Yahoo! board to meet, weigh options after Bartz's ouster

Yahoo! Inc’s board is scheduled to meet to weigh its options after Carol Bartz was ousted last week after less than three years at the helm, a person with knowledge of the matter said.

Investment bank Allen & Co would outline various scenarios for Sunnyvale, California-based Yahoo!, said the person, who requested anonymity because the meeting was private. The board, led by chairman Roy Bostock, would also decide whether or not to hire Allen & Co to explore those options. It would also discuss the search for Bartz’s successor, the person said.

Yahoo!, leaderless and beset by slumping shares and falling revenue, is vulnerable to a takeover from private-equity investors, said Di Zhou, an analyst at Thornburg Investment Management in Santa Fe, New Mexico. A buyer could sell shares in some of Yahoo!’s Asian assets and use proceeds to take the rest of the company private, she said last week.

“A private-equity buyer could seek to unlock the value of the Asian assets and leverage up the core of Yahoo!, which continues to generate cash flow despite competitive and operational challenges,” analysts at Deutsche Bank Securities Inc wrote in a research report last week.

Kim Rubey, a spokeswoman for Yahoo!, declined to comment.

Another possible outcome involves a tie-up with AOL Inc, where chief executive Tim Armstrong is talking with advisers to gauge Yahoo!’s interest in combining the companies, two people familiar with the matter said last week.

Armstrong had been interested in a merger with Yahoo! last year and was rebuffed while Bartz was at the helm, one person said. Her departure prompted him to reconsider the option, and, under one scenario now being considered, Yahoo! would acquire AOL and Armstrong would become the chief executive of the combined company, the person said.

Yahoo! is unlikely to be interested in a deal for New York- based AOL at this time, a person familiar with the company’s thinking said last week.