loeb, a major Yahoo shareholder who has taken aim at the board and, last week, at Yang. Loeb essentially accused Yang of double-dealing in the process.

Enter Kenny, along with Smith and — to an increasingly lesser extent, of late — Yahoo Chairman Roy Bostock. While there are other independent board members involved, these are the three to watch most closely now.

While some think Kenny still would like to be CEO of Yahoo — he was also on the short list several years ago when Bartz was hired — sources said he is more likely to take a job at another consumer Internet company.

While he certainly could slot into a large advertising firm or into the digital division of a big media concern, sources said Kenny is looking to be a CEO.

Just not at Yahoo.

At least for now, since down the road it is unclear what will become of Yahoo and who will run it in years to come.

In fact, it might even be Kenny in the end.

With the continuing negotiations between AOL and high-profile TechCrunch founder Michael Arrington likely to come to some conclusion soon, the big question remaining is whether he will appear at its flagship conference, TechCrunch Disrupt, which officially begins tomorrow.

Sources said that seems more likely than not, although the talks between AOL and Arrington are not resolved as yet and his appearance at the highly lucrative conference is part of a whole package.

But it seems unlikely that neither Arrington nor AOL CEO Tim Armstrong and content chief Arianna Huffington wants to damage TechCrunch Disrupt, which makes piles of moolah from sponsors and fees, attracts thousands of attendees, and where a plethora of promising start-ups compete with each other.

And, in fact, some of the slated speakers I have contacted have said that they have not been told of any changes in the program.

A hackathon of those entrepreneurs is now taking place before the main event, where well-known Silicon Valley players will be interviewed on stage by the staff of TechCrunch.

The conference is mostly run by TechCrunch exec Heather Harde, as well as the site’s leading editor Erick Schonfeld.

But, of course, TechCrunch Disrupt has starred Arrington, the larger-than-life blogger now turned venture capitalist.

That shift and how badly it was done is at the center of complex severance negotiations.

As I previously wrote, sources said the company has so far refused Arrington’s bold demand, posted on TechCrunch itself, to either give the popular tech news site “editorial independence” or sell it back to him.

As I wrote last week:

The situation between the popular tech blogger and top execs at the Internet company — which bought his site earlier this year — comes after a week of increasingly testy back and forth between them, after it was revealed that Arrington was starting his own $20 million venture fund called CrunchFund.

The move caused a media firestorm over the ethics and propriety of the move, which was followed by an ugly internal war at the company, with Arrington and TechCrunch staffers on one side and Armstrong and Huffington on the other.

(Full disclosure: Although no one cares what I think, I consider the deal appalling and wrote that it was a “giant, greedy Silicon Valley pig pile.” Now, it seems to be 56 percent piggier!)

After many confusing messages from AOL, Arrington was removed from his longtime job at TechCrunch and placed in its venture arm, after editorial objections from Huffington.

That had supposedly been the the plan until it all blew up, with reveleations about what the CrunchFund deal — which includes $10 million from AOL — meant to TechCrunch and its news gathering.

That seemed clear from a widely cited quote from CrunchFund investor and well-know Silicon Valley entrepreneur Reid Hoffman to me last week:

“TechCrunch will get some real deal flow from entrepreneurs that we would otherwise not see, because they have established a prominent position as the SV/Tech industry information feed. As many tech entrepreneurs read it — both within Silicon Valley and globally — and view the information news feed to be their target for announcing themselves to the world, CrunchFund will have access to deal flow to these diverse and early stage companies. Some of these companies will be the kind of early stage companies with billion-dollar potential that Greylock invests in.”

There you had it: No one can afford to be out of the deal flow in these competitive times, even if it means cutting corners and using a tech news site as fodder.

Arrington obviously has another view of the deal he struck with Armstrong and, sources said, wants his powerful tech news platform back. He has been talking to many Silicon Valley power players about the situation, said sources.

More to come soon from this Silicon Valley soap opera. And, hopefully, it will be a happy — well, happy-ish — ending.

