Alibaba may eye Yahoo units

As US Internet concern Yahoo Inc weighs its future, speculation continues to mount over the company's Internet business and its stake in China's e-commerce giant Alibaba Group Holding Ltd.

Published reports indicate that Yahoo's board is meeting to consider whether to sell the company's Web businesses while some analysts suggest Alibaba might be interested in the assets.

"Expansion beyond China is Alibaba's long-term goal, and I think Yahoo's internet properties are valuable for Alibaba," Henry Guo, an analyst with Summit Research LLC told China Daily in an email. "Yahoo's Internet portal is the leading web property in the US in terms of user traffic, which definitely should help Alibaba build brand awareness and grow its user base in the US."

Guo said Alibaba has been doing this for some time in China and pointed to the company's purchase of online video sites Youku/Tudou and a major stake in the Twitter-like Weibo in recent years to help grow its e-commerce business.

Carlos Kirjner, an analyst at Sanford C. Bernstein & Co, told The Wall Street Journal that Alibaba is probably not interested in Yahoo's core business, but might consider an offer for all or part of Yahoo's stake in Alibaba, "if it found a financially attractive way to structure the transaction."

The WSJ reported that Verizon Communications and Barry Diller's IAC/InterActive might also be interested in Yahoo's core Internet business.

Yahoo CEO Marissa Mayer has been under pressure to improve the company's financial results, which have seen revenue decline from $5.4 billion in 2008 to an estimated $4 billion this year.

According to Bloomberg News, activist investor Starboard Value has estimated that Yahoo's enterprise value is about $31.2 billion. Excluding the Alibaba stake, cash holdings and partial ownership of Yahoo Japan Corp, Starboard valued Yahoo's core business at about $2 billion.

Yahoo is now planning to complete the previously announced spinoff of its Alibaba stake in January. Yahoo owns approximately 384 million shares or about 15 percent of Alibaba that is presently valued at over $30 billion. In September, the US Internal Revenue Service declined to give the transaction tax-free status.

In what was a down day for stocks in the US, shares of Yahoo gained $1.94, or 5.75 percent, to settle at $35.65, while Alibaba added $1 to finish at $85, up 1.2 percent.