The SS Bartz has been torpedoed pretty bad and it is sinking. Management is in chaos with Yahoo’s board not even knowing who is in charge. First Yahoo was for sale, then it was not, then Jerry Yang unofficially took over as CEO, and now board member David Kenny is vying for the CEO position. The internal power struggles are quite hilarious and reminiscent HP’s board of directors, but at least HP’s board is unanimous in its boneheaded decisions. The only big thing Yahoo has going for it right now is its 43% stake in Jack Ma’s Alibaba, which it acquired back in 2005 for $1 billion. Ever since then, the Yahoo-Alibaba relationship has been nothing but bickering, with Jack Ma recently being quite audible in his intentions to buy back those shares from Yahoo (“I just don’t trust them,” said Ma in the April 2011 issue of Forbes Magazine).
Alibaba is thriving under Jack Ma’s leadership. Recent Yahoo filings have shown that Alibaba revenue is up 150% year-over-year as of March 2011 with losses down significantly and it is looking at a net worth of $27.5 billion. Yahoo’s market cap, at the time of this article, is a little over $17 billion. If Jack Ma wants to buy back the 43% stake Yahoo has in Alibaba, it might be worth it if he just buys Yahoo outright. Alibaba’s biggest ace is that its holdings are private assets which allows them to perform more efficiently and effectively.
Yahoo’s biggest issue has been the lack of direction and the outright neglect of some pretty big projects, such as del.icio.us and flickr. With an Alibaba takeover, Yahoo will be able to either spin off or privatize properties its diverse properties, allowing them to get more control and direction that they’ve deliberately needed. Alibaba’s 65 million users will also help expand Yahoo in China, Japan, and other international marketplaces that are growing increasingly crucial in the globalized realm of technology today.
On the flip side, acquisition by Alibaba will allow the Chinese company to tap into an enormous western userbase and allow the company to get a strong foothold in the U.S. market. Western companies like Google have found it increasingly difficult to enter and compete in Asian markets, especially in China. Alibaba has the advantage of expanding from China instead of expanding to China, and acquiring Yahoo will allow it increase its global reach and become a worthy competitor to Google, Microsoft, and others.
Could Alibaba be what Yahoo needs? What do you think? Give us your feedback in the comments!