Yahoo Sued Over Alibaba Payment Restructuring

News from Yahoo! Inc. regarding Alipay restructuring and getting misled by Alibaba Group caused Yahoo! Inc. to get sued by its shareholders.

The investors, in a complaint filed in federal court in San Francisco, claim that Yahoo! was failed to tell them by May 10, 2011 that its $1 billion investment in Alibaba was “severely impaired” by the transfer of the payment business, Alipay, to a closely held company controlled by Alibaba Chairman Jack Ma.

...Continue reading Yahoo Sued Over Alibaba Payment Restructuring

China Yahoo to E-Commercialize Koubei & Social Networking Service Yahoo Guanxi

Alibaba Group has planned to e-commercialized daily life information website Yahoo Koubei (koubei.com) and social networking service Yahoo Guanxi in 2009. They will later be integrated into Alibaba's e-commerce system, said China Yahoo Public Relations Director Wang Tong.

China Yahoo designated its life information service and email services and Social Networking Service (SNS) Yahoo Guanxi as its key businesses in an annual meeting, as reported by Sina quoting a company insider. Team of over 60 employees has been established to generate profit from the e-commerce webstie in life services. All Yahoo China resoruces will be put towards life services in 2009 to meet the goals.

China Yahoo currently has nearly 700 employees, including nearly 200 for Koubei, but only 20 maintain and update China Yahoo content, said the Sina report quoting Wang. Search and blog services will not be emphasized in the future, and China Yahoo will not spend more money on search traffic, said Wang. China Yahoo has stopped providing some download and upload functions for its online photo service and plans to shut down its new community platform on February 28 due to business restructuring.

China Yahoo Abandons Non-Core Business

According to JLM Pacific Epoch Yahoo China has told them on Monday that it has abandoned its "real domain name" service 3721.com. Yesterday, a Sina report said the site was already inaccessible. Former Alibaba Group and China Yahoo vice president Jasmine Shen said in early December that China Yahoo planned to shrink its business and focus on daily life information site koubei.com, which it merged with on June 1.

Yahoo (Nasdaq:YHOO) acquired 3721.com, established by Qihoo president Zhou Hongyi, with $120 million in November 2003; the site was taken over by China Yahoo in 2005. The real domain name service redirects users who enter keywords in the address bar of a PC with 3721 software to a specific company site.

Yahoo China Vice President Resigns

Shen Jianming, vice president for Alibaba Group and vice president for Yahoo (YHOO) China, told local media that she has resigned her positions and officially departed from Alibaba Group.

Shen says she left Alibaba Group for personal reasons. She says her departure is partly because Yahoo China shifted its focus to Koubei.com after it acquired the website and she was asked to work in Hangzhou to manage Koubei.com. However, she does not want to leave her family in Beijing, so she put forward her resignation a month ago.

Shen adds that she has found a new job and will start work before January 1, 2009. Rumors say Shen may join Tencent and will be in charge of website and public relations, but the news is neither confirmed by Shen nor by Tencent.

Shen joined Alibaba Group in November 2006 and was appointed vice president for Alibaba Group and vice president for Yahoo China. Over the past two years, Shen was in charge of Yahoo China's business expansion in marketing, public relations and email box sectors.

Before joining Alibaba Group, Shen worked in Sina.com for nearly eight years as director for business development, vice general manager for business development and vice president for marketing.

Microsoft-Yahoo war may spur Alibaba buyback

By Sophie Taylor and Anupreeta Das

SHANGHAI/NEW YORK (Reuters) - Chinese Internet firm Alibaba is set to speed up plans to buy back a near 40 percent stake owned by Yahoo Inc (YHOO.O: Quote, Profile, Research), as Microsoft Corp (MSFT.O: Quote, Profile, Research) threatens to go hostile with a lower bid for Yahoo.

Alibaba, keen to calm Beijing's fears that Microsoft's planned $42 billion takeover of Yahoo would increase foreign influence over China's leading Internet firms, wants to fund a buyback of all or part of the 39 percent stake Yahoo owns, said a person familiar with the Chinese firm's plans.

Analysts said this could come from a mix of foreign and local financial investors, including Chinese pension funds or state-backed firms looking to enter the Internet sector.

