There’s an interesting new announcement from leading e-commerce firm Alibaba, which could be simply a straightforward board appointment but could also signal a potential positive development for its stormy relationship with longtime US partner Yahoo (Nasdaq: YHOO). I’ll make a strong disclaimer now and say that everything I’m about to write is highly speculative, since there’s nothing in this new announcement besides the naming of a Yahoo senior executive to Alibaba’s board. But that said, the fact that Alibaba is making the announcement at all is noteworthy, since these 2 companies have not made many upbeat joint announcements in the recent past due to their difficult elationship under previous Yahoo CEO Carol Bartz.
Before I start with my armchair analysis, let’s take a look at the actual announcement, which is quite brief. It simply states that Jacqueline Reses, Yahoo’s vice president of people and development, has been named to Alibaba’s four-member board. (company announcement; Chinese article) She joins a very elite group, sitting alongside Alibaba chief Jack Ma, Alibaba CFO Joe Tsai and Masayoshi Son, head of Japan’s Softbank (Tokyo: 9984), which is one of Alibaba’s earliest and most supportive major investors.
This naming of a Yahoo executive to Alibaba’s board isn’t really surprising at all, since Yahoo remains a major stakeholder with 23 percent of Alibaba’s shares. That figure is down a bit from Yahoo’s original 40 percent stake of Alibaba that it purchased in 2005. Yahoo is now in the process of selling down that stake as it focuses on fixing its struggling core search and portal business. (previous post)
So, now that we’ve looked at the actual announcement, let’s try to read between the lines to figure out what, if anything, are the broader implications. As a longtime follower of Alibaba, I find this newest announcement particularly neutral and even upbeat — an unusual break from its past relationship with Yahoo which was more typically filled with acrimonious words due to an uneasy relationship between Ma and Bartz, who was fired from Yahoo last year.
Since then, Yahoo has named former Google executive Marissa Mayer as its new CEO, and early indications seem to point to a lower-key style from Mayer than the brash approach used by Bartz. That kind of low-key approach might explain why Alibaba chose to name a Yahoo vice president as its new board member, rather than the more obvious choice of naming Mayer herself to the position.
This kind of lower key approach is probably much more acceptable to Alibaba’s Ma, who likes to make all the big decisions at his company and must like having a lower-level executive from Yahoo as one of his board members. The fact that Alibaba has made this announcement at all also seems significant due to its relatively upbeat tone, and could auger the beginning of a potentially new and positive relationship with Yahoo.
It’s still too early to really say how the relationship will develop, since Mayer is still very new at the job and it’s not at all clear how long she will remain as she tries to fix a deeply troubled Yahoo. But if she manages to make some progress at her core task and maintains cordial relations with Ma, I could see Yahoo ultimately decide to retain some of its remaining Alibaba stake, rather than sell the rest of its shares as many are assuming it will.
If these 2 sides can salvage a new relationship under Yahoo’s new leadership, it could indeed mark an interesting and positive development for both sides. Perhaps we could even eventually see a a real global partnership emerge — something that the pair never succeeded in attaining under previous Yahoo leaders.
Bottom line: Alibaba’s new naming of a Yahoo vice president as one of its board members could mark the start of an improving relationship between the 2 companies under Yahoo’s new CEO.
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