• Yahoo co-founder Yang resigns (Reuters)

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    January 19, 2012 /  hey there

    SAN FRANCISCO (Reuters) ? Yahoo Inc co-founder Jerry Yang has quit the company he started in 1995, appeasing shareholders who had blasted the Internet pioneer for pursuing an ineffective personal vision and impeding investment deals that could have transformed the struggling company.

    Yang’s abrupt departure comes two weeks after Yahoo appointed Scott Thompson its new CEO, with a mandate to return the once-leading Internet portal to the heights it enjoyed in the 1990s.

    Wall Street views the exit of “Chief Yahoo” Yang as smoothing the way for a major infusion of cash from private equity, or a deal to sell off much of its 40 percent slice of China’s Alibaba, unlocking value for shareholders.

    Shares of Yahoo gained 3 percent in after-hours trade.

    “Everyone is going to assume this means a deal is more likely with the Asia counterparts,” Macquarie analyst Ben Schacter said. “The perception among shareholders was Jerry was more focused on trying to rebuild Yahoo than necessarily on maximizing near-term shareholder value.

    “It certainly seems things are coming to a head as far as realizing the value of these assets.”

    Yang, who is severing all formal ties with the company by resigning all positions including his seat on the board of directors, has come under fire for his handling of company affairs dating back to an aborted sale to Microsoft in 2008.

    Yang’s exit comes roughly a month before dissident shareholders can nominate rival directors to Yahoo’s board.

    The remaining nine members of Yahoo’s board, which includes Hewlett-Packard executive Vyomesh Joshi and private investor Gary Wilson, are all up for reelection this year.

    Yang’s departure could be part of a broader board shakeup, said Ryan Jacob, chairman and chief investment officer of Jacob Funds, which owns Yahoo shares.

    “If they don’t move quickly on these things, they run the risk of a proxy battle and they are doing everything they can to avoid that.”

    The company did not say where Yang was headed or why he had suddenly resigned. CEO Thompson offered few clues in a memo to employees obtained by Reuters following the announcement.

    “I am grateful for the support and warm welcome Jerry provided me in my early days here. His insights and perspective were invaluable, helping me to dig deeper, more quickly than I could have on my own, into some of the key elements of the company and how it operates.

    Yang and co-founder David Filo, both of whom carried the official title “Chief Yahoo,” own sizable stakes in the company. Yang owns 3.69 percent of Yahoo’s outstanding shares, while Filo owns 6 percent as of April and May 2011.

    CHIEF YAHOO NO LONGER

    In a letter to Yahoo’s chairman of the board, Yang said he was leaving to pursue “other interests outside of Yahoo” and was “enthusiastic” about Thompson as the choice to helm the company.

    Yang, 43, is also resigning from the boards of Yahoo Japan and Alibaba Group Holdings.

    Respected in the industry as one of the founding figures of the Web, Yang has come under fire over the years from investors and to some extent within the company’s internal ranks.

    “Lots of people think he holds up innovation there with old ideas and (is) slow to decide and that he’s not an innovator himself for being at such a high level,” said one former Yahoo employee.

    “People have very high expectations for founders. Everyone wants a Steve Jobs,” the employee said, referring to Apple’s co-founder who brought the company back from near death and transformed it into the world’s most valuable tech company.

    Some analysts say the Yahoo board’s indecision stems in part from Yang’s sway in the company. Disillusioned by the company’s flip-flopping, they warn that the rest of the board remained much the same as the one that rejected Microsoft’s unsolicited takeover bid when Yang was CEO.

    “Jerry Yang was certainly an impediment toward anything happening,” said Morningstar analyst Rick Summer. “This is a company that’s been mired by a bunch of competing interests going in different directions. It was never clear what this board’s direction has been.”

    Microsoft’s bid was worth about $44 billion. Its share price was subsequently pummeled by the global financial crisis and its current market value stands at about $20 billion.

    More recently, Yang and Yahoo chairman Roy Bostock have incurred the wrath of some major Yahoo shareholders for their handling of the “strategic review” the company was pursuing, in which discussions have included the possibility of being sold, taken private or broken up.