"Jack's number-one thing is to maintain control," said Hany Nada, managing partner of Granite Global Ventures, an early institutional investor in Alibaba, referring to the group's Chief Executive Jack Ma.

Alibaba plans to exercise its 'right of first offer' on the stake, which is stated in a 2005 agreement with Yahoo, should the two U.S. firms reach a deal, a source told Reuters earlier.

The 'right of first offer' states that Yahoo cannot transfer its Alibaba stake without first offering it to other shareholders. Alibaba believes any change of control at Yahoo, including a deal with Microsoft, would amount to such a transfer, the source said.

LOSING OUT

Alibaba may be unwilling to rule out potential business opportunities with Microsoft, for example in advertising or online trading, that would be lost if it were to buy back its stake from Yahoo. If that were to happen, the U.S. software giant also could miss a chance to expand its foothold in the world's largest Web market by users.

"Alibaba is peripheral to the potential Microsoft/Yahoo transaction, but its decision will create an impact on Microsoft's deal because Alibaba is an important strategic presence for Yahoo in Asia, and Alibaba has global aspirations," said Duncan Clark, chairman of Beijing-based research firm BDA.

Another thorny factor is valuation.

Yahoo has so far rejected Microsoft's unsolicited takeover bid as too low, in part because Yahoo sees its Asian operations as strategically valuable.

Any offer on the stake in Alibaba -- particularly if it is broken up and sold to several investors -- will likely go through a complicated arbitration process to determine the offer's value.

Perhaps the most important factor is whether Alibaba is able to line up financial support to buy back its stake from Yahoo.

Possible candidates include Chinese pension funds, or even one of the country's state-backed telecoms companies looking to move into Internet services, said Claus Mortensen, analyst at IDC's Asia/Pacific Emerging Technologies Research.

Alibaba's other major shareholder, Japan's Softbank (9984.T: Quote, Profile, Research), which holds a 33 percent stake, is unlikely to buy Yahoo's stake as it is heavily in debt after buying Vodafone's (VOD.L: Quote, Profile, Research) Japan unit two years ago.

"There's no way we could raise funds in this environment. We bought Vodafone (Japan) just in the nick of time. We were lucky," said a Softbank contact, who declined to be identified because he was not authorized to speak on the matter.

STAYING INDEPENDENT

Beijing is often wary of what it sees as attempts by foreigners to control prominent Chinese companies.

Alibaba dominates China's business-to-business sector with a 70 percent share of a market that is expected to grow to 2,130 billion yuan ($303.6 billion) in 2009 from 1,250 billion yuan in 2007, according to the Internet Society of China.

Alibaba is expected to maintain its dominant position in the short term, said Ovum analyst Charice Wang, but over the longer term local rivals offering niche services may eat into that lead.

Beijing was stung by its exposure to a foreign firm shortly after a 2005 deal in which Yahoo merged its Chinese operations into Alibaba in exchange for the stake in Alibaba.

Along with Yahoo's operations, Alibaba also gained a role in an international human rights controversy when press freedom watchdogs and U.S. lawmakers attacked Yahoo for turning over a Chinese reporter's emails to the government, which later imprisoned him.

If the Microsoft-Yahoo deal goes through and Yahoo retains its stake, the Chinese authorities are likely to set conditions for the stake's transfer, such as limiting the number of foreigners on Alibaba's board.

RIGHT OF FIRST OFFER

Even if Alibaba manages to shore up finances to buy back its stake from Yahoo, there is a small chance its interpretation of the 'right of first offer' might be challenged by a combined Microsoft-Yahoo entity. Both U.S. companies have declined to comment on Alibaba's interpretation of the right.

But one lawyer said Alibaba's right of first offer -- which applies to both a direct and indirect transfer of Yahoo's stake -- may not apply in case of a change of ownership of Yahoo.

Alibaba's position is that if Microsoft buys Yahoo, what it gets is ownership of Yahoo's stock and not Yahoo's ownership in Alibaba, said the lawyer, who declined to be identified because his firm could advise one of the companies.

So, if Yahoo is bought, Alibaba's argument is that it amounts to an indirect transfer and triggers the right of first offer, but New York state laws govern the definition of 'indirect' in this case, said the partner at a U.S .law firm who has worked on international M&A transactions.

