Tonight, new Yahoo CEO Marissa Mayer gave her first public interview since becoming the leader of the troubled Silicon Valley Internet giant.

Not to cranky me, of course, but to the much more amenable Fortune magazine writer and editor Pattie Sellers, who hosted the former Google exec at a dinner in Palo Alto, Calif., as part of the magazine’s Most Powerful Women franchise.

Fortune recently put a glamour shot of Mayer on the cover, and Sellers also did a profile. Now, Mayer was ready to sit down to talk about Yahoo and more.

(I wish I could have reported from the event, and almost did. I had initially been invited to the dinner at the Garden Court Hotel for about 100 guests, mostly women. But I was then waitlisted, and then told by Sellers directly that I could not attend, as the editors had decided to close out outside media and only have Fortune staffers covering it.)

Whatever! I have my ways to liveblog it and do it faster than any magazine writer can — and none involve disguising myself as a cater-waiter or solely using the Twitter feed from Fortune. As if!

Here goes:

7:50 pm: After some lovely cocktails, the audience sits down at about 10 tables of nine people and starts in on the salad course.

Soon enough, the night starts off with a speech by a McKinsey partner (and presumable sponsor of the dinner), delivering some stats as part of a study of some sort about how businesses are using — or should be using — social tools.

More than 60 percent of knowledge workers spend time exchanging information … Social can deliver an estimated $1 trillion in value.

Big news! Not! Even! Slightly! Oh dear, please get to the opening act!

Finally, Sellers gives her intro of Mayer.

8:04 pm: Sellers notes that her conference had hosted Yahoo CEO Carol Bartz in 2010 (she was ousted in 2011), and in 2011 had Mayer when she was an exec at Google (she became Yahoo CEO this year).

Now, in 2012, Mayer is top dog at Yahoo, and the youngest CEO in the Fortune 500.

“Why don’t we just call this ‘the most powerful Yahoo dinner,’” jokes Sellers.

Why not!

Mayer — for those who care, and forgive me, since I am fashion-stupid — is wearing a black frock and some heeled Mary Janes. She gets big applause when Sellers notes that Yahoo stock is up 18 percent since Mayer became CEO.

Note: It did go down when she made a shareholder misstep early in her tenure, but has gone up since she repeated mobilemobilemobile with confidence on a recent earnings call that got investors excited about her tenure.

8:08 pm: By the way, Mayer put in a call for people to vote for her as Time magazine’s Person of the Year (she is on the list of nominees — more kudos from a Time Inc. property).

Mayer starts off with basic PR messaging that she trotted out previously on the recent earnings call, around how she wants Yahoo to be focused on “delighting and engaging users” and how it is a brand that touches people every day.

Therefore, its products need to be inspiring and delightful.

Daily delight! This is the buzzword.

Also, she notes, Yahoo should be the bestest place to work.

As apparent proof of that, Mayer says that all Research In Motion BlackBerry smartphones have been banished, and that Yahoos will be using Apple’s iPhones, Google’s Android phones and Microsoft’s Windows phones.

This has been endlessly reported, even though most other Internet companies do this, but it’s a good line, anyway.

8:12 pm: By the way, iPhones are the most popular with Yahoo employees.

News at 11! (I will add that iPhones are the most popular with the Swisher boys, too, and — irony alert — one of their moms works at Google.)

Sellers then asks about what makes a good product, which is precisely why the product-savvy Mayer was brought in to fix Yahoo.

Says Mayer: “Acute user need.”

I acutely need doughnuts. Does this count?

Also, says Mayer, products have to be created in a way that is “frictionless and beautiful,” and that the offering cannot get in the consumer’s way.

Sellers asks her to name a great product. Mayer notes that she was not talking acquisitions, but quickly namechecks the iPhone and Google.

Since those companies’ market caps are a billionty times bigger than Yahoo’s, she def cannot acquire anything there.

8:17 pm: Mayer also apparently likes some kind of luxury paper made in Germany that looks like velvet. It’s Gmund, by the way.

The topic moves on to Flickr, the once hip photo-sharing service that Yahoo bought and proceeded to ignore. Meanwhile, Instagram.

Mayer says that Yahoo needs to focus on the “global suite” services that are excellent, and on executing them well.

She points out Yahoo’s fantasy football service, mentioning its recent breakdown on game day that sent fans into a tizzy.

It’s a they-love-us-so-much-they-hate-us point.

Yahoo will not do things like online maps, though, Mayer says, noting that where Yahoo cannot compete, it should partner.

Sellers asked about acquisitions.

Mayer: Mobilemobilemobile! (It worked before!)

8:22 pm: Mayer then mentions the importance of small teams that work together, such as its recent Stamped purchase.

She notes that the bigger and more strategic opportunities are around advertising technology. Calling the Rubicon Project!

Mayer veers away from a question about layoffs, a sad Yahoo tradition. I have reported previously that she will make cuts via performance reviews.

At Yahoo, she says, it’s now about performance, not potential: “No offense to potential, but what we really care about now is performance.”

No offense taken!

Also, everyone’s goals will be posted on the Yahoo Web site for everyone to see.

Oh, wait, there will surely be offense taken by those lazy potential people at Yahoo.

Mayer does add that Yahoo should be a “growth company,” and not one defined by cuts.

8:28 pm: “The consumer Internet is growing, and we need to invest,” she says.

To achieve this will be a hard job, and will take multiple years, she adds.

Sellers asks about the Disney turnaround, which Mayer is apparently fascinated with. Mayer does indeed love Disney.

Who doesn’t? (Well, me, but I am an outlier.)

Speaking of Disney, one of its directors, Facebook COO Sheryl Sandberg, sent regrets, but has emailed a question from its board meeting in New York.

Sandberg once worked at Google with Mayer, though the pair is still not working on a search engine together.

Sandberg asks what was most surprising to Mayer about taking over at Yahoo.

Mayer says she thought the job would be hard, and her new baby would be fun. Mayer had her first child at the end of September.

“The job is fun, and the baby is easy,” says Mayer.

Sellers wants to know how Mayer gets it all done. The answer: “Ruthlessly prioritize.”

She notes that that’s why she has not talked to the media at all, and why she will not be talking after this event.

(Well, I guess I will go back to not waiting by the phone for Yahoo PR to call back. Hi Anne! — also looking forward to not getting the holiday media party invite, which is no prob as the Googlers are throwing one the same night and they usually have organic arugula picked by elves they employ that’s acutely delicious.)

Then, as a Wisconsin Green Bay Packers fan, Mayer does her version of the famous Vince Lombardi quote: “God. Family. Yahoo.”

Cheesehead moment! And Mayer and I have so much in common! Mine is: Dog. Family. Yahoo.

8:33 pm: Sellers throws in one more question from famed investor Warren Buffett, who apparently wants to know what, if Mayer was not CEO of Yahoo, would she want to run?