(Full disclosure: AllThingsD also runs conferences that could be construed as competitive to TechCrunch Disrupt, although we both we seem to do just fine. In addition, Walt Mossberg and I are getting along like peas and carrots, although we vigorously disagree over the humongous talent of Barry Manilow.)

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

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.

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:

Today and tomorrow, Yahoo’s directors are gathering here in Silicon Valley for one of their regular meetings that take place over the course of the year.

While board meetings in general are usually pretty dull affairs–and Yahoo’s, in particular, are typically glacial ones–there is a lot on the plates of those with purview over the machinations of the long-struggling Silicon Valley Internet giant.

Here’s a primer of what might (and might not) be happening, according to sources, of course, as Yahoo continues on its quest to reinvigorate itself–a journey that is beginning to make Siddhartha’s transformation into Buddha enlightenment look speedy.

A Yahoo spokeswoman declined to comment on anything below, although I did run it all by them.

The U-Shaped Turnaround

At Yahoo’s recent sales meeting in San Antonio, CEO Carol Bartz went all Sesame Street on the troops, using the letter “U” as an illustration to indicate where in the cycle the company was in its turnaround.

Apparently, just on the other side of the very bottom of the letter, heading inevitably upward.

Her argument was that the company has finally cleaned up its platform mess and its confusing corporate structure, and that its display and search advertising business is now recovering nicely.

All true, except there are some other key issues, such as the slowness of the search and online advertising partnership with Microsoft to make some serious hay.

In fact, although its display business will show a definite strong recovery in Yahoo’s quarterly results next week, its search business–both in market share and revenue per search (RPS)–has, as one person close to the situation put it succintly, “fallen off the cliff.”

That’s due, in part, to getting the new system with Microsoft delivering better results, which is not happening yet (if ever!).

In this quarter, Microsoft has honored its contractual guarantees and will make up the difference–which will result in masking the magnitude of the RPS loss. It’s a worrisome trend to watch.

The Asia Situation

Yahoo and its Asian partners are still mulling over various options regarding the company’s large ownership stakes there.

What is happening with its share in China’s Alibaba Group, according to sources, is precisely nothing right now, as has been made clear in recent comments by its CEO and co-founder Jack Ma.

“If you cannot make the business cool, you have no right to be angry with me,” said Ma in an article in Forbes published this week, referring to Yahoo. “I just don’t trust them…I’ve been working with them for years, and I’m disappointed.”

Relations between Ma and Bartz, sources said, remain as bad as ever, and even the normally close one between Ma and Yahoo co-founder Jerry Yang is strained.

Plus, Ma told Forbes, as he has said before, Alibaba is not taking its auction site, Taobao, public–leaving Yahoo in possession of an appreciating but decidedly private asset.

Japan is a different story, with the disposition of Yahoo’s stake in Yahoo! Japan the subject of long and continuing negotiations for a while now.

While the earthquake and tsunami crisis there did slow discussions down, there is still active recent movement about a variety of cashing-out scenarios, all of which have massive tax and regulatory issues.

Without boring you with the specifics, one option is to create a tracking stock, another a spin-off of the asset and still another some sort of stock trade.

But no matter what happens, Yahoo will have to pay some sort of taxes on its 35 percent stake in Yahoo! Japan, now worth $8 billion.

But if its CFO Tim Morse–the key figure working on the deal–can pull it off, what will Yahoo do with all that money?

Acquisition Guns Blazing? Or Sputtering?

In a recent forum in Silicon Valley, one of its M&A minions said Yahoo had its “guns blazing” with regard to acquisition activity in 2011, as deliciously reported in The Wall Street Journal, despite the company’s lackluster acquisition record.

Sources said the exec had his ears soundly boxed by his managers for the dopey remarks, since Yahoo has had such a lackluster record in the arena–especially compared to others.

And, oh yes, Yahoo’s M&A head just decamped to gaming phenom Zynga.

That aside, Yahoo should be deep in the market for hot start-ups to help revive its innovative spirit, but it remains hindered by a continued reluctance by new start-ups to join it and by its reputation for being a place where entrepreneurs go to die.