"Microsoft, it seems, unless there is language or other terms elsewhere, simply will step into the shoes of Yahoo in the Alibaba agreement," he said.

But Carol Glendenning, a mergers and acquisitions lawyer at Strasburger and Price LLP, said that "a sale of Yahoo stock would be an indirect transfer of the beneficial ownership that Yahoo owns in Alibaba, which falls into the definition of a transfer."

Both lawyers based their assessment on excerpts of the agreement sent to them by Reuters.

Under the 2005 agreement, which is available on the U.S. Securities and Exchange Commission Web site, Yahoo also has a pre-emptive option of refusing to sell to a list of competitors.

But the lawyers said the pre-emptive option applies only if Alibaba plans to issue new shares in case of a transaction.

What’s Yahoo worth to Microsoft without Alibaba?

One of Yahoo’s best arguments for getting Microsoft to raise its offer to acquire the company–the portal’s stake in Chinese e-commerce giant Alibaba–is in jeopardy courtesy of antitrust regulations in China.

The New York Times reported Friday that a Chinese monopoly law that goes into effect in August could likely throw a roadblock in front of Microsoft’s bid for Yahoo.
According to the Times:

The law, which goes into effect on Aug. 1, is intended to strengthen an existing set of antitrust regulations the Chinese originally established in 1993. It will make China a third sphere of regulatory influence, matching the power of the European Union and the United States, according to legal specialists in this country and in China who have studied it.

If Chinese authorities raise any objections to Microsoft’s acquisition of Yahoo–and they will because hometown favorite Alibaba is against the purchase–the argument that Yahoo is worth more than $31 a share becomes laughable. In fact, you could argue that Yahoo is worth less than $31 a share. In its pitch to investors arguing that it’s worth more, Yahoo figured that Alibaba was worth $2.25 a share and had a market value of $3.2 billion.

What happens if Alibaba is removed from the equation? Given that Microsoft is already a regulator whipping boy in the EU it may not want to tussle with China too–especially if Alibaba management doesn’t want to deal with the software giant.

Bottom line: Microsoft isn’t likely to lower its price, but these China regulator concerns mean that the company isn’t about to raise its bid any time soon.

Alibaba looking to buy back Yahoo stake

SAN FRANCISCO (MarketWatch) - Alibaba Group is reportedly looking to buy back the shares owned by Yahoo Inc. in a bid maintain its independence in the event of a Microsoft Corp. takeover of the beleaguered Internet portal, according to media reports.

Such a move could have a major impact on Yahoo's valuation as the company remains the target of an acquisition bid from Microsoft according to some analysts.

Alibaba Group, the Chinese Internet giant which is 39% owned by Yahoo has been meeting with investors about possibly financing a buyback of Yahoo's ownership stake, according to reports in the Wall Street Journal and Reuters, both of which cite unnamed sources. A clause in the contract between the two companies would reportedly give Alibaba the opportunity to buy back Yahoo's stake should a change of control occur at the Internet giant.

The reported talks are taking place as Yahoo is trying to convince Wall Street that Microsoft's blockbuster bid, initially valued at $44.6 billion, is grossly undervaluing the Web portal.
Yahoo's stake in Alibaba.com, a key component of Alibaba Group, and in Yahoo Japan are thought to be major components underlying its valuation. Yahoo itself values the two investments at about $12.5 billion, or about $8.90 per share, according to an investor presentation filed with the Securities and Exchange Commission on Tuesday.

Yahoo shares were trading down 1.1% at $27.34 by midday Wednesday.
"We believe this makes the deal less attractive from Microsoft's perspective as Yahoo's strategic China assets were a significant part of its bid for Yahoo," Brian Pitz of Banc of America Securities wrote in a note to clients Wednesday.

Some say the move also appears to be a stunning vote of no confidence against Yahoo from a major partner in the increasingly important Asian market as the company struggles with an unsolicited merger offer from Microsoft.

"They're separating themselves from Yahoo probably due to the instability and to concerns that Microsoft may end up owning that stake," analyst Rob Enderle of the Enderle Group said. "They don't want that turmoil to reflect on them... You don't want the concern over Yahoo to transfer to you."

