The chairman of the Federal Communications Commission has come out against the merger of cellphone giant AT&T and T-Mobile USA.
Julius Genachowski made his position known in a document he circulated to fellow commissioners Tuesday.
Genachowski recommended sending AT&T Inc.’s proposed $39 billion takeover of T-Mobile to an administrative law judge for review and a hearing. That’s what the FCC does when it opposes a merger.
According to an FCC official familiar with the matter, an agency analysis concluded the merger would result in higher prices for consumers, less innovation, less investment in the U.S. and fewer U.S. jobs.
The review also cast doubt on AT&T’s claim that only the merger would allow it build out “4G” high-speed wireless Internet access to cover 97 percent of the population, up from about 80 percent. The agency concluded AT&T would likely do so anyway to remain competitive with Verizon Wireless.
The official wasn’t authorized to speak publicly.
AT&T spokesman Larry Solomon said in a statement that the chairman’s action was “disappointing.”
“It is yet another example of a government agency acting to prevent billions in new investment and the creation of many thousands of new jobs at a time when the U.S. economy desperately needs both,” he said. “At this time, we are reviewing all options.”
The FCC would be the second government agency to oppose the deal. The Justice Department filed a lawsuit with the U.S. District Court in Washington in August to stop it, and that trial is expected to start Feb. 13.
Genachowski’s proposed order recommends the administrative law judge begin the hearing after the trial is done.
The deal announced in March would vault the combined No. 2 carrier AT&T and No. 4 T-Mobile into the top spot ahead of Verizon.
Dallas-based AT&T has about 101 million wireless subscribers. T-Mobile, the Bellevue, Wash.-based subsidiary of Deutsche Telekom AG of Germany, has 34 million. Verizon Wireless, a joint venture between Verizon Communications Inc. and Vodafone Group PLC, has about 108 million, while Sprint Nextel Corp. has 53 million.
NYSE Euronext on Thursday said the summer’s unusually heavy trading helped lift third-quarter profit by 56 percent.
The owner of the New York Stock Exchange and other operations reported net income of $200 million, or 76 cents per share, for the three months ended Sept. 30. That compared with net income of $128 million, or 49 cents per share, in the year-ago quarter.
Adjusted for costs related to the planned combination with German exchange operator Deutsche Boerse, a one-time tax benefit in Europe, and other items, profit came to 71 cents per share.
Revenue rose 20 percent to $1.26 billion, from $1.05 billion last year.
Analysts, on average, were expecting profit of 69 cents per share on revenue of $701.8 million, according to data provided by FactSet.
The strong results come as the exchange awaits a decision by European regulators on the $10 billion all-stock deal to create the world’s largest exchange operator that was announced in February.
The two companies reportedly have until Nov. 17 to address objections from the European Union’s competition watchdog that center on the potential for the combined company to potentially dominate the trading of derivatives, a very lucrative business for exchanges. Derivatives are complicated financial products that allow investors to bet on developments in things like commodity prices or interest rates.
CEO Duncan L. Niederauer said in a statement accompanying the results that the companies recently took part in a hearing before the EU regulators. “At the hearing, both companies were able to crystallize the compelling nature of our merger, which will bring significant benefits to customers, regulators and intermediaries.”
A decision on the deal is expected by late December. The two exchanges have stated the goal of completing the deal by the end of the year.
In conjunction with the deal, both companies last week announced plans to coordinate stock repurchases. NYSE Euronext it will buy back up to $100 million of its stock shares, while Deutsche Boerse AG said it would repurchase shares valued at around 100 million euros ($141.2 million). The two programs will take place simultaneously to preserve the ownership percentages of 40 percent and 60 percent to be held by former NYSE Euronext and Deutsche Boerse shareholders, respectively, in the combined company.
During the third quarter, trading volume on NYSE Euronext exchanges in both the U.S. and Europe surged amid the worst quarter for the markets since 2008. The European debt crisis, the U.S. debt ceiling debate and fears of another recession fueled the volatility.
