Microsoft may have to up Yahoo!'s bid due to Asia holdings

Posted Feb 27th 2008 10:35AM by Douglas McIntyre
Filed under: Deals, Competitive Strategy, Google (GOOG), Microsoft (MSFT), Yahoo! (YHOO), China, Japan

Yahoo! (NASDAQ: YHOO) may have a better foothold in Asia than any other large internet company. This is driven by its holdings in Yahoo! Japan and Chinese e-commerce company Alibaba. According to The Wall Street Journal, "Depending on how their value is calculated, the stakes account for $9 billion to $14 billion of Yahoo's value."

The valuations are old news. What is not so old is that it is dawning on Microsoft (NASDAQ: MSFT) that having Asian allies may help the company fight off Google (NASDAQ: GOOG) in the fast-growing markets of the Far East. It is something that the world's largest software company does not have now.

The Yahoo! board has a unique opportunity to talk up the strategic value of these holdings with shareholders in public and with Microsoft in private. The prevailing wisdom is that Yahoo! has no alternative other than to sell to Redmond, and that the price is the issue. Yahoo! management should be saying that the Microsoft bid does not take into account the value of having powerful partners in Japan and China and that these are worth several more dollars a share.

It is an argument that has the benefit of being true.

Douglas A. McIntyre is an editor at 27wallst.com.

Tags: asia, china, goog, interent advertising, InterentAdvertising, inthenews, msft, search advertising, SearchAdvertising, yhoo

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Reader Comments (Page 1 of 1)

2-27-2008 @ 10:06PM

j. smith said...

Yahoo's value of Aliaba Com Ltd(ALBCF) is overstated. MSFT can buy ALBCF for 2.5-5.0 $B. ALBCF has 1 billion shares capitalization selling today for about $2.50/share. If MSFT offers a slight premium, many Chinese will sell, doubling or tripling their investment. ALBCF is currently on the pink sheets. When it rises to NASDAQ requirements, that will increase the buying of ALBCF. In turn, when ALBCF advertises its B2B connection to the Chinese manufacturers, the U.S., Europe, etc. will find they can order B2B over the internet, just as you and I can presently. YHOO should probably accept a 1 for 1 stock exchange with MSFT, and hang on for the ride. This is just my opinion.

P.S. If YHOO doesn't accept the offer, Gates and associates could team up with Buffet, take it private, and the rest of us will suffer with mediocre stock prices.

2-28-2008 @ 7:49AM

j. smith said...

Supplemental opinion to my comments re MSFT acquisition of YHOO, and resolution of ALBCF role.
If MSFT acquires YHOO, and/or ALBCF interface, he could freeze out connections to Europe who is trying to fine him $B's for whatever.

P.S. Bill is still sensitive about his wedding night, when it was rumored his bride declared that she "doesn't do WINDOWS..." . Bill felt his empire
was crumbling.

4-15-2008 @ 11:25PM

michael li said...

Why not support an American Alibaba? Factories In China Inc. is celebrating the launch of www.FactoriesInChina.com with free shares giveaway. There's details in a press release http://www.fastpitchpress.com/pressrelease.cfm?PRID=22618

They placed banner ads for sale on eBay. Buyers of the banner ads will get discounted prices as well as matching number of shares in the private company.

Search on eBay’s website under “next aliaba” or go to: http://stores.ebay.com/Factories-In-China-Website