That certainly could change at any time with the right execs in place, but Yahoo is competing with a plethora of more exciting companies and also a seemingly endless venture capital gusher of cash of late.

While it is the board’s job to approve acquisitions and not source them, perhaps it is its job to pressure Bartz and other execs to get off the stick and hit at least one of the targets Yahoo aims at.

Targets are plentiful in advertising, content and even social, with many start-ups playing right into a lot of arenas Yahoo needs some help.

And help it does need as talent keeps walking out the door daily, mostly to hotter prospects such as Zynga and social buying sites Groupon and LivingSocial.

There is no question it is hard for any large company to hold onto top staff when there are so many enticing bonbons out there as options, but it can be done.

One good thing: Its newish head of product Blake Irving and head of U.S. media and advertising Ross Levinsohn seem to be playing well together and are setting a tone of stability that is much needed.

Enter the Kenny

That said, there remains endless swirl, especially with key investors, about the performance of its CEO.

While she started off as a publicly in-your-face exec, Bartz has definitely stepped out of the limelight of late, as her pugnacious manner started to irritate Wall Street and others.

It was a good idea, since it has taken the focus off the lack of stock and revenue progress she had loudly promised.

Still, Yahoo shares have continued to stay locked in the mid-teens, as investors wait for some sign that Bartz’s turnaround has worked.

The entrance of its spanking new director, Akamai President David Kenny, has further increased speculation about management and board changes at Yahoo.

This is Kenny’s first board meeting, but this well-connected newbie is someone who is clearly going to rise quickly to the top of decision-making at Yahoo.

That’s because the smooth and well-liked Kenny, who also has deep advertising experience as founder of the Digitas agency, has a long relationship with Yahoo and also with Yang.

He also now has much more tech cred as a leader of one of the Internet’s most important infrastructure companies, with a ton of regular contacts with media giants, ad networks and video providers that are Akamai’s clients.

In other words, Kenny (pictured here) is the full package of ad and tech experience that would make him an obvious Yahoo CEO candidate when Bartz’s contract is up in early 2013, if not before.

He’s also the person most likely to take over for longtime BoomTown punching bag Roy Bostock as chairman of the board at some point.

None of this is happening soon, but it is clearly an interesting development.

There are other machinations, of course, from continued interest from private equity players in Yahoo, as well as a variety of takeover scenarios, each more complex than the next.

While often derided as yesterday’s news by the elite of Silicon Valley as on an inevitable downward path, those plots are there because Yahoo remains a stellar brand with consumers worldwide and an Internet property with huge traffic and a big ad business.

In other words, it’s a U that someday maybe could be a V.

Flixster–the popular social movie site whose brands include the Rotten Tomatoes premium reviews site, as well as BuddyTV–is in early acquisition talks with several suitors, including Yahoo, said sources close to the situation.

The price being discussed for the San Francisco-based start-up is between $60 million and $90 million, said several sources, in talks that are “substantive.”

Nonetheless, any acquisition negotiations could always fail. In fact, Flixster held advanced discussions in late 2007 with IAC/InterActiveCorp.

Along with Yahoo, which is interested in bringing in a strong team to bolster the entertainment offerings of the Silicon Valley Internet portal, sources said several media giants are also eyeing Flixster in order to strengthen their ties to entertainment consumers. Likely candidates in this regard include Disney and Warner Bros.

Interestingly, one of Flixster’s big shareholders is News Corp., which traded its Rotten Tomatoes unit for a 20 percent stake in the combined entity a little over a year ago.

But its minority stake gives News Corp. little influence over Flixster’s fate, although its IGN gaming unit head Roy Bahat is on the Flixster board. News Corp.–which has been shedding Web properties, such as its current effort to sell MySpace–is not bidding for Flixster.

But the interest in the site by Yahoo and others is obvious.

Flixster has attracted a huge online audience, which trades all kinds of recommendations, ratings, news and even post user-generated movie reviews on the Web site and via widgets on social networking sites, mostly on Facebook. Its recent mobile app efforts have been successful.