The higher volume pushed up revenue from derivatives trading by 20 percent to $226 million. Average daily volume of global derivatives rose 33 percent to 9.3 million contracts.
Revenue from cash trading and listings gained 18 percent to $353 million. Average daily volume in Europe surged 40 percent to 1.9 million transactions. Average volume in the U.S. rose 9 percent to 2.6 billion shares traded.
During the most quarter, the New York Stock Exchange led 11 initial public offerings in the U.S., raising $3.2 billion.
The company’s revenue from information and technology services increased 11 percent to $125 million during the quarter.
Cost-cutting measures also helping NYSE Euronext’s results during the quarter.
Excluding merger-related costs, operating expenses slipped to $416 million, from $419 million last year. Excluding the impact of acquisitions, new initiatives and a $10 million negative impact attributable to foreign currency fluctuations, fixed operating expenses dropped 5 percent, the company said.
NYSE said it expects to meet its full-year guidance for operating expense of less than $1.65 billion, excluding merger expenses and exit costs. Factoring in certain portfolio changes and the impact of currency fluctuations, full-year 2011 expenses are expected to be about $1.68 billion.
In afternoon trading, NYSE Euronext shares gained 95 cents, or 3.7 percent, to $26.48. The stock is down 12 percent for the year.
Let’s wait and see.
That’s likely to be the message from the Federal Reserve on Wednesday, when its two-day policy meeting ends. Few expect any bold new steps to be announced.
Fed policymakers likely want to gauge the impact of action they’ve taken recently to keep interest rates low. The Fed has breathing room because the economy and stock markets have strengthened enough to allay fears of another recession.
After their September meeting, the policymakers said they would shuffle the Fed’s investment portfolio to try to further reduce long-term interest rates. And in their previous meeting in August, they had said they plan to keep short-term rates near zero until at least mid-2013 unless the economy improved.
“They know they are running out of tools, so they don’t want to employ another one unless they have to,” said David Wyss, former chief economist at Standard & Poor’s.
At its last meeting, the Fed left open the possibility of taking additional action to try to help the economy. One option is to further explain the steps it has already taken and their purposes. Another would be to launch a third program of bond purchases.
But the Fed remains deeply divided over what, if any, action to take, which is another reason economists don’t expect any major announcements this week.
The actions taken in August and September were adopted on 7-3 votes, the most dissents in nearly 20 years.
Three regional bank presidents _ Richard Fisher of Dallas, Charles Plosser of Philadelphia and Narayana Kocherlakota of Minneapolis _ all voted no. They have expressed concerns that the Fed’s policies could lead to high inflation later.
On the other hand, four policymakers are worried that the Fed might not be doing enough. Vice Chair Janet Yellen, Governor Daniel Tarullo, Chicago Fed President Charles Evans and New York Fed President William Dudley have said the economy is at risk and might need more support.
“I have never seen the Fed more deeply divided than it is at this moment,” said David Jones, head of DMJ Advisors and the author of books on the Fed.
At its meeting in September, the Fed stopped short of expanding its portfolio of investments. Instead, it opted to shuffle $400 billion of its investments to try to lower long-term rates.
But two officials pushed for bolder action, according to minutes of the meeting. The members discussed more bond-buying. Some said it should remain an option.
A brighter outlook for the economy has given the Fed more room to wait. The economy grew at an annual rate of 2.5 percent in the July-September period _ the best quarterly performance in a year.
That’s strong enough to show that the economy isn’t about to slide into recession. Still, growth would have to be nearly twice as high _ consistently _ to make a major dent in the unemployment rate, which has been stuck at 9.1 percent for three straight months.
Stocks have rallied of late. Even after a drop of nearly 2.5 percent Monday, the Standard & Poor’s 500 stock index in October notched its best one-month showing since December 1991.
