SHANGHAI (Reuters) – China’s Alibaba Group could command a Facebook-rivalling valuation of $100 billion when it comes to list its shares, possibly by 2015 – but its more immediate challenge is to hang on to top spot in the country’s $36 billion e-commerce market.

Founded and led by Internet entrepreneur Jack Ma, Alibaba faces increasingly tough competition in its e-commerce stronghold from well-funded rivals 360buy, which is backed by Digital Sky Technologies, Dangdang Inc and Amazon.com Inc. Tencent Holdings, China’s leading online games and social networking firm, has also said it will build up its e-commerce business by creating a separate unit.

“All the big Internet players have gotten into each other’s spaces with this idea that you can create a hermetically-sealed world where users never have to leave your platform,” said Mark Natkin, managing director of tech consultancy Marbridge Consulting.

Tencent’s huge user base – it has 575 million active users on its Qzone social site, which is linked to the popular QQ instant messaging application – and record of expanding successfully into new ventures could challenge Alibaba, which needs to maintain its high growth rate for a successful future listing. Alibaba Group revenue grew at a compound annual rate of 72 percent in 2008-2010.

“Competition is going to get more intense with Tencent entering the market,” said JPMorgan analyst Dick Wei.

CORE FOCUS

This week, Alibaba ended more than two years of often fractious negotiations with Yahoo Inc to buy back much of a stake held by the U.S. web giant and, crucially, reduce the voting power of foreign stakeholders including Yahoo and Japan’s Softbank Corp – allowing Ma to focus on growing his business.

SHANGHAI/NEW YORK (Reuters) – Yahoo Inc will sell as much as half of its 40 percent stake in Chinese e-commerce powerhouse Alibaba Group for $7.1 billion (4.48 billion pounds), ending years of fractious talks over how to extract value from its most prized asset.

Yahoo also increased its stock buyback authorization by $5 billion to $5.5 billion as a result of the deal but said it might instead opt to distribute some of the proceeds through a dividend.

The sale, announced on Monday, gives Yahoo $6.3 billion in cash and up to $800 million of new Alibaba preferred stock. After taxes, Yahoo will clear $4.2 billion.

Yahoo shares began rising Friday as word of the imminent deal spread. They increased as much as 3.8 percent in trading Monday before ending the day up 1 percent, or 16 cents, at $15.58.

Under the deal, Sunnyvale, California-based Yahoo and fellow investor Softbank Corp of Japan agreed to cap their voting rights in Alibaba at below 50 percent. Limiting outside ownership was a major motivation for Alibaba Chief Executive Jack Ma because of new Chinese regulations on foreign-controlled Internet companies, a person close to Ma said.

In a round of talks that collapsed in February, Yahoo had tried to work out a complex spin-off of Alibaba assets that wouldn’t trigger a big tax bill. But that deal foundered on how much value to assign Alibaba’s Taobao retail operation and on how U.S. tax authorities would treat the manoeuvre.

“It just got too complicated. There were too many moving parts,” one Yahoo person involved in the talks said. Yahoo said the new version, while taxable, preserved the possibility of future gains because it received the right to sell another 25 percent of Yahoo’s stake at the share price of an initial public offering planned by Alibaba Group. Yahoo would retain the rest.

SHANGHAI/NEW YORK (Reuters) – Chinese Internet entrepreneur Jack Ma’s Alibaba Group is buying back up to half of Yahoo Inc’s 40 percent stake for $7.1 billion (4.49 billion pounds) in a deal that moves the Chinese e-commerce leader closer to a public listing.

Under the agreement, Yahoo will sell one-half of its stake in Alibaba for at least $6.3 billion in cash and up to $800 million in new Alibaba preferred stock. The deal, announced on Monday, caps years of often-acrimonious talks between Alibaba and Yahoo over how the Chinese company could reclaim some or all of the stake that Yahoo bought for about $1 billion in 2005.

Investors pushed up Yahoo shares as much as 3.8 percent after the news even though the reaction was tempered by a big tax bill and questions about Yahoo’s core business, which has been losing ground to Google Inc and other rivals. After tax, the proceeds for the deal will be $4.2 billion, according to Yahoo.

“It’s better to show a path to monetization rather than wait for tax efficiency if that was proving too difficult to achieve,” said Ronald Josey, an analyst at Thinkequity LLC.

Now that the deal has resolved a major distraction for Yahoo shareholders, they may put even more pressure on management to solve problems in the core business, such as the decline in advertising revenue, Josey said.

“Now this hurdle is over, shareholders are looking at how Yahoo could right the ship from a fundamentals perspective.”

Yahoo has been trying for some time to cash in on its Alibaba investment but its efforts have been hurt by management turmoil. While Ma had a strong rapport with Jerry Yang, the Yahoo co-founder who led the initial investment in Alibaba, ties between the two companies soured when Yang was ousted and replaced as Chief Executive by Carol Bartz, who left last year.

