Struggling Internet company Yahoo Inc has secured a lifeline after agreeing to sell half of its prized stake in Chinese e-commerce group Alibaba (阿里巴巴) for about US$7.1 billion, with most of the cash going to its shareholders.
The deal, announced on Sunday in the US, would see Alibaba Group buying back half of its 40 percent stake from Yahoo Inc for US$6.3 billion in cash and up to US$800 million of Alibaba preference shares.
The announcement caps at least a year of rocky on-and-off talks, with Yahoo trying to sell the stake as part of efforts to turnaround its business.
Money from the sale will give Yahoo the financial firepower to return cash to disgruntled -shareholders, many of whom are still upset after it squandered an opportunity to sell itself to Microsoft Corp in May 2008 for US$33 per share, or US$47.5 billion. Yahoo’s stock has sagged since then, trading at US$15.42 on Friday.
Yahoo said in a joint statement with Alibaba that it planned to return “substantially all” of the after-tax cash proceeds to shareholders. It said its share buyback program had been increased by US$5 billion, though a final decision on how to return the cash had not been made.
Yahoo’s interim chief executive Ross Levinsohn said the stake sale provided “clarity” for Yahoo shareholders.
Levinsohn stepped into the role earlier this month after Yahoo fired former chief executive Scott Thompson because his official biography included a college degree that he never received.
Alibaba and Yahoo also have an agreement for Yahoo to sell the remainder of its Alibaba stake in stages at a later date. Yahoo bought the stake in 2005 for US$1 billion and the deal suggests it is now worth US$14.2 billion.
The statement also indicated that Alibaba could hold an initial public offering in the future.
Under the terms of the deal, if Alibaba Group goes public, it would have to buy back another 10 percent stake from Yahoo or let Yahoo sell those shares in the IPO.
A blog post on Alizila, Alibaba’s in-house news site said that condition expires in December 2015.
Alibaba chairman and CEO Jack Ma (馬雲) said the deal established a “balanced ownership structure that enables Alibaba to take our business to the next level as a -public company in the future.”
After the US$7.1 billion transaction is completed, Yahoo and Japan’s Softbank, which owns 30 percent of Alibaba, will hold exactly 50 percent of Alibaba, but the two companies have agreed to cap their collective shareholder voting rights at less than 50 percent, according to the Alizila blog post.
That means Alibaba will be in the driving seat for decisions made by shareholders, though the board will still have control over strategic issues. Yahoo and Alibaba also agreed to modify their technology and intellectual property licensing agreements.
Under the changes, Yahoo will grant Alibaba a license to continue using the Yahoo China brand for up to four years. Alibaba will pay Yahoo US$550 million and make royalty payments over that period. However, Yahoo will no longer be restricted from making other investments in China.
DECOUPLING? In a sign of deeper US-China technology decoupling, Apple has held initial talks about using Baidu’s generative AI technology in its iPhones, the Wall Street Journal said China has introduced guidelines to phase out US microprocessors from Intel Corp and Advanced Micro Devices Inc (AMD) from government PCs and servers, the Financial Times reported yesterday. The procurement guidance also seeks to sideline Microsoft Corp’s Windows operating system and foreign-made database software in favor of domestic options, the report said. Chinese officials have begun following the guidelines, which were unveiled in December last year, the report said. They order government agencies above the township level to include criteria requiring “safe and reliable” processors and operating systems when making purchases, the newspaper said. The US has been aiming to boost domestic semiconductor
Nvidia Corp earned its US$2.2 trillion market cap by producing artificial intelligence (AI) chips that have become the lifeblood powering the new era of generative AI developers from start-ups to Microsoft Corp, OpenAI and Google parent Alphabet Inc. Almost as important to its hardware is the company’s nearly 20 years’ worth of computer code, which helps make competition with the company nearly impossible. More than 4 million global developers rely on Nvidia’s CUDA software platform to build AI and other apps. Now a coalition of tech companies that includes Qualcomm Inc, Google and Intel Corp plans to loosen Nvidia’s chokehold by going
ENERGY IMPACT: The electricity rate hike is expected to add about NT$4 billion to TSMC’s electricity bill a year and cut its annual earnings per share by about NT$0.154 Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has left its long-term gross margin target unchanged despite the government deciding on Friday to raise electricity rates. One of the heaviest power consuming manufacturers in Taiwan, TSMC said it always respects the government’s energy policy and would continue to operate its fabs by making efforts in energy conservation. The chipmaker said it has left a long-term goal of more than 53 percent in gross margin unchanged. The Ministry of Economic Affairs concluded a power rate evaluation meeting on Friday, announcing electricity tariffs would go up by 11 percent on average to about NT$3.4518 per kilowatt-hour (kWh)
OPENING ADDRESS: The CEO is to give a speech on the future of high-performance computing and artificial intelligence at the trade show’s opening on June 3, TAITRA said Advanced Micro Devices Inc (AMD) chairperson and chief executive officer Lisa Su (蘇姿丰) is to deliver the opening keynote speech at Computex Taipei this year, the event’s organizer said in a statement yesterday. Su is to give a speech on the future of high-performance computing (HPC) in the artificial intelligence (AI) era to open Computex, one of the world’s largest computer and technology trade events, at 9:30am on June 3, the Taiwan External Trade Development Council (TAITRA) said. Su is to explore how AMD and the company’s strategic technology partners are pushing the limits of AI and HPC, from data centers to