Oct. 7 (Bloomberg) -- Yahoo! Inc. Chief Executive Officer Jerry Yang missed his chance to get top dollar for the company's stakes in Asian Internet firms.

The combined market value of holdings in Yahoo Japan Corp., Alibaba.com Corp. and Gmarket Inc. shrank about $2.1 billion, or 22 percent, to $7.3 billion since Yahoo assessed them in July. The stocks slid on investor concern that Web advertising budgets will shrink amid the credit crisis, a trend that may only worsen.

The crunch limits the options left for Yang, who said he may sell or spin off the assets to shore up the stock after failing to reach a buyout agreement with Microsoft Corp. Yahoo kept the stakes even after billionaire Carl Icahn, a Yang critic who advocated their sale, joined the board in August, and Yahoo shares fell yesterday to the lowest in five years.

``It clearly looks like a big missed opportunity,'' said Sandeep Aggarwal, a Collins Stewart Plc analyst in San Francisco who rates the shares ``hold'' and doesn't own any. ``I don't know whether they can get a reasonable price, even if they can get a buyer.''

Rising borrowing costs may curb opportunities for Yahoo, owner of the No. 2 search engine behind Google Inc., to sell the stakes, Aggarwal said. The cost of one-month loans in euros and overnight dollar loans have reached records in the past week, a sign banks are hoarding cash.

Yahoo spokesman Brad Williams declined to comment on the Sunnyvale, California-based company's plans for the assets. The Asian stakes, which would have been included in a sale of Yahoo, were one reason Yang gave for rejecting Microsoft's $47.5 billion offer as too low. The software maker later proposed a plan that would have jettisoned the assets.

Google Impact

The pressure may increase after Yahoo and Google last week agreed to delay an ad partnership that could have added $800 million a year to Yahoo's sales. Yang chose the deal over selling all or part of the company to Microsoft. Now, odds are rising the accord will fall apart because U.S. government scrutiny may cause Google's interest to wane, Susquehanna Financial Group analyst Marianne Wolk said yesterday in a research note.

Yahoo dropped 73 cents, or 4.8 percent, to $14.58 at 4 p.m. in Nasdaq Stock Market trading, its lowest close since August 2003. Microsoft offered as much as $33, and the slump has led to criticism of Yang, 39. Shareholders withheld one-third of votes for his board re-election in August.

Icahn, who owned 5 percent of Yahoo's shares as of Aug. 1, had called for a sale of the stakes during his campaign to replace the board. He joined the directors after a settlement with Yahoo ended his challenge, leaving the group fractured between eight of the original members and Icahn's three.

Asian Stakes

``I want to see the board talk about how to unleash some of the value from this company,'' said Colin Gillis, an analyst at Cannacord Adams Inc. in New York. ``Lay out the plan for us, folks. What are we doing here?''

Yahoo valued most of its Asian stakes at $9.4 billion in a July 17 regulatory filing. It holds one-third of Yahoo Japan, which operates the country's most-visited Internet portal, and 10 percent of South Korea's online auctioneer Gmarket. It also has about 30 percent of Alibaba.com Corp., China's biggest trading Web site for companies, mostly through its 41 percent stake in Alibaba Group Holding Ltd.

Yahoo Japan has dropped 21 percent, Alibaba.com's publicly traded unit lost 27 percent and Gmarket is little changed since July 17, when Yang told investors in a letter that he would consider ``unlocking the value'' of the stakes.

Depressed

Yahoo Japan spokesman Toru Nagano and Alibaba.com's Christina Splinder declined to comment, as did Takeaki Nukii, a spokesman for Softbank Corp., the biggest holder of Yahoo Japan and second-largest of Alibaba.com's parent Alibaba Group. Gmarket representatives didn't return calls.

Yahoo may still decide to sell the assets and use the cash to buy back shares or invest in the business, said Clay Moran, an analyst at Stanford Group Co. in Boca Raton, Florida.

``It may make a lot of sense still, especially if they really view their own stock as depressed,'' he said.

While Yang said he would consider a transaction, he and other executives expressed reluctance and said it would be complicated.

By giving up the Alibaba.com stake, Yahoo would risk losing its foothold in China, one of Asia's fastest-growing markets for Internet advertising services. Web users there may almost double to 406 million by 2010, according to Credit Suisse Group AG.

``These assets have been critical to our ability to expand our franchise into Asia as quickly as possible,'' Yahoo Chief Financial Officer Blake Jorgensen said on a July 22 conference call.

Tax Issue

Yahoo may also face a ``tax issue'' by disposing of the assets, Jorgensen said on the call. Yahoo invested in the Asian companies when they were much smaller, and may have to pay more than $2 billion in taxes on the gains, said Sachin Shah, an analyst at ICAP Securities in Jersey City, New Jersey.

Yahoo also has been hamstrung by a lack of interest in the properties, said Jeff Lindsay, an analyst at Sanford C. Bernstein & Co. in New York. The most likely buyers, the companies themselves, have little incentive to pay a premium to offset Yahoo's tax losses, he said.

``Strategically, you can't do anything,'' said Lindsay, who recommends buying Yahoo shares and said the company's best option is still a sale to Microsoft. ``It's very hard to see any way forward with them. They're just there.''

To contact the reporter on this story: Crayton Harrison in Dallas at tharrison5@bloomberg.net.

Last Updated: October 7, 2008 16:20 EDT