Yahoo rethinks plan of rewarding investors

Under its new chief executive Marissa Mayer, Yahoo Inc yesterday agitated shareholders saying that it may rethink a plan of returning cash to investors from selling a part of its stake in Alibaba Group Holding Ltd.

Post announcement, shares of the company fell by 5.8 per cent to $15.08 in yesterday midday trading - its biggest one-day drop since November 2011.

The surprise announcement once again laid the stage for confrontation between the board and the company's investors.

In May, Yahoo had said that it will sell 20 per cent of its 40-per cent stake in Alibaba back to the Chinese company for $6.3 billion in cash and take Alibaba preference shares worth $800 million in its initial public offering. (See: Yahoo to sell 20% in Alibaba for $7.1 bn)

The deal would net Yahoo around $4 billion after taxes, and the company said that it plans to hand part of the sale proceeds to its shareholders by increasing its share buyback plan by $5 billion.

According to a filing with the US Securities Exchange Commission, Yahoo said that the company is currently reviewing its business strategy, and "this review process may lead to a re-evaluation of, or changes to ... our previously announced plans for returning to shareholders substantially all of the after-tax cash proceeds of the initial share repurchase by Alibaba Group."