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article imageChinese company poised to buy Yahoo, challenge Google and Apple

By Bradley Axmith     Oct 3, 2011 in Business
Sunnyvale - Later today, Yahoo’s acting-CEO Tim Morse will get peppered by questions that its sale to Chinese e-commerce (company) Alibaba is imminent, signaling an interesting week for technology markets and the future for consumer products.
“We are very interested in Yahoo. Our Alibaba group is important to Yahoo and Yahoo is important to us … All the serious buyers interested in Yahoo have talked to us,” Jack Ma, the boss of Alibaba told an audience attending a Stanford tech event on Friday.
Microsoft and AOL along with equity firms Silver Lake and Andreesen Horowitz are reportedly eyeing the former tech paragon Yahoo!, a search engine pioneer in the 1990s that has since been dwarfed by Google and belittled by Facebook in the last many years.
The stakes for Yahoo! are more interesting now should Alibaba buy it in its entirety as Ma has revealed his company may do.
Though Yahoo has struggled to maintain market share and increase revenues, it provides a potential vehicle through which Alibaba could expand into the North American market, which it seems poised to attempt with a new mobile operating system sometime this fall and possibly a tablet by year’s end.
Based in Hangzhou, China, Alibaba has dominated the e-commerce market there, recently expanding into smart phones with its Aliyun OS bundled onto K-Touch’s Cloud W700 back in July.
In September AliCloud, the subsidiary owned by the Alibaba Group that developed Aliyun OS announced that it would launch an English version in the coming month that would compete with Android and Apple’s iOS, Reuters reported.
The strength of Aliyun is its cloud computing functionality, which synchronizes user data across several different platforms, similar in concept to Google’s cloud, but with significant constraints removed from the developer side, according to AliCloud’s boss, Wang Jian.
"Introducing cloud apps to mobile devices not only brings a whole new user experience, but also greater ease for third-party mobile software developers who will be able to use Internet technology such as HTML5 and JavaScript to reduce the complexity in the app development process," Wang told CNET News.
Buying Yahoo! has been described as a 'no brainer' due to a financial symbiosis Ma alluded to in his comments. 40% of Alibaba, valued at $32 billion, is owned by Yahoo! making the Sunnyvale, California company’s $16 billion valuation predicated on its shares in the Chinese firm.
Ma has indicated his intent to buy back the $1 billion in shares Yahoo! bought in 2005 in order to shore up his leadership, which was challenged by a dispute arising from Alibaba’s sale of AliPay, a PayPal competitor, to a company controlled by Ma.
Yahoo was not informed of the sale and had reportedly considered AliPay’s $2 billion valuation an important component of its strategy to maintain share price.
This dispute was settled in July, but going into an election year in the US could complicate the sale of Yahoo! given lawmakers’ penchant for China-bashing blocking foreign companies’ takeover of iconic American firms.
After being thwarted in its attempts to buy Yahoo! in 2008, Microsoft too might object to a Chinese competitor gaining a strong footing in North America, viewing a struggle over Yahoo! in zero sum terms.
Yahoo!’s shares rose 5.8 percent in after hour trading on Friday following Ma’s comments, and will likely continue Monday morning leading up to the press conference.
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