September 14th, 2009
Yahoo's sale of Alibaba.com stake opportunistic
There’s a fair amount of hubbub about Yahoo’s decision to sell its stake in Alibaba.com, but it’s really just an opportunistic trade.
Reuters notes that Yahoo is selling its entire 1.14 stake in Alibaba.com, China’s B2B e-commerce giant, to net about $150 million. The move makes sense since:
Alibaba.com shares have almost quadrupled from January.
Alibaba.com co-founder Jack Ma just unloaded shares in his own company. And Yahoo still owns 40 percent of Alibaba Group, the private group that floated the Alibaba.com IPO in Hong Kong.
Simply put, Yahoo is just making a decent trade. Yahoo CEO Carol Bartz is just taking a little liquidity where she can get it. It’s unlikely that Bartz could unload Yahoo’s stake in Yahoo Japan or Alibaba Group easily given the size of the stake, the regulatory concerns and the tax hit.
Goldman Sachs analyst James Mitchell writes in a research note:
We view the sale timing as opportune given: (1) Alibaba Group founder Jack Ma recently sold 13 mn shares in Alibaba.com, his first sale post-IPO, which likely removes any stigma associated with Yahoo! selling shares in Alibaba.com. (2) Alibaba.com shares have rallied sharply, up 300% ytd and up 50% since Yahoo!’s initial investment; we see near-term downside to Alibaba.com stock given our expectation for higher churn and lower gross adds as it laps the 60% price reduction for Gold Supplier membership in 4Q2008, which drove an initial spike in customer adds.
Larry Dignan is Editor in Chief of ZDNet and Editorial Director of ZDNet sister site TechRepublic. See his full profile and disclosure of his industry affiliations.
For daily updates, follow Larry on Twitter.
Subscribe to Between the Lines via Email alerts or RSS.