The move, he continued, also makes it harder for Yahoo to highlight its strengths in Asia because "if you are showcasing that region and have someone in that region separating from you, it's not a comfortable situation to be in."

Analyst Crawford Del Prete of International Data Corp. said Alibaba's purchase of Yahoo's stake would mean a cash infusion for the Web giant, but it "could be a signal that they are not interested in a Microsoft ownership position for Yahoo."

"Or it's a signal that they are not buying into Yahoo's future vision and the valuation expectations they have," he added.

However, analyst Steve Allen of Sierra Tech Research offered a different view, saying Alibaba's reported efforts to break free from Yahoo actually gives the Internet giant an opportunity to highlight its value as a tech giant with a global footprint. He said Yahoo could argue that Alibaba is trying to "get rid of us because the opportunity is so great they want to grab it themselves."

CCID Consulting Analyzes Alibaba's Strategy Implementation

BEIJING, Feb. 29 /Xinhua-PRNewswire/ -- CCID Consulting, China's leading research, consulting and IT outsourcing service provider, and the first Chinese consulting firm listed in Hong Kong (Hong Kong Stock Exchange: HK08235), recently analyzed Alibaba's implementation of its new corporate strategy.

Towards the end of last year Alibaba made a high-profile announcement about the reorganizing of its corporate structure, as well as senior management changes and the reduction of staff at Yahoo! China. Alibaba has defined for itself a magnificent goal, as declared at the Company's IPO -- 'to build a perfect ecological e-business chain and make Alibaba a great world-class company created by Chinese people. After the successful listing, Alibaba acquired necessary capital as well as incentive mechanisms for sustainable development. In the next stage, Alibaba will enter the phase of strategic goal implementation, going along with great challenges.

In Alibaba's development history, Mr. Ma Yun considers mission, value and strategic targets as his life. Alibaba's mission is to make it easy to do business anywhere. What's more, Alibaba considers team spirit, quality, facility, passion, openness, innovation, service and respect as its core values.

During the establishing of a global e-business operating system, Alibaba needs to build a more robust and stronger e-business infrastructure, which will form the key competence of Alibaba. As the number and involved area of transactions increase rapidly, e-business infrastructure will become the engine of Alibaba's e-business transactions to ensure a more reliable, robust and smooth transaction environment. Also, its e-business infrastructure will help Alibaba to integrate its different business mode to satisfy the demand of business innovation. It is obvious that Alibaba's e-business infrastructure will be an important investment direction that Alibaba will benefit from.

It is necessary for Alibaba to clearly define its strategic focus clearly in order to achieve solid development. During the establishment of an ecological e-business chain, Alibaba should think about its business development strategy deeply: In B2B, should the focus be on expanding business scale or optimizing business structure? In B2C, should the focus be on extending business scope or enhancing business profitability? In market development, should the focus be on opening up a new overseas market or deep ploughing on the stock market? In strategy making, should the focus be on integrating resources among the industry chain or developing new business?

Taking the business structure and layout of Alibaba into account, the recent focus of Alibaba is to accelerate the growth of B2B and B2C business, speed up overseas market development and strengthen platform resource integration. In the current industry chain of Alibaba, the market scale and customer aggregation of Yahoo! China's network search didn't reach the expected target. Yahoo! China is currently not a contributor of income and profit for Alibaba. Hence, the restructuring of Yahoo! China was inevitable. In December 2007, Yahoo! China cancelled the original three departments (new media department, network search department, and communications department), and established two new departments (Website operating department, and Mailbox operating department). The merging of network search and e-business and digging in potential value of network search will be the future development direction of Yahoo! China. On the other hand, e-business search technology development will be a focus, which takes network search from a profit center to a cost center.

Integration will be another important step for Alibaba. Alibaba integrates information flow, capital flow and logistics into a uniform ecological chain, of which the majority of customers are 'long-tail' customers distributed all over the world, including SMEs and individuals. The service mode comprises B2B and B2C. The integration of different regional resources and integration of business resources are two key parts in the implementation of resource integration. The establishment of the Group Search Technology Development Center, P4P Operating Center, and Media Sales Center should focus on the resource integration to promote the common value of B2B and B2C business.