Not Berkshire Hathaway! Mayer says she would build something herself.

It seems as if that is what she is doing at Yahoo, so we await the result.

Until then, Mayer’s mum. So to speak.

They like her, they really like her.

Wall Street, that is, in regards to new Yahoo CEO Marissa Mayer, assigning the former Google exec a clear premium.

And whether it is deserved or not yet from a pure performance perspective — we actually won’t know for several quarters ahead — the shares of the Silicon Valley Internet giant over the past three months have gone up 22 percent. The rise has taken place pretty much on the promise that she will finally be the one to deliver what no other Yahoo leader has done.

And that is, besides making the company relevant and innovative again: Getting Yahoo’s stock past $20 a share again.

That’s within striking distance now. Shares are at $18.40 today, close to an all-time high for the year. The recent rise certainly isn’t taking into account the results of the recent lackluster third quarter, which continued to show the worrisome downward trends — even though partial asset sales of the company’s Chinese Alibaba stake successfully masked the problems — in growth, engagement and overall profitability.

But Mayer’s confident I’ve-got-this tones on the earnings call itself — especially in pushing a mobile strategy that has not been put in place as yet in any substantive way — won over Wall Street investors, who apparently like how she sounds and, thus, are intrigued with what she might do.

While this kind of perceptual game will only get Yahoo so far, moving out of the teens in share price would be an important benchmark for the company.

The stock was last at that level in August of 2008. At the time, in fact, $20 a share was considered very disappointing, taking place after Microsoft dropped its $44.6 billion hostile bid for Yahoo a few months earlier. Indeed, $20 was a big comedown from when Yahoo shares were above $43 in 2006.

The lowest price Yahoo shares got in recent years were $9.39 in November of 2008, just before then CEO and co-founder Jerry Yang stepped down.

Now the stock is close to double that sad trough, fueled in part by some cosmetic moves to improve culture by Mayer — including free food, smartphones and a promise to end the slow-moving decision-making at Yahoo.

There has also been a start of the promised multi-billion-dollar stock buybacks by the company, although Yahoo has been cagey about how and when it is purchasing. Also helping, more recently, is that several big hedge funds are buying into the story of hope.

Following in the footsteps of successful activist shareholder Dan Loeb of Third Point, who is now on the board and is a major Yahoo investor, others like him have now joined in the party in a bigger way. That includes David Einhorn of Greenlight Capital and Chase Coleman of Tiger Global Management.

The thoughtful Einhorn, who is a friend of Loeb’s, has been in and out of the stock before, buying it on hopes that now ousted CEO Carol Bartz would be Yahoo’s savior and selling it soon after it was clear she might not be. He came back in February with three million shares, sold them in May, but now has upped his stake to just over five million more under Mayer’s regime.

More substantively, Tiger’s Coleman has grabbed 25 million shares (interestingly, he’s also upped his stakes in Groupon and Facebook).

Obviously, they must believe Yahoo is set to move upward, which all depends on Mayer. She’s made one critical stock misstep early in her tenure, by announcing that she was considering keeping the huge cash windfall from its sale of Alibaba stock and not giving it back to shareholders in some form.

That dropped Yahoo’s shares to under $15, but Mayer walked back that mistake and the stock has been climbing since.

For the year to date, it’s up almost 14 percent — a nice rise — although that pales in comparison to Apple’s 39 percent rise, Amazon’s 37 percent rise and, most of all, AOL’s 136 percent leap.

The comparison to the massive stock run that AOL has had, after CEO Tim Armstrong — also a former Googler — cut costs, focused units, sold patents and bought back stock, is often made. It’s perhaps apt, but arguably Yahoo has much better and fixable assets than AOL.

More to the point, Yahoo’s price-to-earnings ratio remains unusually low — it’s 5.6, compared to the S&P’s 14.2 average — which means that the entire business is severely undervalued by Wall Street.

It is if Mayer can create real value by actually staging the comeback she is already getting credit for accomplishing. She certainly has a lot of levers to improve results, from the stock buyback to finally making a deal to sell its multi-billion-dollar stake in Yahoo! Japan to making expense cuts to buying some innovative small start-ups to creating products that aren’t, well, lame.

Most importantly, Mayer has to stop the decimation of Yahoo’s once mighty advertising business, which makes up the bulk of its revenue, as well as improve its search monetization by rejiggering its heretofore dysfunctional partnership with Microsoft. (But, as I wrote earlier this week, she will not be making new search engines with Facebook.)

A gander at this chart of Yahoo’s declining quarterly revenue should give you a good visual of the problem with the core business:

YHOO Revenue Quarterly data by YCharts

And, indeed, Yahoo’s sales have dropped 29 percent since 2007, with typically flat display revenue and declining search revenue, which was once Yahoo’s crown jewel. While operating margins have risen over the years, very few point to the company as an exciting growth story.

And it still isn’t, although investors are starting to consider it a possibility. We’ll see as Mayer makes more significant changes in 2013, hopefully underpinning the stock’s recent rise with a true story of financial strides.

But, for now, giddy shareholders probably should not get too far ahead of themselves. Not that you can stop them: Mayer fan Eric Jackson is calling for Yahoo’s stock to be over $40 again by end of 2013.

Whether the Mayer premium can do pull off that particular investor miracle or not remains to be seen.

In the midst of last week’s earnings call, after the company had released strong results, Demand Media CEO and co-founder Richard Rosenblatt made an unusual declaration about its once-tight affiliation with now-disgraced professional racing cyclist Lance Armstrong.

Said Rosenblatt about the Santa Monica, Calif., social content company to Wall Street analysts about the status of the relationship in the wake of Armstrong being stripped of his many Tour de France titles:

“Our relationship is with the Livestrong Foundation, not with Lance, and we are aligned in empowering people to live healthier lives, and we support the important work of the foundation. We have built a powerful destination, popular applications and a very engaged community. None of this has changed and we have seen no material impact on the consumer traffic or metrics.”

In reality, the once-close relationship between Demand and Armstrong ended a while ago, even though the athlete’s cancer-fighting charity has been a high-profile shareholder since early 2008. At the time, Demand struck a four-year exclusive deal with Livestrong to create a health and wellness site, and also got a perpetual license to the Livestrong.com domain name.

But Armstrong — despite appearing at the Web 2.0 conference in 2008 with Rosenblatt — eventually had little to do with the Demand brand.

And it is down to zero involvement now, after he recently stepped down as chairman of Livestrong, due to the doping controversy. That mess has caused a lot of the brands he was tied up with, such as Nike, to disassociate themselves from Armstrong himself, although not from the Livestrong Foundation.