European leaders have also announced a debt agreement that could help prevent a financial catastrophe on the continent. Still, even if it does, many analysts don’t think Europe can avoid another recession.
Many economists think the Fed will hold off on new action until its December meeting or early next year. The next step could be further clarity on its interest-rate policy.
Evans has proposed that the Fed set benchmarks for raising rates. For example, it could agree not to raise short-term rates until unemployment fell below 7 percent or the outlook for inflation exceeded 3 percent. The unemployment rate has hovered around 9 percent for more than two years, and the Fed’s inflation outlook is under 2 percent.
Yellen, who heads a Fed panel that is examining ways to improve the central bank’s communications, says the idea should be examined. But she cautioned that such benchmarks could confuse investors.
She has suggested that the Fed could add further guidance when it provides its economic forecasts four times a year. The forecast offers estimates for growth, unemployment and inflation. It does not forecast interest rates.
Mark Zandi, chief economist at Moody’s Analytics, said that adding a Fed forecast on the federal funds rate, its main policy lever, would reassure investors about when it might move interest rates.
“They have given investors more clarity about the timing of future rates, but including an actual forecast of when rates might change would help bring rates down further,” Zandi said.
The leaders of South Korea and Japan agreed Wednesday to expand the size of a currency swap deal and push to resume stalled free trade negotiations, as Tokyo returned looted Korean royal documents in a goodwill gesture.
Seoul and Tokyo have close economic ties and are key U.S. allies in Asia, but many older Koreans still harbor deep resentment against Japan over its 35-year colonial occupation of Korea that ended in 1945. Ties suffered this year because of a territorial dispute and differences over the occupation.
On Wednesday, the leaders of the two countries agreed in a meeting in Seoul that they would expand the size of their total currency swap arrangements to $70 billion from the current $13 billion as a backstop against global economic turmoil. The measures consists of dollar-local currency and bilateral won-yen arrangements.
Swaps allow one central bank to borrow a currency from another, offering an equivalent amount of its own as collateral.
“We reached the agreement … based on a belief that we should strengthen our financial and currency cooperation to preemptively stabilize the financial market as the world’s economic uncertainty is deepening,” South Korean President Lee Myung-bak said at a news conference with Japanese Prime Minister Yoshihiko Noda.
Lee and Noda said they also agreed to bolster efforts to resume stalled negotiations on signing a free trade agreement.
The two countries began free trade talks in 2003, but the negotiations remain stalled over trade barriers on agriculture and fish. The South Korea-Japan deal drew renewed attention after the U.S. Congress ratified a free trade accord with South Korea this month. That deal still needs approval from South Korea’s parliament fast payday loan.
In an effort to improve ties, Noda repatriated five volumes of Korean royal documents that his country took away during its rule.
“The return should be seen as a gift with a political intention,” Seoul National University international relations professor Park Cheol-hee said.
The documents are part of 1,205 historical volumes that Japan agreed to give back to South Korea when Noda’s predecessor, Naoto Kan, met with Lee last year. A Japanese official traveling with Noda told reporters in Seoul that Tokyo is to return the remaining books by Dec.10. The official declined to be named because of office policy.
Noda told Lee that he would seek to return the remanning books at an appropriate time, according to South Korea’s presidential office.
The books’ return came two months after South Korea banned three conservative Japanese lawmakers from entering the country after they arrived at a Seoul airport with a plan to travel near islets at the center of territorial and historical disputes between the countries.
The two countries are also at odds over Seoul’s offer to hold talks on Japan’s compensation of Korean women forced into sexual slavery for Japan during its colonial rule. Japan declined, saying the matter was settled by a 1965 treaty that normalized ties between Japan and South Korea.
“I stated several times that moving toward the future without forgetting history is the basis of South Korea-Japan relations,” Lee said.
Noda told reporters the issue of sex slaves wasn’t discussed during Wednesday’s meeting.
