Yahoo’s Asian partnerships ready for change? (YHOO, GOOG)

Yahoo Inc (YHOO) is reportedly in advanced talks to exit its Japanese joint venture. This is the company’s latest effort to to cut costs and raise capital for its fight against Google (GOOG) and Facebook. Reuters reports:

A deal to transfer Yahoo’s 35 percent stake in Yahoo Japan to Softbank Corp, which already controls 42 percent of the unit, could come within a few weeks, people with knowledge of the discussions said.

If a deal is reached, Yahoo is likely to turn its attention to China, where it owns about 40 percent of prominent Internet company, Alibaba Group, the parent company of Alibaba.com, these people said.

It was not immediately clear what Yahoo wants to do with that stake.

Relations between Yahoo, Softbank and Alibaba have soured in recent years with Alibaba founder Jack Ma agitating to buy back Yahoo’s stake in his company and Softbank founder and major shareholder Masayoshi Son openly attacking Yahoo’s track record as an innovator and its approach to international markets.

Softbank also owns a stake in Alibaba.

Details of the deal are still to be determined. AP reports:

A straightforward sale of Yahoo’s shares in Yahoo Japan is unlikely because it would result in a large tax bill. That has left Yahoo trying to negotiate a less expensive way to bow out of the venture, based on the public remarks of Tim Morse, the company’s chief financial officer. One possibility being floated on Wall Street is some sort of stock swap with Softbank, Yahoo Japan’s largest shareholder.

Although MarketWatch reports that “Wall Street has long seen Yahoo’s Asian assets as among the company’s strengths from a financial standpoint,” the market cheered news of YHOO shaking up its Asian business, sending the stock up 3.29% versus GOOG, which was flat, as of end of day 3/2.

Covestor models that hold YHOO as of end of day 3/2 – click through for more info on the models:

Covestor models that hold GOOG as of end of day 3/2 – click through for more info on the models:

Sources:

“Yahoo in talks on $8 billion Japan exit: sources” Nadia Damouni and Tim Kelly. Reuters, 3/2/11. http://www.reuters.com/article/2011/03/02/us-yahoojapan-idUSTRE72081N20110302

“Yahoo shares rise on report of possible Japan sale” YahooFinance, 3/2/11. http://finance.yahoo.com/news/Yahoo-shares-rise-on-report-apf-3032123597.html?x=0&.v=1

“Yahoo shares up on report it may sell Japan stake” MarketWatch, 3/2/11. http://www.marketwatch.com/story/yahoo-shares-up-on-report-it-may-sell-japan-stake-2011-03-02

Share price information from Google Finance as of 3/2/11, http://www.google.com/finance