Should Yahoo Sell Itself?

Yahoo's board finally had enough with Carol Bartz, and moved to fire her on Tuesday after market closed. Investors, who had had enough with Ms. Bartz as well, gladly bid Yahoo's stock up 6% on the news. The market had high hopes with Ms. Bartz when she joined Yahoo! two years ago, but ultimately her tenure could not rescue the descent of the company. While Yahoo's board botched the deal with Microsoft's offer of $33/share before Ms. Bartz joined, it was her mismanagement of the relationship with Alibaba, of which Yahoo's share in Alibaba could worth billions, which caused investors to lose all hope. From an investor's perspective, Ms. Bartz should have been fired right then and there. Now that Ms. Bartz is gone, Yahoo's board had named its Chief Financial Officer, Tim Morse, to be the interim CEO. However, what everyone is interested in right now, is not who Yahoo will tap as the new CEO, but whether Yahoo is open to selling itself or breaking itself up to unlock its value. Even though Yahoo YHOO is definitely on a declining slope and ridiculed by pundits, Yahoo is still a profitable company. Its many web properties such as Yahoo! Sports, Yahoo! Finance, Yahoo! Movies, etc. are still widely used, and many of its international portals still rank at the top in many countries. Also, not forgotten is its investments in Alibaba. These are valuable assets and fueled speculations that Yahoo will put itself up for sale, now that Ms. Bartz is gone. The big question, however, is who will the buyer of Yahoo? Will Microsoft MSFT come back again? If not, who else? There's some speculation on AT&T T, Verizon VZ, News Corp NWSA, etc., but we don't think they will happen. Surprisingly, no one mentions Alibaba as the buyer of Yahoo, when it fact it is the most logical one. In one swoop, Alibaba can clean up any dispute it has with Yahoo, and sells off the US or parts it does not want to other parties, and Alipay and other Alibaba properties will in essence do a big reverse-IPO. The highest hurdle in this case will probably be more political than financial. Yahoo's board can surprise investors by getting a really good CEO, someone with a clear vision and demonstrated turnaround skills. However, given Yahoo's state of business, and its history of changing CEOs every few years in the last decade, it would be really difficult to convince investors this time around. It remains to be seen what Yahoo's next step would be, but Yahoo's board better gets its act together before investors lose faith again.