Toronto Councillor Adam Vaughan can tell the minute he looks at a condo building in his downtown ward if it
President Ali Abdullah Saleh abruptly returned home to Yemen on Friday after more than three months of being treated in Saudi Arabia for wounds from an assassination attempt, in a move apparently aimed to ensure his grip as his loyalists and opponents wage urban warfare in the capital.
Hours after his return, the fighting intensified as heavily shelling hit the strongholds of Saleh’s opponents in the capital, reinforcing fears that his return signals an escalation of fighting into an full-fledged attempt to crush his rivals.
The White House was blindsided by the sudden return. U.S. officials conceded it was a surprise and said Secretary of State Hillary Rodham Clinton wasn’t warned of Saleh’s plans when she met Tuesday in New York with the foreign minister of Saudi Arabia, which has been working with Washington and Yemen to try to arrange a transfer of power.
The return could be a significant blow to those attempts. A degree of stability in the strategic but impoverished Arab nation is a priority for the United States, which wants a partner to continue the fight against one of al-Qaida’s most active branches, based in Yemen and accused of plotting attacks in the U.S. Islamic militants have already exploited months of turmoil to seize control of cities in southern Yemen.
Abdullah Obal, an opposition leader, said he believed Saleh “returned to run the war and drive the country into an all-out civil war.”
“The cannons are now speaking. Gunfire is doing all the talking,” Obal said.
Saleh made no immediate public appearances, but his return breathed life into the camp of his supporters who turned up in the thousands for the Friday sermon that became a massive show of faith in the country’s leader for 33 years.
“We love you, Ali,” chanted thousands massed on Boulevard 70, a street near the presidential compound.
The return threatens to further break open the deep divisions that have riven Yemen since the protest movement kicked off in February demanding Saleh’s ouster and an end to his authoritarian regime. Saleh’s security forces cracked down hard on protesters, killing hundreds, which prompted members of his government, miltary and allied tribes to join the opposition.
In early June, an explosion ripped through a mosque where Saleh was praying in his Sanaa presidential compound. The blast left him severely burned over much of his body and wounded with wooden shards, and nearly a dozen of his top aides were seriously wounded. Saleh has since been in Saudi Arabia for treatment.
Both the U.S. and Saudi Arabia were believed to be trying to keep Saleh from leaving Saudi Arabia, and signing onto a deal proposed by Gulf Arab states, under which he would resign and hand power to his vice president to form a national unity government in return for immunity from any prosecution.
The mercurial Saleh has repeated promised to sign the agreement, then refused at the last minute.
White House Press Secretary Jay Carney said Friday, “We urge President Saleh to initiate a full transfer of power and arrange for presidential elections to be held before the end of the year within the framework” of the agreement.
“A political solution is the best way to avoid bloodshed,” he said.
This week, the deadlock that endured even during Saleh’s absence broke down into the worst violence in months after he recently delegated his vice president to restart negotiations with opponents on the deal. It was considered another stalling tactic by Saleh. It sparked an escalation in the protests and a violent crackdown in Sanaa and other cities.
Forces loyal to the president’s son Ahmed attacked protesters in the streets and battled troops led by one of the regime’s top rivals, Maj. Gen. Ali Mohsen al-Ahmar, a former Saleh aide who joined the opposition early in the uprising, as well as tribal fighters who back the protesters.
Around 100 people have been killed _ mostly protesters as regime troops hit their gathering with shelling or barrages of sniper fire from rooftops. Residents have been forced to hunker down in their homes or flee the city as the two sides exchanged bombardment over Sanaa from strongholds in the surrounding hills.
Saleh slipped back into the country before dawn on Friday. In a statement on the state news agency, he called for a truce, saying “the solution won’t be through cannons and barrels, but through dialogue, understanding and ending the bloodshed.”
But his opponents dismissed the negotiations call, convinced that Saleh has no intention to step down and aims to break his rivals with military force. Sultan al-Barkani, the head of the ruling party’s bloc in parliament and a Saleh backer, told Al-Jazeera television that it was “totally unlikely” that the president will resign. “Saleh will not leave except through elections,” he said.