Co-founded in 2006 by CEO Joe Greenstein and CTO Saran Chari, Flixster has raised $7 million in funding from Lightspeed Venture Partners and Pinnacle Ventures, as well as garnering angel investments, such as from Silicon Valley entrepreneur and LinkedIn founder Reid Hoffman.

The combination with Rotten Tomatoes and its more robust Web presence made a lot of sense. It features mostly premium content, including professional reviews, trailer videos and news.

The site is famous for its clever fresh and rotten tomato rating system for movies.

A Yahoo spokeswoman declined to comment and I have not received a response from emails sent to Greenstein.

Until he does, here’s my video interview with Greenstein, Chari and COO Steve Polsky, in which they talked about the deal to combine Flixster with Rotten Tomatoes:

]]> http://allthingsd.com/20110316/100-percent-fresh-exclusive-flixsterrotten-tomatoes-in-acquisition-talks-with-yahoo-and-others/feed/ 4 http://allthingsd.com/20110131/boomtown-did-not-call-groupons-andrew-mason-a-corporate-d-bag/ http://allthingsd.com/20110131/boomtown-did-not-call-groupons-andrew-mason-a-corporate-d-bag/#comments Mon, 31 Jan 2011 14:15:42 +0000 Kara Swisher http://kara.allthingsd.com/?p=39982

Oh, to be misquoted!

Last week, a lot of folks on Twitter and elsewhere thought I had called Groupon co-founder and CEO Andrew Mason a “corporate douche bag” onstage in an interview gone badly awry.

While such a comment is not beyond me, the fact of the matter is that he called himself that.

At the DLD conference put on by Burda Media in Munich, Germany, I interviewed Mason, along with Foursquare co-founder and CEO Dennis Crowley, about local online markets that they both now dominate online.

During the session, I pressed Mason about his aborted acquisition negotiations with Google, as well as future IPO plans for the Chicago-based social buying service.

When he demurred, I let it go, but then the ever-voluable Mason decided to explain himself.

“I used to watch people doing like what I just did on TV and be like, ‘What a corporate douche bag, I’m never going to be like that.’ And here I’m doing it. You made me do it!”

I didn’t, but thanks for the credit, Andrew!

After I pressed him on the Google talks, he tried the kiss-and-not-tell excuse.

“It’s very personal between the companies. You’re exploring each other and then everybody wants us to do that out in the open. We don’t have all the answers yet. We’re figuring things out. “

Thus, putting words in his mouth, I concluded:

“Sorry to put words in your mouth, but you’re basically saying ‘We’re a fucked-up group of people behind the scenes, but please invest in our IPO.’”

Mason’s answer: “Yes!”

I’m glad I cleared that up!

In any case, here’s the full video of one of the more enjoyable interviews I have done in awhile:

]]> http://allthingsd.com/20110131/boomtown-did-not-call-groupons-andrew-mason-a-corporate-d-bag/feed/ 2 http://allthingsd.com/20110120/apple-vs-nokia-the-battle-of-britain-ii/ http://allthingsd.com/20110120/apple-vs-nokia-the-battle-of-britain-ii/#comments Thu, 20 Jan 2011 15:19:05 +0000 John Paczkowski http://digitaldaily.allthingsd.com/?p=56095 Another blow landed in the Apple-Nokia patent punch-up. Apple on Tuesday sued Nokia in the High Court in London seeking to invalidate one of the patents at issue between the companies. This particular one covers touchscreen scrolling and is one of a number of patents Nokia has accused Apple of infringing.

Nokia, for its part, doesn’t seem much worried by the action. “[We're] confident that all of the 37 patents [we have] asserted against Apple [are valid],” a spokesperson told Bloomberg. “We are examining the filing and will take whatever actions are needed to protect our rights.”

