Uh oh. Yahoo's Alibaba is antsy about Microsoft; Good luck getting to $40 a share

Uh oh. Yahoo's Alibaba is antsy about Microsoft; Good luck getting to $40 a share

Summary: Alibaba, Yahoo's stronghold in China, is reportedly wary of the Microsoft's $44.6 billion bid for the Internet portal.

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Alibaba, Yahoo's stronghold in China, is reportedly wary of the Microsoft's $44.6 billion bid for the Internet portal. Alibaba is so wary of Microsoft that it is looking for more management independence from Yahoo.

According to the Wall Street Journal, Alibaba management is worried that a Microsoft purchase of Yahoo would hurt its links to the Chinese government. Alibaba, a B2B trading site, is a national champion in China and Chinese regulators are already sniffing around about how a Microsoft purchase would affect the company.

This is bad news for Yahoo. Really bad. Why? If Yahoo wants Microsoft to raise its bid, say to $34 a share or even $40 a share, the company has to argue that its core business and holdings in Alibaba are worth more. That case gets a lot harder if Alibaba further distances itself from Yahoo and ensures its independence. Alibaba is prime real estate that Yahoo could even have to divest if Microsoft acquired the company.  Yahoo owns about 39 percent of Alibaba.

Good luck getting to $40 a share from Microsoft with those moving parts.

Yahoo CEO Jerry Yang made it clear in his recent shareholder letter that the company views its holdings abroad as one of the reasons it is worth more. In the letter, Yang said:

We have the added value of our substantial, unconsolidated investments in Japan and China. We have substantial positions in Yahoo! Japan, the leader in its market, and Alibaba, which is strongly positioned in China, a market with enormous growth potential.

If Alibaba arranges more independence from Yahoo in the event of a Microsoft merger a nice chunk of that added value goes kaput. And along with it goes the argument that Yahoo is worth more than $31 a share.

Topics: Government US, Banking, Browser, Enterprise Software, Government, Microsoft, Social Enterprise

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32 comments
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  • Interesting. The hostile takeover is in itself reducing the value of Yahoo

    because partners are running away, employees are leaving, etc. In the end, MS is able to buy Yahoo cheaper because of the damage that THEY did.

    Interesting, but, probably not that much you can do about it.
    DonnieBoy
    • LOL! You are really working on the spin, these days

      (though actually, no different then any other day)
      The damage "they did"? LOL!

      I could see why the Chineese company does not want to be a part of it: it changes deals, (possibly one which Yahoo may have signed so quickly as to give the other company the better deal?).

      Microsoft, on the other hand, has partners in China already, which may negate much of what the other company has gained, so it would be smart for them to run as opposed to being dumped, but as we have not been part of any of the deals, we can only speculate at the reasoning, is that not true, DonnieBoy?
      GuidingLight
      • Again, not my spin. I did not tell this company that MS is evil, they

        figured that out on their own.
        DonnieBoy
        • They figured out MS won't go along with censoring everything.

          too bad...
          No_Ax_to_Grind
          • No, it is not that complicated. They just do not want to work with the

            village idiots. Oh, and they realize that MS will turn anything and everything over to the US government - no questions asked.

            You do remember that Google was the only one to fight that don't you??
            DonnieBoy
          • Here are the lkinks showing what Google turned over to the govenment

            http://www.threadwatch.org/node/8619

            http://www.itnews.com.au/News/65991,google-hands-over-israeli-ip-address.aspx

            Now, why did Google not want to help the US government? It is quite simple: they did not want anyone to know how much money they made from PORN sites, EOS!

            So DB, you have to do better then the "Google loves and protects us" slant you throw out everyday
            GuidingLight
          • It's googles jpob to be a parent and filter the Internet (for Americans)?

            Basically, you are saying that since they (in one instance) turned over the IP address of a blogger who made accusations and in the second case turned over data related to pedophilia and child pornography, that they have to filter pornographic content (search results) because Americans are too lazy to take responsibility for raising their own children? Basically what you said is that Americans are too stupid to raise their own children.
            B.O.F.H.
          • Not at all

            What I am saying is that DonnieBoy praises google as they are the protectors of all, that is why they do not turn over data to anyone.

            Well, except for Brazil, Isreal, ect.

            He throws out the US government instance, yet never touches on the others times they have, that is all.
            GuidingLight
          • Actually, Microsoft censors a lot in China.