Obal, the opposition member, blamed the U.S. and Saudi Arabia for not exerting enough pressure on Saleh to quit. He said the opposition was hardening its position in the face of Saleh’s return and that any accord “can no longer give guarantees against prosecution amid all this killing.”
Violence continued even after Saleh’s return. Thuds of mortar rounds raged after sunset in the northern and western part of the capital where Saleh’s opponents have been based. Mortars hit the square in central Sanaa where protesters demanding Saleh’s ouster are camped out, killing two. Other mortars hit a group of anti-Saleh tribal fighters in a neighborhood where battles have raged with Saleh loyalists, killing two tribesmen.
During a brief lull in the fighting, there were mass protests by both sides.
At the opposition rally on Boulevard 60, demonstrators carried pictures of those killed in the violence as speakers urged security forces to stop killing their own people. “The people want the trial of the butcher,” the crowd chanted.
Abdel-Hadi al-Azazi, a protest leader, warned that Saleh’s return means “more divisions, more escalation and confrontations.”
“We are on the verge of a very critical escalation,” he told The Associated Press.
April Alley, a Yemen researcher with the International Crisis Group, said Saleh’s suprise return put both his supporters and opponents off balance, creating an explosive situation but one with also high stakes.
“There is greater incentive to actually come through with a deal,” she said, particularly as negotiations over ways to implement the power transfer had been ongoing until the recent violence.
Retired army general Ahmed Salem said Saleh, an astute military man who has balanced tribal and security loyalties for decades, will be driven by the battle cry.
“He will attempt to stop the advances of his adversaries, and will try to improve his situation on the ground,” Salem said. “His return will enable his supporters, lifts their spirit after a period of confusion because of lack of political management.”
A strike deadline has now passed for Southern California grocery workers, but there is no word of any walkout just yet.
The three-day notice period required before calling a strike elapsed at 7:10 p.m. Pacific time Sunday, but union leaders said they intended to keep negotiating past the deadline.
United Food and Commercial Workers Local 770 spokesman Mike Shimpock said earlier Sunday that workers will stay on the job at least until midnight and possibly longer if talks are moving ahead.
Messages left for union and grocery representatives just after the deadline were not immediately returned.
Some 62,000 grocery employees have been working without a contract since March, while in discussions with negotiators for grocery chains Vons, Ralphs, and Albertsons.
THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP’s earlier story is below.
A union representing workers at three major grocery chains in Southern California distributed picket signs Sunday, as the clock ticked toward the end of a three-day notice period required before calling a strike.
Union negotiators intend to keep talking if a resolution appears to be in sight when the period ends at 7:10 p.m. They also stressed that members could keep working beyond that time.
“Our workers will stay on the job until at least midnight, and possibly longer if negotiations are moving ahead,” said Mike Shimpock, spokesman for United Food and Commercial Workers Local 770, one of the unions representing the 62,000 workers seeking a new contract.
If little progress is made toward settling disagreements over health benefits, negotiators said they will tell members to walk off the job.
The grocery workers have been working without a contract since March, while in discussions with negotiators for The Vons Cos. Inc.; Ralphs Grocery Co., a subsidiary of The Kroger Co.; and Albertsons, owned by Supervalu Inc.
Representatives for the supermarket chains said last week they were disappointed that the unions had taken that step but remained committed to reaching an agreement.
Kendra Doyel, a spokeswoman for Ralphs, said Sunday the supermarkets remained hopeful a deal would be reached before the deadline.
Calls to representatives for Albertsons and Vons were not immediately returned.
A four-month strike and lockout that began in 2003 cost Ralphs and other grocery chains an estimated $2 billion.
Both sides in the current dispute announced in July that they had reached a tentative agreement on the employers’ contributions to pension benefits, but payments to the union health care trust fund remained a major sticking point.
