• by Joe Mandese  @mp_joemandese, February 15, 2012

In the latest chapter of the digital ad industry’s favorite soap opera, the plot has once again thickened for Yahoo. Specifically, a lucrative deal to sell off its Asian assets in a $17 billion swap with China’s Alibaba Group appears to have faltered, causing investors to rethink prospects for the online display advertising giant.

“What now,” queried J.P. Morgan’s Doug Anmuth in an equity research update sent to investors this morning. Anmuth had estimated that the Alibaba deal would have resulted in a significant boost in the price of Yahoo’s shares, and now believes its demise will surface “other scenarios” for the storied digital publishing giant.

“While less than ideal, a taxed sale of some or all Asian assets could still yield a higher stock price in our view,” he said, speculating that those assets may yet go on the block, either as part of a “revaluation” of its asset swap with Alibaba, or a possible private equity investment for a minority stake in Yahoo itself.

Either way, Anmuth questioned the logic of moving forward on that front, despite the potential short-term benefit to Yahoo’s stock price.

“We don’t see how Yahoo! benefits here as it doesn’t need cash and now has a new CEO in Scott Thompson,” Anmuth wrote, adding that “noise around a proxy battle is already intensifying, with institutional investor Third Point “stating it will nominate four new board members in the coming weeks.”

In other words, the Yahoo soap is likely to continue for a while.

In the meantime, Thompson is expected to stick to his knitting, focusing on ways to improve Yahoo’s core product, introduce new ones and try to regain its stature among online users and advertisers.