            Keep in mind that Asia is a large market and Microsoft is not going to leave it to accommodate a poster on ZDNet (even if s/he is a master in the janitorial arts, such as No_Ax_to_Grind, now outed), they have played the censorship game in China for years (meaning the also censor MSN content and blogs in China and other important markets). Perhaps you should not comment on the big leagues when at best you are a spectator (and an ignorant one at that).
            B.O.F.H.
    • By the way

      What about that Google GrandCentral outage? I thought you said their infrastructure was so redundent and incredible that something like that happening was an impossibility?
      GuidingLight
      • Not sure what that has to do with a company in China that does not want to

        have anything to do with MS. But, in when it comes to choosing the fastest and most reliable sites, very few choose Microsoft.
        DonnieBoy
        • I wonder why MSN

          is the third most popular site on the internet, with Google lagging way behind in the 5th spot, almost 50% behind MSN.
          <br>
          <br>
          MSN and Yahoo combined would grab a massive lead in visited websites. perhaps as valuable as searches as Microsoft ramps up it's web advertising. <br>
          Make no mistake, Google is very concerned. My neighbor's son works for Google and the loss of ad revenue is a huge concern at Google as they have not seen any traction in any products or forms of revenue. Particularly their "Office Apps" which have been soundly thumped by MSO and clearly rejected by the user community at large. <br><br>
          Now you can reply by calling Microsoft the villiage idiots and comparing Microsoft as more evil than communism. Go Donnie, love those objective and informative posts.
          xuniL_z
          • It is only that MSN is the default for Windows, and it automatically loads

            every time somebody in the world boots Windows. But, MS has lost a small fortune on MSN and all of their online properties - and, the still trail the Linux punks, and the BSD punks by a HUGE margin.
            DonnieBoy
          • The numbers are a little bit different than what you think.

            On a global scale, [url=http://marketshare.hitslink.com/report.aspx?qprid=4]the usage numbers[/url] are a little different than what you believe. For the month of January, 2008:

            Google held 77.11% (global)
            Yahoo held 12.23% (global)
            MSN held 3.43% (global)
            Microsoft Live Search held 2.59% (global)
            AOL held 2.13% (global)
            Ask held 1.42% (global) - Ask used to be in the number 4 position.

            Now, I am not sure what source you are using but this says that Microsoft combined usage percentages are still around 6.02%, less than half that of Yahoo.

            According to [url=http://www.ranking.com/?xcmpx=1214&gclid=COXehuP6y5ECFRscawode3Kh2w]Ranking.com[/url], the numbers are as follows (first 6):
            1 google.com
            2 yahoo.com
            3 msn.com
            4 live.com
            5 youtube.com
            6 microsoft.com

            Where are you getting your stats? (I tend to agree, the on-line apps are not wonderful as per Office stuff, but I also hated Office 2007 on the desktop).
            B.O.F.H.
        • It was just an observation early on

          that I had noticed, that you quickly jump in and throw your two cents in on any "anti-Microsoft" articles, yet remain absolutelly silent when queried about a negative Google article.

          You imply everyone runs to google to work, (that no one ever wants to leave) yet have been proven wrong there, so no comments to that effect.

          You imply that all "smart" companies should trust in Google more then themselves as Google's infrastructure would never go down as it is so superior, yet stories of massive outages and problems within Google's infrastructure raise no posts from you.

          I am just pointing out that you have grossly overstated Google's capabilities, proven wrong on a number of topics.

          If you have misread or have been wrong about the company you so blindly idolize, could you not also be misreading or wrong about the company you so blindly hate?
          GuidingLight
          • Still, it was a short outage at a small startup that Google bought. I do

            NOT know any details, and can not really comment mroe.

            But, for speed, reliability, quality of searched, and just the best search interface, The vast majority chooses Google.
            DonnieBoy
          • Side stepping the comment at hand, as usuall

            You continue to make excuses for Google, while continuing to sidestep the comment I made.
            You wanted to know why I made the statement, and I clarified.

            Your turn.
            GuidingLight
          • No excuse for service outages, but, you are trying to make a mountain out

            of a molehill. This was not like all of Google's infrastructure crashing. Still, when people want the best, fastest, most reliable, most relevant search, the vast majority chooses Google. Microsoft is a miserable distant third and losing share.
            DonnieBoy
          • But, wait, you told us that Linux and BSD are junk. How could anybody build

            a service that customers like based on those OSes??? Especially when there is a company running the best OS on the planet that would surely be faster and more reliable than BSD or Linux.

            Oh wait, the company running the best OS is a miserable distant third????? What is wrong????
            DonnieBoy
          • Really> When did I say that BSD and Linux are junk?

            unless of course I am having some fun with an obvious ABMer like yourself, the of course I sat tha to YOU (though can;t remeber if I had, to tell the truth)?

            I have repetedlly said that I think Windows, Leopard, and Linux are all good operating systems, with each having their own strenths and weaknesses,

            I do claim, howevere that it is only the real [i]morons[/i] out there that continue to claim what is best for who, as talk is cheap and it is easy to say "Linux is the best for all companies, so only a fool would not switch" when it is not their cash riding on that decision.

            So understand when I say that Linux and BSD are [i]not[/i] junk, but instead that the mindless posts by the ABMers on Linux are the [i]real[/i] junk I speak of.
            GuidingLight