That has also been Demand’s direction, especially given that the commercial Web site, which has become the No. 3 health property in the U.S., is one of the company’s strongest ones. That adds up to about 26 million monthly unique visitors, a gain of 97 percent since last year.

But with that success, why did Demand make the statement at earnings — as well as putting up a blog post recently clarifying that it had “no direct relationship” with Armstrong?

Apparently, according to several sources, Demand had to move to be as explicit has possible, not because of consumers, but because of advertisers.

“The advertisers did care about the affiliation,” said one source. “So it was time to say in no uncertain terms to them and shareholders that Lance Armstrong has nothing to do with Demand.”

Or, as the blog post in late October noted rather strongly:

“We don’t believe the struggles of one individual should detract from the millions of real people who have benefited from work that’s been done to prevent cancer and improve the lives of those unfortunate enough to have it.”

Or, as they say in bike racing, Armstrong had simply become too much of a wheel sucker.

Some news cannot wait, of course, and sources at Apple said the company had planned to release news of the sudden exit of Scott Forstall, one of its major execs, this afternoon.

Maybe so, but it’s also unusual timing. Due to Hurricane Sandy — which was poised to hit landfall in central New Jersey just as Apple made its announcement about the iOS mobile software chief’s leaving, along with that of Apple Store retail head John Browett — Wall Street reaction to what appears to be a major management move by CEO Tim Cook will not take place until at least Wednesday.

That’s because the massive storm has led to the closure of the stock markets today and tomorrow, leaving investors to mull on the major reorganization without a lot of ability to react.

Apple shares closed at $604 on Friday, up about 49 percent over the past year. Its stock had declined slightly recently, after last week’s quarterly earnings did not meet the enormous profit expectations of Wall Street. Still, Apple had — for anyone else — a blockbuster fourth quarter.

The tech leader reported $8.67 per share of profit on sales of $35.97 billion.

How the departure of Forstall and, to a much lesser extent, Browett (who has been a largely unpopular exec since he was hired a year ago), will be greeted by shareholders when markets open should be interesting.

On one hand, Forstall has been a major exec at the company for a very long time, in charge of key areas of success for Apple, including the software for its hugely popular iPhone and iPad. Forstall has even been called CEO-in-waiting in some media accounts.

That said, many sources report that he has wrangled with other top execs, including Cook, and he has been known as someone with a doesn’t-play-well-with-others personality. One source told me today that Forstall had made numerous “open challenges” to the Apple leader over the last year.

While that’s not necessarily a negative at Apple — the late CEO and co-founder Steve Jobs was also someone who did not suffer fools or even simple mistakes among trusted staff — the recent troubles as it replaced Google’s mapping software with its own had clearly tarnished Forstall’s image.

In addition, while Apple does great at hardware, as well hardware/software integration, it has often fallen down in other key software efforts, such as MobileMe, iTunes and more.

This is not all Forstall’s fault, of course, but his sudden departure — which will take place officially next year — means that Cook is consolidating control over the top management.

Thus, the did-he-jump-or-was-he-pushed meme will doubtlessly increase over the next few days. Pushed seems to be the consensus so far.

But here’s a little insight into Apple’s often opaque culture to better discern management Kremlinology there: iTunes is still advertising competitors’ maps instead of its own failed product, and Forstall got no stage time at Apple iPad mini event last week.

Clearly, the removal of Browett, who had made a series of moves that were negatively greeted by Apple’s retail unit, will make Cook look decisive, especially since he had hired him. But whether that extends to how the influential Forstall was dispatched — and it looks like he was — will be another story to grok for Wall Street.

Yahoo is nothing if not consistent, turning in yet another weak quarter that met weak expectations from investors.

The 98-pound weakling is still weak!

In the third quarter, the Silicon Valley Internet giant had $1.089 billion in revenue, a hair above expectations and just two percent higher than a year ago. (Please note that competitors, such as Google and even Facebook, are growing revenue like gangbusters.)

Profits were also weak, despite an apparent pop from a gain from its sale of some of the shares it holds in China’s Alibaba Group. But let’s focus on operations, people, which are the real numbers to gauge. As Yahoo noted: “On a GAAP basis, income from operations decreased 14 percent to $152 million in the third quarter of 2012, compared to $177 million in the third quarter of 2011.”

Minus traffic acquisition costs, display revenue was down to $451.6 million, compared to consensus estimates of $484 million; search revenue was up only a tiny bit to $414.1 million (consensus was $411 million).

Interestingly, Yahoo left out detailed information it has usually provides about engagement and other user metrics. Let me take a big guess: The numbers are simply not impressive, or else they would have been touted.

Also left out was any guidance going forward — new CFO Ken Goldman just came on today, so that’s no surprise. Guess it’s time to throw out the trash, as they say in politics!

But here’s an interesting factoid in the press release: “In October 2012, Yahoo! entered into a 364-day, $750 million unsecured revolving credit facility. The facility is currently undrawn and is expected to be used for general corporate purposes.”

More available cash to go with the pile of cash that Yahoo has already piled up for purposes unclear right now.

To be clear, this meh quarter does not matter at all — with Yahoo getting a financial equivalent of a hall pass for these results — as investors look to hear from new CEO Marissa Mayer about her plans to make all the bad go away. Until she charts a course and sets out on it, it is likely that no one is going to blame her for Yahoo’s past woes.

As Mayer said in a statement today: “Yahoo! had a solid third quarter, and we are encouraged by the stabilization in search and display revenue. We’re taking important steps to position Yahoo! for long-term success, and we’re confident that our focus on quality and improving the user experience will drive increased value for our advertisers, partners and shareholders.”

Everyone is looking forward to hearing how, which the former Google exec will presumably explain in more detail on a conference call with Wall Street analysts — her first as a public company CEO — at 2 pm PT. Tune in for my live blog.

Until then, here are Yahoo’s Q3 slides to peruse:

YHOO_Q312EarningsPresentation_FINAL

Later today, new Yahoo CEO and latest savior Marissa Mayer is expected to debut in her first major turn as a public company CEO, as the company reports its third-quarter earnings.

Unfortunately, her initial script recounting the last three months is likely to be rather lackluster, with Wall Street anticipating yet another nothing-to-write-home-about financial performance from the Silicon Valley Internet giant.

Investors are expecting $1.08 billion in revenue and 25 cents in net income per share in a report that is likely to show more of the same kind of weakness Yahoo has had for far too long. The main reasons this time: Worrisome growth in search and display advertising, especially compared to robust worldwide trends.

Such concerns have kept Yahoo’s stock pretty much flatlined at about $16 a share since she arrived in July.

And that is not likely to change until Wall Street hears more specifics about Mayer’s future plans. Yahoo has previously said she would outline more about her direction on the call with investors later today, after the financial results are released.

Thus, it’s basically a wait-and-see attitude, until Mayer does that, and perhaps until after there is some actual traction.