    Yang’s efforts to seek a minority investment in Yahoo from private equity firms enraged several large shareholders, including hedge fund Third Point, which accused Yang of pursuing a deal that was in “his best personal interests” but not aligned with shareholders’ interests.

    Yahoo has also been exploring a deal to unload most of its prized Asian assets in a complex deal involving Alibaba, valued at roughly $17 billion, sources told Reuters last month.

    Alibaba Group’s founder, Jack Ma, whose personal relationship with Yang led to Yahoo buying a 40 percent stake in Alibaba in 2005, said he looked forward to continuing a “constructive relationship” with Yahoo.

    Susquehanna analyst Herman Leung said: “I had thought that Jerry Yang was a lifer at Yahoo.

    “Without him on the board, this could smooth a potential transaction. What that transaction is, is any of our guesses right now.”

    (Reporting By Alexei Oreskovic; Additional reporting by Alistair Barr and Poornima Gupta in San Francisco, Lisa Richwine in Los Angeles, Liana Baker in New York and Melanie Lee in Shanghai; Editing by Bernard Orr, Gary Hill and Matt Driskill)

    Source: http://us.rd.yahoo.com/dailynews/rss/tech/*http%3A//news.yahoo.com/s/nm/20120118/wr_nm/us_yahoo

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  • S&P, Greek standoff pressure euro zone to boost defenses (Reuters)

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    January 18, 2012 /  hey there

    LONDON (Reuters) ? Mass euro zone ratings downgrades are unlikely to shake up investors too much, but with Greek debt talks at an impasse, pressure has been loaded on the bloc to shore up its defenses and glimmers of optimism from last week have been firmly doused.

    With the United States and Japan already downgraded from “AAA,” the likes of France and Austria are in good company and Standard & Poor’s ratings cuts had been flagged in December. Nonetheless, the upbeat tone that surrounded last week’s strong Spanish bond auction now seems a distant memory.

    “The euro zone crisis is now dominating market activity again, after a period in which better economic news from the U.S., and easier monetary policy in China had helped markets move higher,” said Dominic Rossi, chief investment officer, equities, at Fidelity Worldwide Investment.

    Shares in Asia fell more than 1 percent on Monday in reaction to the S&P downgrades and the euro hovered near a 17-month low against the dollar.

    U.S. markets are closed for the Martin Luther King holiday, but the euro zone will not have to wait long for a test of investor appetite.

    France will attempt to sell up to 8 billion euros of debt on Thursday and Spain will tap the market again after a successful bond auction last week where it raised twice as much as expected at lower borrowing costs.

    Analysts put that success down to the flood of cheap 3-year money the European Central Bank pushed into the banking system in December. It will make the same offer in February, fostering hopes that it can avert a credit crunch and helped bolster struggling euro zone debt issuers to boot.

    ECB Governing Council member Ewald Nowotny said on Sunday the central bank would do all it could to calm the situation after the downgrade.

    “Everything that is within our possibilities will be done to bring about a relaxation (of the situation),” he said on television in Austria.

    But the twin blows of the serial S&P downgrades and the stalled Greek bond swap talks have cast another pall of gloom. This time, Spain will try to sell longer-term debt, which could be tougher.

    “While the market impact of the downgrades is unlikely to be very significant in the short term, they serve as a stark reminder that the euro area sovereign crisis is here to stay,” analysts at RBS said. “We continue to expect the crisis to deepen eventually leading to further widening in spreads across countries vis-a-vis Germany.”

    After downgrading nine of the euro zone’s 17 countries, S&P said it would decide shortly whether to do the same for the currency area’s EFSF bailout fund. Ratings cuts for commercial banks are probably imminent too.

    “Speculation around an EFSF downgrade will now grow, complicating its ability to raise capital and displace the ECB in the sovereign bond purchasing program,” Rossi said. “Both the ECB and the IMF will get sucked further into central roles.”

