Alibaba ‘interested’ in buying all of Yahoo
http://money.cnn.com/2011/10/01/technology/alibaba_yahoo/index.htm
A Chinese company, Alibaba, is looking to purchase Yahoo. At a press conference at Stanford, Jack Ma, the CEA of Alibaba, said his company is “interested” in buying all of struggling online media firm Yahoo. This rose the stocks of Yahoo 3%, however Yahoo refuses to make any remarks until after their press conference on Monday. Although some claim “Yahoo’s only hope is to sell itself,” Alibaba is not the only company looking to purchase Yahoo. Three years ago, Microsoft offered to buy Yahoo for $47 billion, although Yahoo’s current market value is a mere $16.6 billion. Yahoo has already given up on inovation and has partnered up with Microsoft’s bing, which should make Microsoft and Yahoo more inclined to make a deal together. Similarly, Yahoo has 40% of the stake in Alibaba, which is more motivation for Alibaba to purchase Yahoo. Regardless, Yahoo is failing in the search engine market to the enormous capabilities of Google, so it must be sold soon to cut its losses and not lose money.
This relates to what we have been discussing in class by considering Yahoo, Microsoft, and Alibaba as nodes in a network. Alibaba is connected to many nodes, Yahoo being one of them, whereas Yahoo is only connected to Microsoft and Alibaba. Microsoft is also then connected to many other nodes. Yahoo must make a deal with either Microsoft or Alibaba, which could potentially put Yahoo in a power position, except the fact that neither Microsoft or Alibaba needs to make a deal with Yahoo. Other complexities not covered in class include the fact that Yahoo has 40% of the stake in Alibaba, so Alibaba does have more internal motivation to purchase Yahoo than most other companies. This makes a complex network where Yahoo is looking to make a deal, and it can use the fact that multiple companies want to buy it to get as much money as possible from either Alibaba or Microsoft.