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Valuation of Yahoo’s Alibaba stake

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Yahoo buys US$1 billion stake in Alibaba (2005-8-11, China Daily): $1 billion for 40% stake of Alibaba Group (parent company of Alibaba, Taobao and Alipay). Taotao and Alipay is Chinese equivalent of eBay and Paypal, repectively.

Yahoo sells direct stake in (cnet, 2009-9-14). Quote:
Yahoo has sold 1 percent of its stake in the Chinese-based business-to-business trading site, the company said on Monday. Reuters first reported on the story.

In November 2007, Yahoo invested approximately $100 million in when it went public on the Hong Kong Exchange. Writing in an e-mail, a company representative said that Yahoo’s “sale of its shares in is expected to generate pre-tax proceeds of approximately $150 million.”
According to Yahoo, it maintains approximately 40 percent interest in the Alibaba Group. “Alibaba Group owns approximately 70 percent of,” Yahoo wrote in the e-mail, “and as such, Yahoo continues to own an approximately 28 percent indirect interest in”

1% of (1688.HK) = $150 m
28% of = $150 m * 28 = $4,200 m = $4.2 billion

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Alibaba update

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It was a short while ago (last Nov) Alibaba did its high profile IPO in Hongkong. Now it’s back in the news again. Don’t get me wrong, Jack Ma (Ma Yun), the founder and Chairman of Ali, was always in the news. I remember a few years ago (when the company was private) he said Ali pays 1 millions Yuan everyday, that’s not a small number and people thought Mr. Ma was bragging. Oh, well, bragging or not. Alibaba’s IPO was very successful, and it created a few hundred millionares (stock option holders) in its employee bases, from what I read last Oct.

Fast forward to March 2008. It reported a good quarter but stock continued to drop (see Sramana Mitra at Seekingalpha). And there is a rumor about class action lawsuit coming (news in Chinese).

Alibaba 1688 stock chart
(Alibaba 1688.HK 6 month stock chart, full size pic here).

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Week in review 07-15 to 07-21

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1) StrengthTrader listed the greatest investors of all time (in Chinese). Among them I am familar with Buffett, Fisher and Lynch. I think Bill Miller is the Peter Lynch in current Mutual Fund world.

2) Alibaba is hiring, they are adding 2,000 people by the end of 2007. Meanwhile, Ali’s little bro Ninetowns is shrinking, they are laying off people after recent acquisition.

3) Save $10 off Crocs through

4) Investor Trip Starbucks experience. My comment: it’s about experience, not just about coffee (i.e., coffee buyers at McDonald and Dunkin Donuts are different groups).

5) Sun’s Financial Diary’s “Pay ourselves first”. I remember seeing one of the guest on CNBC “Millionare Inside” said similar things. Well, Sun has made significant progress on this aspect too. Very good job.

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Home Inns and Alibaba update

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I got some more Home Inns (HMIN) today. Nothing fundamental has changed at Home Inns, as I said in my previous post.

Separately, Ma Yun, the big mouth at Alibaba, speaks again. We all know he likes to brag about how great will Alibaba become, but this time he is saying “China does not have a pure Internet company”. Duh? How about Baidu?

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