Today: Yahoo (YHOO) CEO Marissa Mayer is re-evaluating the Alibaba deal as Zynga keeps facing upheaval. Also: Google (GOOG) agrees to pay $22.5 million FTC fine for subverting Apple (AAPL) security settings, and Cisco (CSCO) gets a stock bump while SunPower (SPWRA) falls.
Yahoo rethinks Alibaba deal, Zynga upheaval continues
Two Silicon Valley companies that have dealt with seemingly constant upheaval continued their tumultuous paths Thursday, as Yahoo announced new CEO Marissa Mayer is considering a new path for proceeds from the Alibaba deal and Zynga dealt with the fallout
Mayer is the fifth person to lead Yahoo in the past year, and in a filing with the Securities and Exchange Commission, the latest leader of the Sunnyvale Internet giant said that she was rethinking one of the biggest deals made by a predecessor. Yahoo agreed in May to sell half of its 40 percent stake in Alibaba back to the Chinese Internet giant in a deal that would have netted Yahoo about $4 billion after taxes, a sum that would was reportedly planned to go back to shareholders in a stock-buyback program.
The deal was worked out while the company was still led by Scott Thompson, who stepped down in May amid a resume scandal, but was completed after he left the company.
Now, however, Mayer wants to re-evaluate how to use the money Yahoo receives from the sale, disappointing investors, who sent the stock down more than 4 percent in after-hours trading. Yahoo shares had already fallen 1 percent in regular trading, and the extra loss sent the stock below the $16 level it had finally eclipsed last month.
"There was an expectation of getting that cash back, so I think there will definitely be some disappointment" from investors, RBC Capital Markets analyst Andre Sequin told Reuters. However, he also said that shareholders want Mayer to invest in the company's domestic business, so a move that way could make up for the loss of cash.
Meanwhile, San Francisco online-gaming company Zynga continued to deal with the fallout from the drastic cut to its earnings forecast, as Chief Operating Officer John Schappert has left the company, according to a Wednesday SEC filing. Schappert was heralded as a coup for the company when it hired him away from rival Electronic Arts (ERTS), but the executive lasted only 15 months in the important position. Zynga paid him handsomely for his effort, however, with Dan Primack reporting that he walked away with $24 million.
The loss of an important executive is part of a chain reaction to Zynga's disastrous quarterly earnings report last month, which has led to multiple lawsuits seeking class-action status for shareholders who have lost millions in equity as the company's stock has fallen 70 percent since its initial public offering. In an effort to keep employees from walking away from the struggling gaming company, Zynga plied workers with additional stock options immediately following the earnings report, Bloomberg Businessweek reported Thursday.
With executives departing and last-ditch efforts to keep other employees around, Zynga introduced a new game in its popular "With Friends" series Thursday, but VentureBeat immediately pointed out that the game resembles a competitor's popular offering. Zynga has been beaten down with accusations of copying popular games from other studios, including a lawsuit from Schappert's former employer, EA, claiming that it had infringed on their rights with a game that too closely resembled "The Sims Social."
Despite all the company's issues, Zynga stock managed a gain Thursday, increasing 2.1 percent to close at $3.01; the company's shares debuted for $10 in December.
Google to pay record $22.5 million FTC fine for Safari workaround
As expected, Mountain View search giant Google agreed to pay the largest fine in the history of the Federal Trade Commission on Thursday, sacrificing $22.5 million for going around security settings on Apple's Safari Web browser to place cookies on users of the Cupertino company's popular mobile devices.
The workaround, first discovered by a Stanford researcher, placed cookies on iPhone and iPad users' browsers even when the users had expressly requested that cookies not be used. Though the cookies were not storing confidential information, the security bypass was found to have violated agreements Google had with the government branch after signing a consent decree for the Buzz fiasco.
After Buzz -- an attempt at social networking that automatically signed users up without their consent -- Google agreed to be subject to 20 years of privacy audits by the FTC. Though the fine is basically a pittance for Google, an FTC official said that the company could expect escalating fines if it continues to threaten users' privacy.
"We have Google under order for another 19 years ... and if there's further violations, one could anticipate that the Commission would insist on increasingly higher civil penalties," David Vladeck, director of the FTC's Bureau of Consumer Protection, said Thursday.
Google stock stayed stable Thursday, closing at $642.35 after a gain of 12 cents.
Cisco gains on upgrades, SunPower falls after earnings report
Wall Street was also relatively stable Thursday, as two of the three major U.S. stock indexes moved less than 0.1 percent on the day. The tech-heavy Nasdaq had the best day, gaining 0.3 percent thanks to strength from some Silicon Valley tech stocks.
The networking industry brought some of the day's biggest tech gains, as two analysts upgraded Cisco on Thursday, sending the San Jose networking leader to a gain of 3.2 percent in advance of next week's earnings report.
"We see a positive inflection in fundamentals ... pointing to stronger enterprise networking" in the second half of the year, Goldman Sachs analyst Simona Jankowski wrote in a note upgrading Cisco.
Cisco rival Juniper, based in Sunnyvale, also experienced an uptick after the upgrades, gaining 3.4 percent Thursday. Palo Alto-based VMware, which recently agreed to purchase virtualization-networking startup Nicira, had an even better day, gaining 4.5 percent.
Santa Clara chipmaker Nvidia also increased Thursday, but found even larger gains after the markets closed thanks to a positive earnings report that showed its advances beyond personal computers are paying off. Nvidia beat analysts' forecasts for both the previous quarter's earnings and the current quarter's forecast on the back of its tegra line of chips for mobile gadgets. After rising 3.4 percent in regular trading, Nvidia rose 4.7 percent in late action.
The day's biggest Silicon Valley loser on Wall Street was SunPower -- the San Jose solar power company declined 10.5 percent after announcing poor quarterly results Wednesday.
Silicon Valley tech stocks
Up: VMware, Nvidia, Juniper, Cisco, Zynga, Facebook, EA, Splunk, Tesla
The tech-heavy Nasdaq composite index: Up 7.39, or 0.25 percent, to 3,018.64
The blue chip Dow Jones industrial average: Down 10.45, or 0.08 percent, to 13,165.19
And the widely watched Standard & Poor's 500 index: Up 0.58, or 0.04 percent, to 1,402.8
Check in weekday afternoons for the 60-Second Business Break, a summary of news from Mercury News staff writers, The Associated Press, Bloomberg News and other wire services. Contact Jeremy C. Owens at 408-920-5876; follow him at Twitter.com/mercbizbreak.