As noted by Cantor Fitzgerald’s Youssef Squali:

“1) We’ve seen this movie before (this new CEO is the fifth in as many years) and 2) it will take some time before any of the yet-to-be-announced changes yield any meaningful P&L results. Until then, we see Yahoo! shares remain cheap with limited downside, but no clear catalyst to drive them higher short/medium-term.”

Among the highlights that investors hope will be covered by Mayer and also by new CFO Ken Goldman:

A cogent strategy to turbocharge the business, which — as ATD has reported many times — will focus on tech and product solutions; what acquisition arenas are in the pipeline; plans for new talent recruitment and perhaps layoffs of less-than-stellar employees at the bottom 20 percent of Yahoo; the status of talks to sell off its stake in Yahoo Japan; and, perhaps most of all, what are the plans to return cash to shareholders from its recent sale of its partial stake in China’s Alibaba Group.

That might already be in the works via stock buybacks that Yahoo has been engaged in, but it will be interesting to see if Mayer will provide more specifics.

Investors will also look for some details around mobile growth, and perhaps an update of how Yahoo is fixing its search monetization problems with its partner, Microsoft.

One development that some expect is that Mayer will drop future expectations, in a classic take-out-the-trash move.

As J.P. Morgan’s Doug Anmuth noted:

“Similar to what AOL CEO Tim Armstrong did when he stepped in a few years ago, we believe Mayer is likely to remove low quality ad units and over-monetization throughout the site. Despite the near-term monetization impact, we think this would be a good thing, as it would improve the user experience and de-clutter the site. Additionally, we think it’s likely new management would simply want to start off with a low bar.”

And, if she makes it low enough, anything Mayer will do going forward is likely to look pretty good.

Yahoo could announce in the coming week what it plans to do with the billions of dollars it recently garnered after closing the sale of a portion of its stake in China’s Alibaba, according to sources close to the situation.

As AllThingsD has previously reported, the company is most likely to do a share buyback with the $3.65 billion, a move that could boost its still-lackluster stock.

That’s what happened when AOL did one in late June after it got a pile of cash from hawking its patent assets. Its shares are up more than 25 percent for those last three months, while Yahoo’s have gone up less than one percent in the same time frame.

When it announced the completion of the deal in mid-September, Yahoo said that it would hand over 85 percent of the after-tax proceeds to shareholders. (The Silicon Valley Internet giant will keep about $650 million for its own use.)

At the time of the transaction, a Yahoo spokeswoman said that the company declined to give any specifics around the form of return. The company could also, for example, decide to give investors a dividend, too, although Yahoo has long explicitly favored stock buybacks.

“The form and timing of returning proceeds will be determined by the board and management, taking into consideration the best interests of the company and its shareholders,” said the Yahoo flack.

Speaking of flak, new CEO Marissa Mayer tried to give some to tech journalists, some of whom have been giving her a bit of a hard time of late for showing signs of potentially being too spendy.

In a memo to staff announcing the date of its employee holiday party — it’ll be on December 1 on Pier 48 in San Francisco — Mayer took issue with a particular report from Business Insider about how she tussled over costs with departing CFO Tim Morse, whom she ousted last week.

Business Insider claimed that included her taking the price of the holiday shindig from $100,000 to $3 million, due in part to a change in venue location.

Mayer begged to differ, noting in the internal memo that the event would not bust the bank and still be tons of fun:

“Building on the theme of tech reporters not being great with math or numbers, rumors of this year’s party budget have been greatly exaggerated.”

(Is there actual time for tech reporters being math-impaired to become a theme that’s being built upon at Yahoo? I thought Mayer said the company would be building innovative products.)

But since we in the media are apparently dunces, I suppose we’ll just have to rely on Yahoo’s own numbers from its last quarter — which I embedded below — to tell the tale of continuous troubling declines in search queries and page views, declines in minutes spent on its media properties, declines in growth of unique visitors and flat-as-a-sugar-cookie growth in revenue.

Or, as Mae West famously said in the most delightful math quote ever: “A man has one hundred dollars and you leave him with two dollars. That’s subtraction.”

So is this Q2 financial performance at Yahoo — which is certainly not Mayer’s fault since she just arrived, but will be her responsibility to fix going forward:

YHOO_Q212EarningsPresentation

According to sources close to the situation, Yahoo will officially close the multi-billion-dollar sale of half its assets in China’s Alibaba Group in one week.

Sources said the deal is set to be announced next Wednesday, in which the Chinese Internet giant will pay the Silicon Valley company $7.6 billion to buy back 20 percent of Alibaba. Yahoo still owns another 20 percent.

Yahoo will get $7.1 billion in the transaction, as well as a $550 million payment related to the ending of licensing fees that Alibaba has paid annually to Yahoo.

It’s a huge return from when Yahoo co-founder Jerry Yang led a $1 billion investment in the then-fledgling Alibaba seven years ago, with a belief in its CEO and co-founder Jack Ma.

But once-cordial relations between the companies became tense in the ensuing years, as Ma sought to lessen Yahoo’s 40 percent ownership.

After many public kerfuffles, Yahoo finally agreed earlier this year to sell half its stake. It still holds 20 percent, which could eventually reap even larger returns once the fast-growing Alibaba goes public in several years. Yahoo is required to sell 10 percent at that IPO and must sell the rest after that.

Still, Yahoo is getting a pile of money now. After taxes, that gives new CEO Marissa Mayer about $4.5 billion to use in some as yet undetermined way. But it will most likely be for a series of acquisitions to try to reinvigorate the long-troubled company.

Yahoo’s board and later its CFO Tim Morse had promised to return the money to shareholders by way of a stock buyback. But, last month — in a move that quickly depressed Yahoo’s shares and angered major investors — the company filed a statement saying that Mayer was reevaluating that move and could keep the money for other strategic reasons.

Given what a huge windfall it is getting, it will be interesting to see if the board of Yahoo — which is meeting next week, sources said — will choose to return a portion of the Alibaba money to shareholders. A recent similar move by AOL — using money it got from selling patents — was partially the reason for the recent run-up in its stock.

Yahoo could also presumably also give a special dividend to shareholders, but that is less likely.

That will be the question once Yahoo gets its cash in the kitty, which is no small feat.

The complicated transaction spans the globe, given the size of the borrowing — $8 billion, which will value Alibaba at $43 billion — that the company is doing to regain some control from Yahoo. The deal includes debt, as well as the sale of both convertible preferred and common shares, and includes a wide range of players.

That includes current investors, such as Silver Lake, DST Global and Singapore’s Temasek Holdings, as well as many others.

“This is a lot of money flying around the world to complete this,” said one person close to the situation.

Speaking of more money, it’s still unclear where Yahoo is in its long and very drawn out negotiations with its other Asian partner, SoftBank, over selling its stake in Yahoo! Japan.