SHANGHAI/NEW YORK (Reuters) – Chinese Internet entrepreneur Jack Ma is buying back up to half of a 40 percent stake in his Alibaba Group from Yahoo Inc for $7.1 billion, in a deal that moves the Chinese e-commerce leader closer to a public listing.

Under the agreement, Yahoo will sell half of its stake in Alibaba for at least $6.3 billion in cash and up to $800 million in new Alibaba preferred stock. The deal, announced in a joint statement on Monday, caps years of talks between the two firms over Alibaba reclaiming some or all of the 40 percent stake that Yahoo bought for about $1 billion in 2005.

A source familiar with the deal said Yahoo built in incentives for Alibaba, which operates the popular Chinese online marketplace Taobao, to hold an initial public offering by end-2015.

Yahoo, which has come under fire from shareholders for failing to take aggressive action to reverse a decline in advertising revenue in the face of competition from Google Inc and Facebook, will hand most of the sale proceeds to its stockholders.

“For Yahoo it’s a decent compromise, they were never going to keep all the 40 percent stake and expect to see these guys IPO. I think they sold it off at a pretty reasonable valuation,” said Michael Clendenin at RedTech Advisors in Shanghai. “Yahoo still has a lot of bigger problems ahead of them, I mean, they are a portal so they’re going the way of the dodo bird.”

“Credit to Jack Ma, he’s a wheeler and dealer and he got a very good deal on this one,” he added.

According to the statement, Alibaba would buy back half of Yahoo’s remaining stake – a 10 percent holding – at the IPO price or allow Yahoo to sell those shares in the offering before end-2015. Alibaba Group is valued at $30-35 billion.

SHANGHAI/NEW YORK, May 21 (Reuters) – Chinese Internet entrepreneur Jack Ma is buying back up to half of a 40 percent stake in his Alibaba Group from Yahoo Inc for $7.1 billion, in a deal that moves the Chinese e-commerce leader closer to a public listing.

Under the agreement, Yahoo will sell half of its stake in Alibaba for at least $6.3 billion in cash and up to $800 million in new Alibaba preferred stock. The deal, announced in a joint statement on Monday, caps years of talks between the two firms over Alibaba reclaiming some or all of the 40 percent stake that Yahoo bought for about $1 billion in 2005.

A source familiar with the deal said Yahoo built in incentives for Alibaba, which operates the popular Chinese online marketplace Taobao, to hold an initial public offering by end-2015.

Yahoo, which has come under fire from shareholders for failing to take aggressive action to reverse a decline in advertising revenue in the face of competition from Google Inc and Facebook, will hand most of the sale proceeds to its stockholders.

“For Yahoo it’s a decent compromise, they were never going to keep all the 40 percent stake and expect to see these guys IPO. I think they sold it off at a pretty reasonable valuation,” said Michael Clendenin at RedTech Advisors in Shanghai. “Yahoo still has a lot of bigger problems ahead of them, I mean, they are a portal so they’re going the way of the dodo bird.”

“Credit to Jack Ma, he’s a wheeler and dealer and he got a very good deal on this one,” he added.

According to the statement, Alibaba would buy back half of Yahoo’s remaining stake – a 10 percent holding – at the IPO price or allow Yahoo to sell those shares in the offering before end-2015. Alibaba Group is valued at $30-35 billion.

May 15 (Reuters) – Sina Corp sounded a bearish note for the coming quarters, warning that further losses may lie ahead because of increased investment into its microblogging platform Weibo, China’s version of Twitter.

China’s largest Internet portal and media website posted a first-quarter loss that was smaller than Wall Street had expected after advertising revenue shot up 9 percent despite a weak domestic market, propelling its shares 7 percent higher in after-hours trade.

However, Sina said margins will be hurt as it increases Weibo investment to $160 million this year, up from $110-$120 million last year, with the bulk of the costs going to hiring and upgrading infrastructure.

“We may still incur operating loss in the second quarter as we continue to invest in our Weibo platform. Our operating results this year may continue to suffer,” said Charles Chao, Sina’s chief executive on an earnings call.

Analysts, on average, were expecting a second-quarter profit of $4.94 million, according to Thomson Reuters I/B/E/S.

Sina saw brand advertising revenue jump to $78.5 million in the first quarter from $72.3 million a year earlier.

Chao said China’s overall advertising market is likely to remain weak in the current period but some of Sina’s advertisers, such as automakers, m a y not be as badly hit.

BEIJING, May 11 (Reuters) – Baidu Inc, China’s largest search engine, will launch a new smartphone partnership next week, that will see the smartphone use an upgraded version of its mobile operating system, a senior company executive said on Friday.