Union members voted overwhelmingly to reject the health care proposal offered by the chains and to authorize their leaders to call a strike.
Union officials said they were responding to what they characterized as the chains’ delaying tactics when they issued the required 72-hour notice Thursday evening to cancel the contract extension under which they had been working.
The Ontario Securities Commission has partly lifted its ban on trading in controversial timber company Sino-Forest to allow the completion of several options trades.
The Canadian Derivatives Clearing Corporation had asked the OSC to allow the completion of almost 9,000
Bionic ear maker Cochlear has been forced to begin a global recall of the world’s thinnest hearing implants after some stopped working.
The Sydney-based company, which dominates the world’s bionic ear market, said on Monday it was mystified as to why some of its award-winning Nucleus CI500 devices were suddenly shutting down.
The company has begun recalling its entire Nucleus CI500 range, which makes up the bulk of its sales, from shelves after a rise in the number of faults with the CI512 model.
Shares in Cochlear fell 14.68 Australian dollars ($15.21), or 20 percent, to close at AU$57.50 ($59.58), the lowest in over two years.
Yahoo’s stock rose nearly 5 percent on Wednesday after the company fired its CEO following more than 2 1/2 years of financial lethargy.
Tuesday’s ouster came as investors were convinced that Carol Bartz couldn’t steer the Internet company to a long-promised turnaround.
To fill the void, Yahoo’s board named Tim Morse, its chief financial officer, as interim CEO. Bartz, who became CEO in 2009, lured Morse away from computer chip maker Altera Corp. two years ago to help her cuts costs. Yahoo said it is looking for a permanent replacement.
Yahoo Chairman Roy Bostock, also a target of shareholder frustration, informed Bartz about the move over the phone, according to an e-mail the outgoing CEO sent from her iPad that was obtained by the All Things D technology blog. The blog first reported Bartz’s ouster.
Yahoo didn’t return requests for comment Tuesday and Wednesday.
Bartz’s rude dismissal “made you feel a little bit like you were watching some reality TV show,” Forrester Research analyst Shar VanBoskirk said Wednesday.
Macquarie Securities analyst Ben Schachter said the handling of Bartz’s departure was unseemly and a sign of even more drama to come at Yahoo.
In a research note late Tuesday, Schachter predicted there will be a wide range of conjecture about Yahoo’s future, with the most likely speculation centering on Yahoo as a takeover target during a vulnerable time.
Alternatively, Yahoo could make a bold move itself by trying to buy the online video site Hulu.com, which is already talking to suitors, or trying to sell its 43 percent stake in the Alibaba Group, one of China’s most prized Internet companies. Bartz’s tense relationship with Alibaba CEO Jack Ma had fed investor dissatisfaction about her leadership.
Youssef Squali at Jefferies & Co. said that the Internet company’s challenges, and the fact that Bartz was Yahoo’s third CEO in four years, will make it tough for the board to find an “A player” for the job.
Squali said Yahoo could be sold to a large media company like News Corp. or be bought by some sort of consortium that could feature Microsoft Corp. or AOL Inc.
“In all, we believe that it is more likely that the board reaches an agreement to sell the company or parts of the company before a new CEO is found,” Squali wrote Wednesday.
In a statement Tuesday, Yahoo said it is undergoing a “comprehensive strategic review” in its latest effort to give investors a reason to buy its stock, but the company didn’t offer details.
Bartz, 63, led an austerity campaign helped boost Yahoo’s earnings, but the company didn’t increase its revenue even as the Internet ad market grew at a rapid clip.
The financial funk, along with recent setbacks in Yahoo’s online search partnership with Microsoft Corp. and the Alibaba investment, proved to be Bartz’s downfall. Her ouster comes with 16 months left on a four-year contract that she signed in January 2009.
That contract entitles her to severance payments that could be two to three times her annual salary and bonus, along with stock incentives she received during her tenure. Bartz received a $2.2 million bonus to supplement her $1 million salary last year.
