There's a whole lot of talk about Chinese Internet companies here lately, talk that's been capped off with the stunning (or is the word startling?) IPO debut of Baidu (NASDAQ:BIDU) late last week. No wonder some investors might be intrigued by rumors in the news that Yahoo! (NASDAQ:YHOO) is in talks to take a significant stake in a Chinese Internet auction firm.
According to various news sources, Yahoo! is in discussions to snap up a 35% stake -- a transaction that is expected to have a price tag of nearly $1 billion -- in Alibaba. This is supposedly by no means a done deal, with Alibaba talking to other companies as well. (Let your imagination run wild with that information.)
Well, given some of the China craze here lately, it's hard to ignore some correlations to, say, five years ago or so -- not the least of which was Baidu's debutlast week, when the stock skyrocketed by an eye-popping 300-plus percent. Alibaba is a business-to-business (B-to-B) auction company, a term that might also give some people a serious case of flashback.
At any rate, it's no secret that U.S. Internet giants are looking hungrily at China. Consumer auction giant eBay (NASDAQ:EBAY) has made it clear that it plans to attempt to dominate China and has described China's market as having the potential to be second only to the U.S. -- cases in point, eBay's acquisition of EachNet and its recent word that PayPal is entering China. Google (NASDAQ:GOOG) is also seen trying to break into the Chinese market and said last month it plans to open an R&D center in the country.
And of course, there are the many hot companies deeply immersed in China, such as Sina (NASDAQ:SINA), NetEase (NASDAQ:NTES), and ShandaInteractive (NASDAQ:SNDA). (Indeed, way back in early 2004, Yahoo! did some teaming up with Sina to form an auction site to take on eBay's EachNet.)
Today's word about Yahoo! underlines the importance of the massive Chinese market. And let's face it: If Yahoo! does acquire Alibaba, it will be taking on eBay in a big way. If someone else snaps the company up, it might be questionable as to how far Yahoo! can get in the company. It's not surprising that investors and the public alike will watch the Internet giants' battles over China's Internet turf with curiosity.
eBay and Sina are Motley Fool Stock Advisor picks. Shanda Interactive and NetEase are Motley Fool Rule Breakers stocks.
Alyce Lomax does not own shares of any of the companies mentioned.
