• by Laurie Sullivan , Staff Writer @lauriesullivan, May 13, 2011

Yahoo this week had some explaining to do when news broke that Chinese ecommerce company Alibaba Group -- which the Sunnyvale, Calif. company owns a 43% share of -- restructured without the knowledge or approval of the Alibaba Group board of directors or shareholders. Reports suggest the move hurts Yahoo because of its stake in the company, but the tech company takes a different view.

Thursday night Yahoo issued a statement in response to recent media reports regarding the timing of the restructuring of Alipay, which happened months ago. "On March 31, 2011, Yahoo! and Softbank were notified by Alibaba Group of two transactions that occurred without the knowledge or approval of the Alibaba Group board of directors or shareholders. The first was the transfer of ownership of Alipay in August 2010. The second was the deconsolidation of Alipay effective in the first quarter of 2011."

Will the lack of immediate disclosure further hurt the move by Yahoo CEO Carol Bartz to continue to gain ground? Google sites led the U.S. explicit core search market in April with 65.4% market share, followed by Yahoo sites with 15.9% -- up 0.2 percentage points -- and Microsoft sites with 14.1% -- up 0.2 percentage points, according to comScore.

Yahoo continues to gain ground in the U.S., but it's not clear whether advertisers -- like investors -- will pull back after hearing the news, especially since it appears that Google has made strong efforts to disclose events even when executives sneeze.

Wall Street analysts such as Macquarie Securities' Ben Schachter point out that Yahoo executives were made aware of the restructuring in March and should have disclosed the spinout during the Q1 earnings. Although the company's position is that executives needed time to gain more clarification of the situation, in a research note he explains the lack of understanding by investors regarding the timing.

Citing The Wall Street Journal, the MarketWatch commentary points to comments from an Alibaba spokesperson who said "the transfer was made to comply [with] Chinese regulations that bar foreign ownership of online payment services." The commentary also suggests "it appears that Alibaba Group is doing everything it can to get rid of Yahoo Inc. as a shareholder."

Yahoo disclosed this restructuring in its first-quarter 10Q filing following discussions with Alibaba Group and its efforts to gain a better understanding of the situation. The news surfaced after Alibaba.com reported quarterly earnings. Net profits for the quarter ending March jumped to 452.5 million yuan, compared with 330 million yuan a year earlier.