Sources said the deal was proceeding well right before Mayer was hired, but that she slowed down the talks to reevaluate the prices being discussed. Since then, shares in Yahoo! Japan have appreciated strongly, while shares in Yahoo itself have lagged.

It’s a good thing that Yahoo has both its Asian assets — the value of them now makes up most of the company’s valuation.

Until, of course, Mayer figures out a way to turn the money Yahoo is getting into more gold.

An Alibaba spokesman declined to comment and Yahoo’s PR spokeswoman never speaks as per usual.

It’s not well known, but last year, before it went public, Groupon almost didn’t.

With pressure from former board member Howard Schultz, and also doubts about timing expressed to CEO Andrew Mason by outside investors such as Silicon Valley luminaries Marc Andreessen and Mary Meeker, the Chicago-based daily deals site pressed forward, anyway.

Since then, it has been a tough ride for Groupon and, perhaps most of all, for Mason.

Yesterday afternoon, I got on Skype to do a video interview with him about the continued swirl — much of it very negative — around the company he co-founded and leads.

“I love Groupon,” he said. “Groupon is my life.”

Not so much everyone else these days — who are starting to compare the company to Web 1.0 flameout Webvan and even, in the ultimate digital insult, Pets.com.

That’s a false comparison — those were both never profitable, and had negative cash flow, unlike the much larger Groupon.

Still, Groupon’s stock has been under pressure pretty much since the time of its IPO last year, with critics hammering on everything from whether its business plan is fundamentally flawed to its controversial accounting to the goofy nature of Mason himself.

He even got dinged for drinking a beer at a Groupon all-hands employee meeting. (I’m fine with that one, by the way.)

Groupon shares hit a new low last week, after it reported second-quarter earnings that showed better profits, but a revenue miss. Growth prospects in its core coupon business, or lack thereof, was pointed to by Wall Street investors for the continued sell-off.

One bright spot was its nine-month-old Groupon Goods, which sells a variety of products and which has grown to $200 million in annualized revenue. But the lower-margin offering makes up a smaller part of the company’s overall results, as does its impressive improvements in mobile commerce.

These two positive developments have failed to impress, though, with the stock at even lower lows today — at $4.74 a share. That’s down 82 percent since Groupon went public, making the company worth $3 billion, or about half of what Google had once offered to buy it, and a little more than double its cash on hand.

In other words, it is crunch time for Mason, who must answer to shareholders, employees and his board, and must somehow get Groupon to a better place, and fast.

Among the myriad of risks for him as he does: Everything from new management to the sale of Groupon.

That is not in the cards right now, of course. And, as usual, the affable exec talks with confidence about the company.

To his credit, in this long interview, he is also pretty candid about the struggle.

It’s well worth a watch (except for me looking like I just got off a red-eye flight, which I did).

Here’s Mason:

]]> http://allthingsd.com/20120817/video-exclusive-heres-groupons-andrew-mason-talking-about-daily-deals-sites-stock-smack-future-plans-and-ipo-regrets-or-lack-thereof/feed/ 0 http://allthingsd.com/20120809/mine-mine-all-mine-yahoo-says-it-might-just-keep-that-alibaba-money-for-itself-instead-for-shareholders/ http://allthingsd.com/20120809/mine-mine-all-mine-yahoo-says-it-might-just-keep-that-alibaba-money-for-itself-instead-for-shareholders/#comments Thu, 09 Aug 2012 20:50:48 +0000 Kara Swisher http://allthingsd.com/?p=239824

Yahoo just filed a regulatory document noting that it might not give back the bulk of the $4 billion-plus that it is expecting to get from its sale of a chunk of its Alibaba stake to shareholders, as it had previously said it would, either via a stock buyback or dividend.

Instead, CEO Marissa Mayer looks like she wants all that dough to buy some tasty companies.

The filing noted that Mayer’s recent look-see review of Yahoo, “may lead to a reevaluation of, or changes to, our current plans, including our restructuring plan, our share repurchase program, and our previously announced plans for returning to shareholders substantially all of the after tax cash proceeds of the initial share repurchase.”

Yahoo’s stock is down about five percent on the news, in after-hours trading, to $15.28. It had been moving up slowly in recent weeks.

That’s because, for investors, this is a drastic reversal of previous Yahoo statements on what it was going to do with the windfall. At the time of the deal and then later in several statements by its top execs, Yahoo said it would return the most of the money to shareholders.

“We look forward to delivering the proceeds of the near-term transaction to our shareholders,” said CFO Tim Morse at the time of the deal’s announcement in May, which he later reiterated on an earnings call.

Related to the deal, the Yahoo board had also recently authorized its execs to conduct a larger stock buyback, although the company was under no legal obligation to do so.

In addition, in a recent letter to his investors, Third Point’s Dan Loeb — now a Yahoo director and in charge of a six percent stake — said the company “has indicated that it will return substantially all of the expected $5B of cash it will receive from this transaction to shareholders.”

No longer — at least for most of the incoming pile of moolah from China.

Still, the move probably should come as no surprise, given Mayer is already on the prowl for innovative companies to buy and talent to “acqhire.”

She’ll certainly need a bigger war chest, since Yahoo only has just above $2 billion in cash now, not all of which is available (long accounting reason I will go into later).

The big slug of Alibaba money, from selling half of Yahoo’s stake in the Chinese company, will obviously give her more heft.

So, too, would any money she might get from a deal around Yahoo’s Japanese assets. The company has been in protracted talks with SoftBank, its partner there, about such a sale. While sources said it was close to completion, there appears to still be some roadblocks to its final settlement.

Depending on how such a transaction is completed — tax-free or not — Yahoo could get about $3 billion in cash and perhaps another asset worth $1.5 billion.

That would certainly give Mayer a bigger kitty to do acquisitions — and presumably make lots of friends in Silicon Valley in the process.

Here is the pertinent section of the filing:

New Chief Executive Officer and Review of Business Strategy

On July 17, 2012, Marissa Mayer became the Chief Executive Officer and a member of the Board of Directors of Yahoo! Inc. (the “Company”). As reported in our Form 10-Q for the quarter ended June 30, 2012 filed today with the Securities and Exchange Commission, Ms. Mayer is engaging in a review of the Company’s business strategy to enhance long term shareholder value. As part of that review, Ms. Mayer intends to review with the Board of Directors, among other things, the Company’s growth and acquisition strategy, the restructuring plan we began implementing in the second quarter of 2012, and the Company’s cash position and planned capital allocation strategy. This review process may lead to a reevaluation of, or changes to, our current plans, including our restructuring plan, our share repurchase program, and our previously announced plans for returning to shareholders substantially all of the after tax cash proceeds of the initial share repurchase under the Share Repurchase and Preference Share Sale Agreement we entered into on May 20, 2012 with Alibaba Group Holding Limited.

