Shares of Yahoo, which had previously promised to return most of the cash to shareholders, slid 3.5 percent to $15.45 in after hours trade.
Yahoo said in a filing with the U.S. Securities and Exchange Commission on Thursday that Mayer, who was hired as CEO last month, has started a review of the company's strategy.
The filing said the review "may lead to a re-evaluation" of Yahoo's previously announced plans to return to shareholders substantially all of the after-tax cash proceeds under the initial share repurchase from the May 2012 deal with Alibaba.
Under the agreement, Yahoo was to sell one-half of its stake in Alibaba for at least $6.3 billion in cash and up to $800 million in new Alibaba preferred stock.
"There was an expectation of getting that cash back, so I think there will definitely be some disappointment," said RBC Capital Markets analyst Andre Sequin.
But he said that shareholders also expect Mayer, a former Google Inc executive, to re-invest in the company's domestic business to rejuvenate the struggling Web company.
As part of Mayer's review, Yahoo said, she would look at the company's growth and acquisition strategy, the restructuring plan launched by her predecessor, and Yahoo's cash and capital allocation strategy.
Mayer is the latest in a string of executives to try revive Yahoo, a one-time Web pioneer which has seen its revenue fall amid competition from Google and Facebook Inc, a nd changes in the online advertising market.
Analysts expect the 37-year-old Mayer, whose background is in computer science, to focus on bolstering Yahoo's technology and online products rather than working on media and content partnerships as the company seemed to be doing before her arrival.
The cash Yahoo gets from Alibaba could be used to finance a shopping spree of new acquisitions, said Susquehanna Financial Group analyst Herman Leung.
"I think there's a little bit of concern about that," Leung said, noting that Yahoo's track record for acquisitions has not been great.
"Historically , a lot of the acquisitions have driven more complexity than anything else," said Leung.
But Mayer's background at Google, which has made relatively few large acquisitions in its 14-year history, could suggest less of an appetite for big deals, noted Adam Seessel, director of research at Martin Capital, which own Yahoo shares.
"She was born and raised inside Google," and is probably "not the kind of person prone to run out and spend billions on acquisitions," said Seessel.
He also noted that Mayer appeared to have the backing of activist hedge fund manager Dan Loeb, who now sits on Yahoo's board and has been a strong advocate for shareholders' interests.
Yahoo has experienced a tumultuous year that included the firing of CEO Carol Bartz in September and the resignation of CEO Scott Thompson in May as a controversy over his academic credentials flared up.
The status of Yahoo's Asian assets have been similarly convoluted. Efforts to craft a complex $17 billion asset swap with Asian partners Alibaba and Softbank fell apart in February, and a separate effort to monetize its 35 percent holding of Yahoo Japan stalled earlier this year.
Yahoo's Asian assets currently account for nearly all of Yahoo's $19.6 billion market valuation, according to analysts.
"Clearly that's one of the big strategic items confronting Yahoo, is this big cash hoard they're going to get," said Martin Capital's Seessel. "In that sense she's right to take a look at it," he said of Mayer.
Copyright Thomson Reuters 2012
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