The implementation of new strategies requires Alibaba to have new abilities. World-class companies need world-class leadership and entrepreneurial spirit, which means Mr. Ma Yun and his leadership team have to have global viewpoints and strategic visions. World-class companies require heads to be experienced in international operations and global value chain operations, while also being familiar with business and legal environments among different countries. These requests cannot be covered by the young employees of Alibaba, hence, Alibaba's decision to launch another strategy: the study, dismissals, and upgrading of the current management team. Suitable people will be promoted to higher positions, while the unsuitable will be further educated, or possibly even dismissed. In December 2007, Alibaba Group announced several personnel changes: Mr. Zeng Ming of Yahoo! China transferred back to Alibaba Group; Mr. Lu Zhaoxi, the original CEO of AliPay transferred to CEO of Taobao.com; Mr. Jin Jianhang, the vice president of Alibaba Group transferred to CEO of Yahoo! China; Mr. Shao Xiaofeng, the vice president of Taobao.com transferred to CEO of AliPay; Ms. Zhang Yifen of Yahoo! Search transferred to vice president of Group P4P Operating Center; while Mr. Sun Tongyu, the president of Taobao.com, Mr. Li Qi, the COO of Alibaba Group, Mr. Wu Jiong, the CTO of Alibaba Group, and Mr. Li Xuhui, the Senior Vice President were all dismissed. And then, on January 24, 2008, Alibaba announced the layoff of 100 employees in Yahoo! China. From all these activities, it is clear that Alibaba is determined to build a world-class team and make this team suitable for the development strategy.

Facing all the challenges, a successful strategy implementation can realizes Alibaba's goal, that is, market value reaching $100 billion in three years, while also becoming one of the top three Internet companies within ten years.

Alibaba worries Microsoft might take its independence

Alibaba, the big Chinese e-commerce company is 39% owned by Yahoo! Inc. (NASDAQ: YHOO). That has been OK for Alibaba; Yahoo! has not taken any role in running the company. But, the firm and the Chinese government are a little worried that Microsoft Corp. (NASDAQ: MSFT) will not see it that way if it buys Yahoo!

According to The Wall Street Journal (subscription required), "Alibaba has already been contacted by Chinese regulators seeking information on how it could be affected by a Microsoft purchase." The concern is perverse for two reasons.

China thinks nothing of allowing its sovereign funds to put capital into U.S. financial companies. Congress has already begun to worry in public that the Chinese might exert unwanted pressure on the managements of some of Wall Street's biggest companies. The Chinese cannot have it both ways, buying into American businesses while setting limitations on investments in its country.

What is even more obvious is that one solution is to have Microsoft simply enter into a legal agreement that makes its shares in Alibaba non-voting. This allows the big software company the advantage of an investment that will probably grow in value, and one that it will probably eventually sell back to Alibaba or even to the Chinese government.