And here is the whole filing:

YHOO-20120809-8K-20120809

]]> http://allthingsd.com/20120809/mine-mine-all-mine-yahoo-says-it-might-just-keep-that-alibaba-money-for-itself-instead-for-shareholders/feed/ 0 http://allthingsd.com/20120724/with-aol-set-to-report-q2-earnings-tomorrow-tim-armstrongs-feeling-closer-to-fine-video/ http://allthingsd.com/20120724/with-aol-set-to-report-q2-earnings-tomorrow-tim-armstrongs-feeling-closer-to-fine-video/#comments Wed, 25 Jul 2012 01:34:29 +0000 Kara Swisher http://allthingsd.com/?p=233428

When I was in New York last week, I got a chance to sit down with AOL CEO Tim Armstrong, the former not-Marissa-Mayer Googler, to talk about how it’s going in his thankless efforts to turn the New York-based Internet company around.

Unlike Mayer, who is just getting started at fixing what ails Yahoo, Armstrong has been at the job for some time now and finally seems to be getting some traction.

He talked about that and more in a video interview with me (which we did at Manhattan media-maven lunch spot Michael’s), including how it’s going with his always watchable acquisition of the Huffington Post and its eponymous founder Arianna Huffington.

Armstrong was feeling upbeat due to recent improvements in AOL’s business, as well as the lucrative sale of some patents and a victory over an activist shareholder proxy battle.

But, as usual, investors will need to focus on AOL’s performance, which will be on display in the morning when it reports its second-quarter earnings tomorrow at 5 am PT.

AOL beat expectations by 11 percent in the last quarter and Wall Street analysts expect the company to earn 10 cents per share, which has been guided down recently.

Still, because of all the recent good news, AOL’s stock has been up 82 percent since the beginning of the year, although it did drop 1.6 percent this past week.

Also important to tomorrow’s report is whether AOL can stem persistent revenue decreases in this quarter. Analysts are now expecting revenue of nearly $519 million for the period.

Here’s Armstrong chatting about the possibility that he can finally say that his long-suffering turnaround is actually turning:

]]> http://allthingsd.com/20120724/with-aol-set-to-report-q2-earnings-tomorrow-tim-armstrongs-feeling-closer-to-fine-video/feed/ 0 http://allthingsd.com/20120719/mayer-to-get-40-million-in-overall-compensation-for-yahoos-top-job/ http://allthingsd.com/20120719/mayer-to-get-40-million-in-overall-compensation-for-yahoos-top-job/#comments Thu, 19 Jul 2012 21:25:47 +0000 Kara Swisher http://allthingsd.com/?p=232094

Yahoo revealed in a regulatory filing that it could be paying its new CEO Marissa Mayer a total of close to $60 million to turn the company around.

The mega-sum includes salary, equity grants, stock options, a make-whole payment for the Google shares she left behind and, perhaps most remarkably, a $30 million one-time retention award.

The amount, which is a whole lot more than what the last two Yahoo CEOs — Carol Bartz and Scott Thompson — were paid is, um, rather large.

One Yahoo board member had characterized the pay package to me as “big, big bucks,” as I reported earlier today.

I would say so!

(Side note: Mayer is already extraordinarily wealthy from her stint at Google, where she was its 20th employee.)

Here’s the breakdown of the largely performance-based compensation:

The salary amount is typical at $1 million, with an annual bonus of up to 200 percent of the base salary, which is $2 million. But, according to Yahoo’s employment letter, she could also get up to a 400 percent bonus, dependent on exceeding targets, which is $4 million.

Mayer also gets an equity award for 2012 of $12 million in stock ($6 million) and options ($6 million) that vests over three years. (She could get another similar grant annually, but I did not include that in the overall number, which is $12 million annually or more if she exceeds targets.)

The really big number is a huge up-front, one-time retention award, vesting over five years, of $15 million in stock and $15 million in options.

Finally, there is a make-whole payment of $14 million for the stock she left behind at Google.

Overall, that means about $5.4 million for the rest of this year and could add up to $20 million each year to come.

The pay package was hotly debated by the board as to whether the high-profile exec was worth the huge amount.

While Mayer is considered a talented techie, a very strong decision maker and adept at product innovation, some of the board’s directors raised concerns about her and paying so much to retain her.

One issue: She had been notably passed over by Google CEO Larry Page for one of the major unit jobs in his reorganization of the company, while others in her peer group had been promoted.

That said, since such company ups and downs happen all the time, others argued that Mayer was just the kind of disruptive agent of change that Yahoo needs, especially because she could inspire its engineers and also attract much needed talent.

The enormous compensation was pushed through, said several sources, by Dan Loeb, the one-time activist shareholder who now appears to be the puppet master of the Yahoo board. He owns about six percent of the Silicon Valley Internet giant.

(Another side note: Multiple sources tell me that Loeb has been making calls to all kinds of Internet figures this week, looking for high-fives for his landing of Mayer, a hiring that was largely engineered by him.)

Her appointment has surely garnered a lot of attention for Yahoo, with massive media coverage of the dynamic young exec. Some of the coverage has focused on her being a woman and also on the fact that she is currently pregnant.

But much of it is focused on how Yahoo — a deeply troubled company that has been trying to revive itself for many years now without success and with a lot of management mishegas — has been able to attract such a high-profile and impressive-resumed leader to goose both its products and its stock.

Let’s hope Mayer can do just that, because Yahoo is surely paying up big-time for the privilege.

Please take a gander here at the filing, directly from the Department of the Internet Rich Get Richer:

YHOO-20120719-8K-20120715

Please see this disclosure related to me and Google.

]]> http://allthingsd.com/20120719/mayer-to-get-40-million-in-overall-compensation-for-yahoos-top-job/feed/ 0 http://allthingsd.com/20120702/facebook-pokes-nasdaq-and-not-in-a-nice-way-in-veiled-threat-to-stock-exchange/ http://allthingsd.com/20120702/facebook-pokes-nasdaq-and-not-in-a-nice-way-in-veiled-threat-to-stock-exchange/#comments Mon, 02 Jul 2012 21:00:43 +0000 Kara Swisher http://allthingsd.com/?p=226790

It’s called a warning shot, and Facebook just let a doozie of one fly at the Nasdaq Stock Market, via a clever pair of articles in two major media outlets.

Yesterday, the New York Times reported that Facebook is seriously considering dumping Nasdaq for the New York Stock Exchange.

The reason, according to the Times: “[T]he relationship has soured.”

You’re kidding? Say what? (That’s a little like saying you were surprised when CNN’s Anderson Cooper revealed today that he is gay.)

