Yahoo! shares drop as Alibaba service spins off

May 12, 2011
Yahoo! stock sank on news that Alibaba has spun its online payment business out of reach of the US Internet pioneer, which owns a large stake in China's leading online search service.

Yahoo! stock sank on news that Alibaba has spun its online payment business out of reach of the US Internet pioneer, which owns a large stake in China's leading online search service.

Shares dropped more than seven percent to $17.18 a share in trading on the NASDAQ exchange through the day in the wake of the news.

California-based Yahoo! filed paperwork on Tuesday notifying the US that ownership of the Alipay service was shifted to a Chinese company owned mostly by Alibaba chief executive Jack Ma.

The restructuring was done "to expedite obtaining an essential regulatory license," Yahoo! said in the filing.

The license purportedly at issue was one required by the People's Bank of China to offer financial services in that country, according to an investors note from Citi analyst Mark Mahaney.

The Chinese bank's deadline for obtaining the necessary license is reportedly September, prompting curiosity as to why Alibaba moved so quickly to get Alipay stock away from Yahoo!.

Yahoo! said that it and Alibaba investor were involved in discussions regarding the restructuring and "appropriate commercial arrangements" related to Alipay.

Those discussions likely involve how the investors should be paid or otherwise compensated for lost stakes in the online payment service, according to analysts.

"We view this as a negative for Yahoo!," Mahaney wrote. "We now see Yahoo! as potentially having become a forced seller of its investments."

Yahoo! owns a 43 percent stake in and an estimated 40 percent share of Alipay.

Some analysts saw the drop in Yahoo! stock as a buying opportunity, reasoning that the Alipay move was in response to government regulations and that Yahoo! would be compensated accordingly.

Explore further: Sprint accused of billing for unwanted services

add to favorites email to friend print save as pdf

Related Stories

Alibaba says Yahoo 'reckless' on Google stance

Jan 16, 2010

(AP) -- China's e-commerce giant Alibaba turned on major shareholder Yahoo Inc. on Saturday, calling the American company's support of Google in its standoff with China "reckless."

Yahoo! and Google Resolve Disputes

Aug 09, 2004

Yahoo! Inc. and Google Inc. today announced that the companies have resolved two disputes that have been pending between the companies.

Chinese retail site, Yahoo! Japan unveil deal

May 10, 2010

China's largest retail website Taobao and Yahoo! Japan on Monday announced a new partnership aimed at increasing online shopping options for consumers in the world's number two and three economies.

Recommended for you

Underfire Uber ramps up rider safety

14 hours ago

Uber is ramping up driver background checks and other security measures worldwide after the smartphone-focused car-sharing service was banned in New Delhi following the alleged rape of a passenger.

Sony cancels NKorea parody film release after threats

15 hours ago

Hollywood studio Sony Pictures on Wednesday abruptly canceled the December 25 release date of "The Interview," a parody film which has angered North Korea and triggered chilling threats from hackers.

Sprint accused of billing for unwanted services

19 hours ago

(AP)—Federal regulators are accusing Sprint Corp. of illegally billing its wireless customers hundreds of millions of dollars in charges for text message alerts and other services that they didn't order.

User comments : 0

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.