Yahoo has now replaced three CEOs in a little over four years. During that time, Yahoo has lost ground in the Internet ad race to online search leader Google Inc. and Facebook even though its website remains among the world’s most popular.
Known for her no-nonsense leadership and sometimes gruff language, Bartz arrived at Yahoo as a respected Silicon Valley executive who had won praise for turning around business software maker Autodesk Inc. But she had no previous experience in Internet advertising, the main way Yahoo makes money.
That hole in her resume immediately raised questions whether she was qualified for the job, and those doubts only escalated as Yahoo’s revenue continued to sag.
At first, Bartz blamed bad timing; she started the job during some of the bleakest months of the Great Recession. Later, she would say that she inherited such as mess from her two predecessors, Yahoo co-founder Jerry Yang and former movie studio boss Terry Semel, and that it would take time to get Yahoo back on the right track.
At one point, she even compared her challenge to those that faced Steve Jobs when he returned to Apple Inc. as CEO in 1997.
Unlike Jobs, Bartz never was able to articulate a strategy to win over investors.
“She focused on plugging holes in the ship instead of turning it around,” said Gartner Inc. analyst Ray Valdes.
The disappointing performance was reflected in Yahoo’s stock price, which closed Tuesday at $12.91. That’s 81 cents, or 7 percent, higher than where Yahoo shares stood when Bartz was hired as CEO. During the same period, Google’s stock price has risen by more than $200, or 66 percent, and the technology-driven Nasdaq composite index has climbed by 60 percent. A group of investors led by Goldman Sachs Group concluded privately held Facebook is worth $50 billion in an appraisal done earlier this year. That’s triple Yahoo’s current market value.
Bartz never hit any of the price targets that the board set for her when she was hired. That means none of the 5 million stock options that she received upon signing her contract had vested by the time she was ushered out the door.
Investors seemed happy to see Bartz go. On Wednesday, the Sunnyvale-based company’s stock rose 61 cents, or 4.7 percent, to $13.52.
Although Bartz’s exit as CEO came suddenly, her departure isn’t a shock. The pressure to replace her grew earlier this year after Bartz acknowledged Yahoo’s search partnership with Microsoft wasn’t producing as much revenue as the companies anticipated.
Then, in May, Yahoo stunned investors by disclosing that Alibaba had spun off an online payment service in a move that threatened to diminish the value of Yahoo’s investment in the Chinese company.
Alipay in July agreed to a complex settlement that could eventually be worth more than $1 billion to Yahoo, but there were too many uncertainties in the deal to placate shareholders.
Bostock had steadfastly stood behind Bartz whenever she was attacked by investors or analysts. In a Tuesday statement, Bostock thanked Bartz for “her service to Yahoo during a critical time of transition in the company’s history” without providing an explanation for why the board decided to replace her.
BGC partners analyst Colin Gillis said Yahoo’s board “has got to look in the mirror here.”
“Swapping the CEO without swapping the (board) chair doesn’t solve your problem,” he said. “The person that hired Carol to begin with deserves to share the culpability.”
To help Morse, Yahoo set up an “executive leadership council” that includes some of the executives that Bartz recruited, including the company’s products guru Blake Irving and the head of its North American operations, Ross Levinsohn. While he worked for News Corp., Levinsohn helped put together the Hulu video site and is seen as a possible CEO candidate.
Analysts also have speculated that David Kenny, an Internet veteran who joined Yahoo’s board in April, might be a candidate for Yahoo’s CEO job. Kenny is currently president of Internet networking services provider Akamai Technologies Inc.
With its stock sagging and its management in limbo, Yahoo could be more vulnerable to a takeover attempt by a private equity group or another opportunistic bidder attracted to what remains one of the Internet’s best-known brands. Microsoft offered to buy Yahoo for $47.5 billion, or $33 per share, in 2008 only to be rebuffed.
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