Among the gripes that the social networking giant has against the electronic stock exchange giant, in the wake of its infamously screwy IPO in May:

• The technologically bungled opening day.
• Delayed trades that then junked the stock when they were suddenly released all at once that same day.
• Nasdaq telling investors that it would pay them off too soon on the second day of trading.
• Ensuing shareholder lawsuits.

And, perhaps most of all, crappy communications in the crisis from Nasdaq CEO Robert Greifeld, who has made an ongoing series of dopey remarks. That includes saying its obvious screw-ups had not impacted Facebook’s share price.

Despite Greifeld’s recent visit to Silicon Valley to soothe Facebook’s management ire, the Times wrote: “Tensions remain so high that Facebook is still considering switching exchanges and is weighing the costs of such a move.”

But, hold the phone, then came an oh-God-it’s-Sunday-night-and-now-we-have-to chase-the-Times story in The Wall Street Journal — titled “Facebook to Remain on Nasdaq” — noting that the company execs had already moved past anger and were now into forgiveness.

The Journal noted that, while still plenty irked, “they determined a move would further drain confidence in the company’s battered shares” and “while the company considered a switch in the days after the IPO, Facebook had decided by mid-June to stay put for now.”

The first part is certainly true — Facebook management is worried that a such a quick move away from Nasdaq would hurt the company more than it would feel good to strike back and move to the NYSE.

“Is it a good idea to do this in the midst of all the volatility?” asked one source close to the situation. “Probably not immediately, but it is still a very serious consideration.”

In fact, numerous sources I spoke to also agreed that while it might not happen right away, Facebook has not yet made a definitive decision one way or another to stay or go.

Instead, it is opting to warn Nasdaq strongly, while sending up trial balloons to investors to gauge the impact on its stock and assessing what the NYSE can offer.

As the Times noted, using an apt Facebook status update metaphor: It is complicated.

]]> http://allthingsd.com/20120702/facebook-pokes-nasdaq-and-not-in-a-nice-way-in-veiled-threat-to-stock-exchange/feed/ 0 http://allthingsd.com/20120624/aol-will-start-paying-out-its-pile-o-patent-cash-to-shareholders-this-week-via-stock-buyback/ http://allthingsd.com/20120624/aol-will-start-paying-out-its-pile-o-patent-cash-to-shareholders-this-week-via-stock-buyback/#comments Sun, 24 Jun 2012 22:07:42 +0000 Kara Swisher http://allthingsd.com/?p=223668

For those AOL shareholders waiting for a juicy dividend after the Internet company’s billion-dollar sale of its patent portfolio to Microsoft, it appears you’ll have to get your gains via a stock buyback that will be announced by the end of this week.

According to sources close to the situation, after evaluating tax considerations and talking to major shareholders, New York-based AOL has decided that share repurchase is the best way to realize its gains from the $1.056 billion sale of its lucrative intellectual property of about 800 patents and nonexclusive licensing rights to those the company continues to hold.

The patent sale undoubtedly helped AOL CEO Tim Armstrong in the company’s victory in defeating an activist shareholder assault from the hedge fund Starboard Value and re-electing its eight directors 10 days ago, as well as giving its stock a boost of almost 80 percent since the beginning of the year.

Even without a dividend, the impact on AOL shares from a large buyback could be significant. Various Wall Street analysts have pegged the value of the patent payout at about $11 per share, but that is not exact.

The sale of AOL patents to Microsoft officially closed on June 15.

At the time, AOL said, as it had previously:

“AOL is committed to returning 100% of the patent proceeds to shareholders. AOL’s Board and management team are currently working on determining the most efficient and expedient method to return the proceeds of the patent transaction.”

Of concern, of course, is the possible impact if Starboard decides to sell its 5.3 percent stake in the company. That could presumably be assuaged if AOL includes one of Starboard’s nominees from its alternate slate in a current hunt for two new board members.

But sources said that was unlikely and that AOL expects the disgruntled — and defeated — hedge fund to shed its stake.

]]> http://allthingsd.com/20120624/aol-will-start-paying-out-its-pile-o-patent-cash-to-shareholders-this-week-via-stock-buyback/feed/ 0 http://allthingsd.com/20120613/can-yahoos-busy-new-board-all-row-in-one-direction/ http://allthingsd.com/20120613/can-yahoos-busy-new-board-all-row-in-one-direction/#comments Wed, 13 Jun 2012 19:55:49 +0000 Kara Swisher http://allthingsd.com/?p=219904

Here’s the good news: The nearly-new board of Yahoo is chock-full of experienced and active operators from a variety of backgrounds that are critical to the future of the Silicon Valley Internet giant.

And the bad news? The nearly-new board of Yahoo is chock-full of experienced and active operators from a variety of backgrounds that are critical to the future of the Silicon Valley Internet giant.

In others words, in almost completely upending its director roster over the last several months, Yahoo has given itself a new lease on life, but has also created a significant challenge in forming a cohesive governing structure that can work together in fixing all that ails Yahoo.

Among the important decisions that this new boy band — and they are, as usual, all men save for one woman — has to come to agreement on within the next months: Settling its patent-infringement lawsuit with Facebook; deciding on a permanent CEO — either selecting current interim leader Ross Levinsohn as permanent or someone else; approving a strategic plan for the company that actually sticks; and, most of all, figuring out a governance style that is strong without being too meddlesome.

Which should make Yahoo’s annual meeting on July 12 much more interesting than most.

One thing is clear: The days of overwhelming control in the hands of a few directors — as has been the case in recent years under departed Chairman Roy Bostock — are over.

In its place is a situation with a number of strong factions under new Chairman Fred Amoroso, who appears to have taken a consensus approach to managing the board.

It’s not as if he had a whole lot of choices, said numerous sources, especially noting the aggressive involvement of activist shareholder Daniel Loeb of Third Point — who joined the board with two others in the settlement of a proxy fight — in all aspects of Yahoo of late.

Along with helping finally complete a partial sale of Yahoo’s assets in China, Loeb has also be active in discussions with Facebook over a patent settlement, and has also been searching for new board members and possible new execs for Yahoo.

“Dan has a lot of ideas,” said one person close to the situation, “and he is not shy about communicating them.”

To be fair, it’s a welcome change from the lackluster performance of the previous board, which seemed almost comatose at times as Yahoo pinged from one crisis to the next.

And Loeb is also joined by several other directors who are taking a more substantive role, including Weather Channel CEO David Kenny, American Express CMO John Hayes and former Discovery Communications COO Peter Liguori.

“Every one of them has a lot to say and has definite opinions on what needs to be done, since most have run major businesses,” said another Yahoo source. “Which either means 11 times the noise, or 11 times the help.”

Or, perhaps, 11 times the fun (but only for me).