PREVIOUSLY:

• Nokia Sues Apple
• Did Nokia Sue Apple Before Apple Could Sue Nokia?
• Nokia’s New Focus Is Mobile Services? Sure It’s Not Lawsuits Against Apple?
• Apple Countersues Nokia for Copying iPhone (Plus Disputed Patents and Full Text of Counterclaim)
• ITC Investigating Nokia Over Apple Patent Complaints and Vice Versa
• Nokia Accuses Apple of “Legal Alchemy.” Stops Short of “Chymistry” and “Heresy.”
• Apple Vs. Nokia: The Battle of Britain

]]> http://allthingsd.com/20110120/apple-vs-nokia-the-battle-of-britain-ii/feed/ 6 http://allthingsd.com/20110103/apples-jobs-tops-boomtowns-10-most-fascinating-techies-in-2010-survey/ http://allthingsd.com/20110103/apples-jobs-tops-boomtowns-10-most-fascinating-techies-in-2010-survey/#comments Mon, 03 Jan 2011 16:02:00 +0000 Kara Swisher http://kara.allthingsd.com/?p=39049

Of course, he won.

Dominating tech’s mindshare and press coverage in 2010, Apple CEO and co-founder Steve Jobs also handily took the No. 1 slot of a reader poll conducted by BoomTown in the last days of year.

Jobs–who introduced a range of innovative products, such as the iPad, over the course of the 2010–garnered just over 30 percent of the votes for the question that asked: “Who are the 10 Most Interesting People in Tech in 2010.”

Among the reasons he was selected, from comments posted by those who took the survey:

“With the iPad, he’s re-inventing the personal computer. Again.”

“Because he never stops.”

And my favorite: “Because if he had to be dictator of the world, he’d actually take doing a good job of it seriously.”

And, despite not acing him out for Time magazine’s “Person of the Year,” WikiLeaks head Julian Assange got 16.3 percent for the No. 2 spot, followed by Facebook’s co-founder and CEO Mark Zuckerberg at 10.1 percent.

Said one voluble commenter: “Whether one agrees or not with the how, governments and the individuals in power tend to do things that, we as a public, need to know, given that their actions, ultimately, impact how we must live our lives. Assange, is merely bringing to light things that many would rather not have brought into the light of day. One could argue that we do not need to know, for security or other reasons. However, negotiations, diplomacy and conflict, are all simply ways or resolving issues. Since, as a public, we allow these people into power, should we not know they are acting on ‘our behalf’?”

Arguing for Zuckerberg and his increasingly powerful social networking site, one person said: “Changed the way we looked at the Web and added another layer of connection between user and the Web, as well as sites connecting to each other.”

A wide range of people, not included by name on the list I compiled, got the No. 4 slot with 7.3 percent. They included Google Android head Andy Rubin, Flickr co-founder Caterina Fake, Demand Media co-founder and CEO Richard Rosenblatt, Arianna Huffington and, um, me!

Longtime Silicon Valley entrepreneur-turned venture capitalist Marc Andreessen was No. 5 at 6.3 percent.

“Visionary as a grad student, very successful as an entrepreneur, now doing some really interesting things as a VC,” said one person.

The red-hot attention around social buying start-up Groupon–and its gutsy choice not to take Google’s offer of billions of dollars–got co-founder and CEO Andrew Mason the No. 6 slot with 5.7 percent.

Pure curiousness about the future outcome spurred one choice: “Is he really lucky or really good? I’m guessing 2011 is a fairly decisive year. I’d like to know more about him…”

The mishegas around Yahoo and its voluable CEO Carol Bartz put her in the No. 7 position.

Said one commenter: “She’s taken the impossible job and will succeed. However, rewiring is taking more times than expected…”

Innovation put social magazine iPad app Flipboard co-founder and CEO Mike McCue at No. 8 with 2.3 percent.

No. 9 was Facebook COO Sheryl Sandberg at the same percentage, with the inevitable Betty White clocking in at No. 10 with 2.1 percent.

The reason for picking the longtime Hollywood movie and television star, after lobbying by rabid Facebook fans got her a gig on “Saturday Night Live”?

Simply put: “She rocks.”

And, indeed, she does.

Here’s my lovely bar chart showing the winners, which, perhaps most fascinating of all, did not include anyone from search topper Google or software giant Microsoft or microblogging leader Twitter (click on the image to make it larger):

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