    A senior euro zone official said the EFSF could retain its AAA rating with Standard & Poor’s through higher guarantees from the euro zone’s remaining triple A countries or lower lending capacity.

    Still, German Finance Minister Wolfgang Schaeuble said on German radio on Monday that German guarantees for the EFSF were sufficient.

    Negotiations with the banks on a bond swap scheme designed to eat into Greece’s colossal debts are expected to restart on Wednesday with Athens warning of catastrophe if they fall apart.

    Without a deal, a planned 130 billion euro Greek bailout of which the bond swap is a vital part will be fundamentally holed, raising the prospect of default in March when massive bond payments are due. That, rather than the long-anticipated S&P downgrades, looks to be the bigger worry for investors.

    “At this stage, there is a growing risk of a coercive rather than voluntary debt restructuring, even though the latter is still our base case,” said Joachim Fels, economist at Morgan Stanley.

    SENSE OF URGENCY

    Euro zone leaders do seem to be gripped with a sense of urgency although they have failed for nearly three years to get on the top of the sovereign debt crisis born in Greece.

    Rather than launch a broadside at S&P, German Chancellor Angela Merkel on Saturday said she and her fellow leaders must act more swiftly to impose common fiscal rules and get a permanent rescue fund up and running.

    “Although nobody is excited about the S&P decision, the step may actually help to get a quick agreement on the fiscal compact,” a German government official said.

    While not expecting a euro zone break up, S&P blamed its leaders for focusing too much on cutting debts and not sufficiently on competitiveness and growth.

    The ratings agency, and many economists, say austerity for its own sake will be self-defeating – deepening economic downturns and cutting government revenues needed to lower debt.

    “Market participants are worried about a vicious circle in which they tighten, growth weakens, the deficits get bigger despite the efforts to tighten,” said Jim O’Neill, chairman of Goldman Sachs Asset Management.

    The concerns were echoed by IMF Deputy Managing Director David Lipton, who said EU action was needed.

    “Without…. action, Europe will be swept into a downward spiral of collapsing confidence, stagnant growth and fewer jobs,” he said at a conference in Hong Kong on Monday.

    Ahead of an EU summit on January 30 which will attempt to alight upon a growth strategy, shuttle diplomacy continues apace this week.

    French President Nicolas Sarkozy sees Spain’s Mariano Rajoy in Madrid on Monday. Italian premier Mario Monti visits Britain’s David Cameron in London on Wednesday, then hosts Sarkozy and German Chancellor Angela Merkel in Rome at the end of the week.

    Aside from Greece it is Italy, facing massive bond repayments over the next three months, which poses the biggest threat to the euro zone. It was downgraded two notches by S&P.

    “More than the moves on France and Austria, which are relatively symbolic and to a large extent reflected in prices already, the Italian downgrade might be key going forward,” said Laurent Fransolet at Barclays Capital.

    “Italy is at BBB+ now by S&P, but is on watch negative by Fitch and on negative outlook by Moody’s and therefore some further downgrades are likely.”

    The more upbeat view is that, in the end, Europe’s leaders will not allow the whole edifice to collapse, despite German and ECB reservations about many of the policy options. But even optimists say uncertainty will reign for some time.

    “Some day the markets will wake up and see that Europe is not going to allow a collapse. If they get through the next six months, you can see the tide turning. Sentiment changes very rapidly,” said John Fitzgerald of the Economic and Social Research Institute, a Dublin-based think tank, who also sits on the board of the Irish central bank.

    Europe is the biggest threat to the global economy, JP Morgan’s chief executive Jamie Dimon told German newspaper Die Welt’s Sunday edition. “I thought Europe would muddle through. I still believe that,” he was quoted as saying.

    (Additional reporting by Andreas Rinke, Alex Smith, Nigel Stephenson, Robin Emmott, Jamie McGeever and Adrian Croft)

    Source: http://us.rd.yahoo.com/dailynews/rss/eurobiz/*http%3A//news.yahoo.com/s/nm/20120116/bs_nm/us_eurozone

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