Speaking of fun, here’s the comely One Direction showing how it’s done, in the music video “What Makes You Beautiful”:

]]> http://allthingsd.com/20120613/can-yahoos-busy-new-board-all-row-in-one-direction/feed/ 0 http://allthingsd.com/20120604/exclusive-yahoo-board-hires-spencer-stuart-for-ceo-search/ http://allthingsd.com/20120604/exclusive-yahoo-board-hires-spencer-stuart-for-ceo-search/#comments Mon, 04 Jun 2012 22:38:51 +0000 Kara Swisher http://allthingsd.com/?p=216448

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

]]> http://allthingsd.com/20120604/exclusive-yahoo-board-hires-spencer-stuart-for-ceo-search/feed/ 0 http://allthingsd.com/20120603/patent-peace-yahoo-and-facebook-in-advanced-negotiations-to-settle-fractious-infringement-lawsuits/ http://allthingsd.com/20120603/patent-peace-yahoo-and-facebook-in-advanced-negotiations-to-settle-fractious-infringement-lawsuits/#comments Sun, 03 Jun 2012 19:08:07 +0000 Kara Swisher http://allthingsd.com/?p=215911

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.

]]> http://allthingsd.com/20120603/patent-peace-yahoo-and-facebook-in-advanced-negotiations-to-settle-fractious-infringement-lawsuits/feed/ 0 http://allthingsd.com/20120522/former-ceo-thompson-might-be-gone-but-investigation-into-resumess-still-a-hot-potato-at-yahoo/ http://allthingsd.com/20120522/former-ceo-thompson-might-be-gone-but-investigation-into-resumess-still-a-hot-potato-at-yahoo/#comments Tue, 22 May 2012 16:03:16 +0000 Kara Swisher http://allthingsd.com/?p=210917

While former Yahoo CEO Scott Thompson fades from the tech scene — besides getting jacked from the top job at the Silicon Valley Internet giant, he’s also just come off two tech boards he had served on — the investigation over his hiring and how a fake computer science degree got into the company’s regulatory filings continues.

While the quick-fire controversy burned Thompson, as well as now former Yahoo director Patti Hart, the special committee of independent board members is still at work trying to figure out how such a mess was made in the first place.

And, more importantly, who knew what when and told whom.

At the time the committee was announced, Yahoo said it would “conduct a thorough review of CEO Scott Thompson’s academic credentials, as well as the facts and circumstances related to the review and disclosure of those credentials in connection with Thompson’s appointment as CEO.”

The special committee is chaired by Yahoo’s new Chairman Fred Amoroso and includes John Hayes and Thomas McInerney, two independent directors who joined the board in April.

Yahoo also hired independent counsel Terry Bird of the law firm Bird, Marella, Boxer, Wolpert, Nessim, Drooks and Licenberg in Los Angeles to handle the inquiry.

The company also noted at the time that “the special committee and the entire Board appreciate the urgency of the situation and the special committee will therefore conduct the review in an independent, thorough and expeditious manner. The Board intends to make the appropriate disclosures to shareholders promptly upon completion of the review.”

Gripped by urgency myself, I have grown weary waiting by the phone for some official answers, which sources said will not be forthcoming for some time.

But since I am the most curious of cats — uh-oh! — I started dialing around on my own to find out what’s what.

And, according to sources — especially since Thompson has settled with Yahoo and will not get severance due to the academic falsehood — the big focus is now centering on if the company’s staff screwed up the background check of his academic credentials, thus allowing it to get into its official filings with the Securities and Exchange Commission and also on Yahoo’s corporate Web site.

When Thompson was hired from eBay, where he was president of its PayPal payments division, the online commerce company had the correct bio information in its SEC filings, although not on its Web site or in its PR materials.

The question is: Did someone from Yahoo simply rely on Web bios and not check eBay filings and did anyone ever re-check Thompson’s college records? (Note: It took me 15 minutes flat to find out he did not have such a degree at Stonehill College in the Boston area.)

If lazy checking was the case, it spells rank incompetence on the part of staffers, as well as Hart, who headed the search after Yahoo fired its previous CEO Carol Bartz last fall.

A much more troubling line of inquiry taking place is aimed at the possibility that someone at Yahoo did discover the discrepancy in Thompson’s resume and either did not report it up the chain of command or did and it was either lost or ignored or, well, worse.

While this certainly ain’t Watergate, such a situation would be very hard for Yahoo to explain away as easily to shareholders, especially potentially litigious ones. As it is always said, the coverup can often be more damaging than the crime itself.

And, if it is determined by the special committee that certain employees knew of Thompson’s resume inaccuracy, it will most certainly result in dismissals of Yahoo employees.

The focus on the committee — which truly cannot sweep this under the rug, if it occurred in this much more serious scenario — is most obviously the legal department of Yahoo, which is responsible for making certain filings are accurate.

Also under scrutiny is the quickness of the hiring of Thompson.

Among the questions is how much vetting was done and whether adequate questions about him were asked among a variety of possible sources.

When he was picked in January, Thompson was a dark-horse candidate for many, including some Yahoo board members.

In fact, he was not on the initial headhunting lists prepared by outside talent search firm Heidrick & Struggles.

That’s because Heidrick had placed Thompson at eBay in mid-2000 and could not then recommend him to Yahoo. As it turned out, Thompson took it upon himself to cold email Yahoo board member and Intuit CEO Brad Smith about the job, who then passed Thompson’s interest to Hart.

Heidrick had no involvement in the checking of Thompson, although he later blamed the firm in a public meeting with Yahoo employees for putting the error in his bio in the first place from when he was hired at eBay. Heidrick quickly called the accusation “verifiably not true” in a memo to its own employees.

Sources said that meant that the firm had a resume that Thompson had submitted to it that also contained the error.

But the central mystery of how that mistake appeared on his bio will likely remain just that without further explanation from Thompson.

In a radio interview in 2009, he did not correct a specific question about the twin degrees he appeared to have held and seemed to even agree with the show’s host, Moira Gunn, about them.

Later, she told me in a video interview that Thompson had clearly indicated to her in the prep for that interview that he indeed had a computer science degree.

Still, it is still not clear — and may never be — who put the faux computer science credential on his resume in the first place.

So, with all apologies to Winston Churchill: It might remain a riddle wrapped in a mystery inside an enigma.

]]> http://allthingsd.com/20120522/former-ceo-thompson-might-be-gone-but-investigation-into-resumess-still-a-hot-potato-at-yahoo/feed/ 0 http://allthingsd.com/20120517/exclusive-yahoo-finally-set-to-strike-alibaba-share-deal-half-now-then-half-of-whats-left-after-eventual-ipo/ http://allthingsd.com/20120517/exclusive-yahoo-finally-set-to-strike-alibaba-share-deal-half-now-then-half-of-whats-left-after-eventual-ipo/#comments Fri, 18 May 2012 06:39:00 +0000 Kara Swisher http://allthingsd.com/?p=209700

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.

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