Microsoft-Yahoo Deal May Benefit Alibaba.com But Hurt Baidu

HONG KONG -(Dow Jones)- A Microsoft-Yahoo combination may benefit Hong Kong- listed Alibaba.com (1688.HK) but could heighten competition for China's leading search engine Baidu.com Inc. (BIDU), analysts said.
Last Friday, Microsoft Corp. (MSFT) unveiled an offer to buy Yahoo! Inc. ( YHOO) for $44.6 billion, a move designed to create a more credible competitor to industry leader Google Inc. (GOOG) and deepen Microsoft's position in the market for online business software. "Who would be the biggest winner? The Alibaba Group. Who would be the biggest loser? Baidu," Citigroup analyst Jason Brueschke wrote in a Monday report.
Yahoo owns 39% of Alibaba Group, the parent of Alibaba.com, which provides e- commerce to small and medium-sized enterprises in China and globally.
"Baidu provides search monetization services for Microsoft's MSN China properties. We assume that Microsoft might, if a transaction proceeds, switch this contract to the Yahoo-invested Alibaba group and estimate that the negative impact on Baidu's net revenue could be in the very low single digit percentages, " Goldman Sachs said in a report Monday.
Deutsche Bank analyst Alan Hellawell said a Microsoft-Yahoo combination would create a more aggressive advertising syndication network in China which could present more competition for Baidu.
"We believe Alibaba.com and its unlisted group peers may offer the combined Microsoft/Yahoo entity the best leverage in achieving a previously largely elusive foothold in the China market," he said.
Shares in Alibaba.com surged in early morning trade in Hong Kong as investors weighed in on the potential benefits a Microsoft-Yahoo deal could bring the company. At the midday break, its shares were up 17% at HK$20.95. Shares in Baidu, which are listed on Nasdaq, closed Friday's session, down 3.7% at US$ 269.59.
Alibaba.com spokeswoman Sovanna Fung declined to comment. Baidu officials weren't immediately available for comment.
But some analysts downplayed any negative impact a Microsoft-Yahoo deal might bring to Baidu, given the company's dominant market share in China.
BNP Paribas Asia Securities analyst Eric Wen said while a Microsoft-Yahoo combination could increase competition in China's Internet search engine market, it won't change Baidu's dominance.
"I think the deal should only have little impact on Baidu's traffic and revenue. It's difficult for Microsoft and Yahoo to challenge Baidu's leading position," said Wen, who rates Baidu a "buy" and has a price target of US$480.
According to market research firm Analysys International, Baidu's share of the search market in China as measured by revenue was 60.1% in the fourth quarter of 2007. Google came in second place with 25.9%, while Yahoo China was third with 9.6% of the market.
Some analysts also said Hong Kong-listed Tencent Holdings Ltd. (0700.HK) and Nasdaq-listed Netease.com Inc. (NTES) might see increased competition.
"If Alibaba Group were to take operational control of Microsoft's China assets (MSN, Hotmail), then we could see some increased competition due to better execution by Alibaba," said Citigroup's Brueschke.
According to Citigroup, Microsoft's Windows Live Messenger ranks number two in instant messaging in China to Tencent's QQ, which is number one with 75%. NetEase is the dominant provider in e-mail.
Brueschke also said Microsoft's stake in the social networking site, Facebook, could affect social networking in China where Tencent dominates.
Tencent shares are up 5.7% at HK$50.15 at the midday break.

Alibaba - A B2B Trade Company Overview

Corporate Overview

Alibaba Group is a global e-commerce leader and the largest e-commerce company in China. Since it was founded in 1999, the Alibaba Group has grown to include six core member companies:

Alibaba.com - Alibaba.com (1688.HK) is the Alibaba Group's flagship company and the leading B2B e-commerce company in China, serving small and medium sized enterprises in China and around the world

Taobao - A leading online shopping marketplace for consumers in China

Alipay - China's leading online payment service

Yahoo! China - A search engine and lifestyle portal, acquired from Yahoo! Inc. in October 2005

Alisoft - An Internet-based business management software company targeting SMEs in China

Alimama - An online advertising exchange for web publishers and advertisers to trade online advertising inventory in China

History & Milestones

1999

Alibaba Group officially established, led by Jack Ma and Alibaba's 18 founders working out of a Hangzhou apartment

1999-2000

Alibaba raises US$25 million from Softbank, Goldman Sachs, Fidelity, and other institutions

2003

May: Consumer e-commerce site Taobao is founded, again in Jack Ma's apartment

2004

Online payment system Alipay is launched

2005

October: Alibaba.com forms a strategic partnership with Yahoo! Inc. and takes over the operation of Yahoo! China

2007

January: Business software services company Alisoft is launchedNovember 6: Alibaba.com Limited lists on the Hong Kong Stock ExchangeNovember 20: Alibaba Group launches Alimama, an online advertising exchange company

Alibaba.com (1688.HK) is the leading B2B e-commerce company in China. We provide an efficient, trusted platform connecting small and medium-sized buyers and suppliers from China and around the world. Our international marketplace (www.alibaba.com) focuses on global importers and exporters and our China marketplace (www.alibaba.com.cn) focuses on suppliers and buyers trading domestically in China. Together our marketplaces form a community of more than 24 million members from over 200 countries and regions, as of June 30, 2007.

Founded in 1999, Alibaba.com is the flagship business of the Alibaba Group and one of the world's premier e-commerce brands. Our operational headquarters is based in Hangzhou in eastern China. We have field sales and marketing offices in more than 30 cities in China, Hong Kong, Switzerland and the United States. The company had more than 4,400 full-time employees as of June 30, 2007.

