Youku-Tudou: More Trouble As COO Resigns 优酷—土豆：COO辞职，麻烦更多
Shares of both companies are down sharply over the last month, each shedding about 24 percent, since the first signs emerged that the deal might be running into trouble. Following that decline, Youku’s shares are now down more than 20 percent from their levels just before the deal was first announced 4 months ago, far outpacing a 3 percent decline for the broader market over the same period.
Let’s take a look at the latest news, which has Tudou announcing its Chief Operating Officer Evelyn Wang has resigned, even as the company was quick to add that integration of its staff with Youku’s was proceeding smoothly. (English article; Chinese article) The reports also quoted an insider saying that more top officials at Tudou were likely to depart in the weeks ahead.
Shares of both companies fell nearly 5 percent in New York trading after Wang’s resignation, although unrelated news that the regulator may impose new rules to clean up online video content may have also contributed to that decline.
The departure of Tudou’s COO comes just a week after Youku announced a couple of its own senior management promotions, a move that I interpreted as troubling since it appeared to be a unilateral action that completely ignored Tudou executives. (previous post) I previously predicted this kind of discord could quickly snowball after Youku and Tudou announced their merger, due to very different leadership styles of their 2 heads.
Of course, it’s not at all unusual for top officials to leave companies in this kind of merger. The key difference here is that such senior management changes typically occur after a merger is completed, and the announcements are usually made in a transparent way that shows both companies have contributed to the process and that the transition is proceeding in a coordinated, orderly way.
In this case, the executive moves are all coming before the deal has even closed, which isn’t expected until the third quarter. That means that if the merger falls apart, Tudou especially could find itself in a difficult position if it really does see a steady departure of its top executives. This series of announcements also shows no signs of coordination between the 2 sides, which also hints at possible discord behind the scenes as Youku and Tudou chiefs Victor Koo and Gary Wang clash over what their roles will be in the future company.
Most of this is obviously just my interpretation, since the companies aren’t commenting publicly on any disagreements behind the scenes. But the disorderly nature of these executive changes, combined with their announcement before completion of the deal and sharp declines in both companies’ stock prices, all indicate that this story isn’t over yet.
If I were betting, I would say there’s still a 50-50 chance the deal will be completed, but an equal chance it could fail. But even if it does get completed, I still see many problems for the merged company in the future, with integration issues potentially further delaying its ultimate goal of turning 2 money-losing companies into a single profitable one.
Bottom line: The resignation of Tudou’s COO is the latest sign of trouble in its pending merger with Youku, which now only stands a 50-50 chance of completion.
Postscript: After I wrote this original column, a knowledgeable person close to Youku told me the merger is proceeding smoothly, and the company’s policy of maintaining a self-imposed quiet period is the reason it hasn’t commented publicly on the situation since the original announcement.
Related postings 相关文章:
- More Trouble Signs in Youku, Tudou Union 优酷与土豆联姻问题重重
- Youku and Dangdang: Stuck in the Red 优酷和当当：生存在亏损
- Rumored Tie-Up to Challenge Youku-Tudou 腾讯、搜狐和百度或结盟 挑战优酷-土豆联姻