Baidu will announce the tie-up next week for new mobile devices, similar to Baidu’s partnership with Dell Inc last December when Dell launched a smartphone running on Baidu’s Yi platform. However, the new smartphones will run an upgraded version of Baidu Yi and will be called Baidu Cloud.

“We have a few partnerships coming up and will announce it in a week,” Wang Jing, Baidu’s vice president of engineering and head of mobile, told Reuters.

Wang said the firm was in talks with “global” handset manufacturers to make smartphones with Baidu’s mobile operating system, for the Chinese market.

Wang also said Baidu was moving towards becoming a platform company that offered products across a spectrum of devices, from being a products company.

The focus on cloud computing comes as more people access the Internet from their mobile phones rather than desktop, putting pressure on Internet companies, such as Google and Facebook Inc , to develop robust mobile platforms from which people can still use their services.

Last year, Baidu launched its mobile platform, Yi, in China to compete with Google Inc’s Android mobile operating system and Apple Inc’s iOS.

BEIJING (Reuters) – Amazon.com Inc (AMZN.O: Quote, Profile, Research), the world’s largest online retailer, is prepared to run losses in China to secure a position among the top three players by sales in the country’s cut-throat but booming e-commerce market, its China chief said on Thursday.

China’s $36 billion e-commerce industry is hyper-competitive with online retailers and marketplaces such as Dangdang Inc (DANG.N: Quote, Profile, Research), 360buy and Alibaba Group’s Taobao Mall frequently launching price wars and marketing campaigns to win market share.

The latest salvo was fired by Taobao Mall earlier this week when it said it will spend 200 million yuan to subsidise a four-month home appliances and electronics promotion, to compete with 360buy.

“We are not so concerned about when we make money or how much money we make,” Amazon’s Wang Hanhua told Reuters in an interview.

“We tend to take a very long-term view of things. We believe that China’s e-commerce eventually will be huge. It’s not going to be a winner-takes-all market…We will definitely aim for the top three in China,” he said.

Figuring out where Amazon ranks now is tricky. The company reported $5.76 billion in first-quarter sales from international sites including China, but it does not break down results by country. Wang declined to provide figures for China.

Industry data that measures market share in China is calculated according to transaction volume, not sales. Based on those figures, Amazon trails far behind 360buy, which controls half the business-to-consumer online market to Amazon’s 7 percent.

SHANGHAI/HONG KONG April 27 (Reuters) – Shares in China’s People.cn Co Ltd closed 74 percent higher on their first day of trading on Friday, putting a market value higher than the New York Times on the state-backed news portal after a $219 million public offer.

But its performance contrasted with the flat Hong Kong debut of the very different Haitong Securities Co, China’s No. 2 brokerage by assets, which raised $1.7 billion in Asia-Pacific’s biggest share offering this year.

And analysts said that despite the success of People.cn’s sale there was little sign of a broader pick up in Asia-Pacific equity capital markets after what Thomson Reuters data shows to be their slowest start in four years.

In Shanghai, demand for People.cn shares was so high that the stock was suspended for most of the afternoon after triggering multiple circuit breakers on the stock exchange.

“Investors are scrambling for People.cn due to its scarcity,” said Liu Guanwu, a media IPO analyst with Beijing-based consultancy Analysys International.

At its Friday close of 34.72 yuan, 73.6 percent higher than the initial public offering price of 20 yuan, People.cn was worth 9.6 billion yuan ($1.5 billion), more than New York Times, which has a market capitalization of $951 million.

“Institutional investors I have spoken to seem rather interested in this stock primarily because it’s a government entity,” said Chen Yi, an equity analyst with Xiangcai Securities in Shanghai.

SHANGHAI (Reuters) – China’s People.cn Co Ltd finished 74 percent higher on its first day of trading in Shanghai after a $219 million IPO as investors flocked to the state-backed news portal, giving it a bigger market value than the New York Times.

Demand for People.cn shares were so high that the stock was suspended for most of the afternoon, after triggering multiple stock exchange circuit breakers.

“Investors are scrambling for People.cn due to its scarcity. As long as you’re a Chinese person, you would know the company,” said Liu Guanwu, a media IPO analyst with Beijing-based consultancy Analysys International.

At its Friday closing price of 34.72 yuan, 73.6 percent higher than the initial public offering price of 20 yuan, People.cn was worth 9.6 billion yuan ($1.5 billion), more than New York Times, which has a market capitalization of $951 million.

The stock opened at 31.01 yuan and was temporarily suspended when it triggered a stock exchange circuit breaker after rising 10 percent from its opening price. It was suspended again till the last five minutes of the trading day, after triggering another stock exchange circuit breaker when more than 80 percent of the stock changed hands.

“Institutional investors I have spoken to seem rather interested in this stock primarily because it’s a government entity,” said Chen Yi, an equity analyst with Xiangcai Securities in Shanghai.

“From the look of things, retail investors seem to have also followed suit today,” Chen said.