Taobao operates an online shopping marketplace for consumers in China under the names "Taobao" and "淘宝" ("Taobao" in Chinese). With a registered user base of approximately 39.9 million as of June 30, 2007, Taobao facilitates transactions between individual consumers and a wide range of sellers including individuals and retailers. Sellers may post new and used goods for sale on the Taobao marketplace either through a fixed price or negotiated sale or by auction. Consumers may search, shop and transact with sellers on the Taobao marketplace. Alibaba Group founded Taobao, headquartered in Hangzhou, in 2003.

Alipay is an online payment services provider operating under the names "Alipay" and"支付宝" ("Alipay" in Chinese). Alipay's service enables individuals and businesses to execute payments online in a safe and secure manner. Alipay's users are primarily buyers and sellers engaging in e-commerce transactions. With a registered user base of approximately 43.5 million as of June 30, 2007, Alipay is an accepted online payment method for many online retail websites and other online goods and service providers in China as well as the designated online payment service provider on our China marketplace and on Taobao. Alipay partners with domestic PRC banks to provide an escrow service for payments, which reduces the settlement risks faced by Alipay's customers in their e-commerce transactions. Alibaba Group founded Alipay, headquartered in Hangzhou, in 2004.

Yahoo! China's website operates Chinese language portal services, such as email and the provision of finance, sports, lifestyle and entertainment information, as well as a web search service that crawls and indexes web pages generally available on the Internet targeted at individual Internet users in China. Yahoo! China's paying customers primarily consist of advertisers that purchase fixed price banner advertisements, text-links or auction-based pay-for-performance marketing services on Yahoo! China's website. In October 2005, Alibaba Group acquired Yahoo! China in a transaction whereby Yahoo! became a substantial shareholder of Alibaba Group. In connection with this transaction, Yahoo! agreed to grant to Alibaba Group the exclusive rights to use in China the "Yahoo!" name and certain technologies owned by Yahoo!, as well as the right to sub-license these rights to other members of Alibaba Group. Yahoo! China is headquartered in Beijing.

Alisoft develops, markets and delivers Internet-based business management software targeting SMEs in China. Alisoft's software provides its customers with various tools, including enterprise management tools, such as email, customer inquiries and information management, and basic financial management tools, such as invoicing and bookkeeping. Alisoft owns the copyright and other proprietary software rights of the "阿里旺旺" ("Aliwangwang" in Chinese) instant messaging communication tool, which is the designated instant messaging communication tool for Taobao and which we offer to our users as TradeManager on our international marketplace and as 贸易通 (TradeManager in Chinese) on our China marketplace. Alibaba Group founded Alisoft, with operations in Hangzhou and Shanghai, in January 2007.

Alimama is China's leading online advertising exchange, which allows web publishers and advertisers to trade online advertising inventory. A wholly owned subsidiary of Alibaba Group, Alimama is designed to serve the more than one million small- and medium- sized websites in China which generate an estimated 80% of China's website traffic. Alimama helps connects these web publishers to advertisers, allowing them to monetize their website traffic while offering advertisers an affordable way to reach highly targeted audience groups.

Rumor: China Yahoo To Name New President

Alibaba vice president Jin Jianhang will be promoted to China Yahoo president next week, reports qq.com quoting a China Yahoo employee. The employee said Jin will announce China Yahoo's new strategy along with the end of inner-company personnel changes next week. According to the report, former China Yahoo president Zeng Ming will move to Alibaba Group as chief of staff. China Yahoo spokesman Tao Ran said yesterday that the company plans to focus on e-commence. Alibaba Group decided to set up new search and sales centers along with members of China Yahoo staff on January 23.

Yahoo China Rumored to Cuts Jobs, Restructures Business

According to local media, Yahoo China today initiated a company-wide job cut. These job cuts resulted in internal restructuring including the possible closure of Yahoo China’s new media units. On the other hand, Yahoo China’s main investor Alibaba yesterday announced the formation of its search engine and pay-for-performance advertising team.

What's wrong with Yahoo's efforts in those areas? Yahoo China is not a Yahoo subsidiary; Yahoo swapped its Chinese unit for a stake in Alibaba. These cutbacks seem unrelated to Yahoo's pending layoffs -- but it's telling that Alibaba thinks it's better off with homegrown efforts than the businesses it inherited from Yahoo.