Yahoo May Invest in Chinese Firm

Online media company Yahoo Inc. has been in talks to buy a stake in Alibaba.com, a Chinese business and consumer e-commerce site, according to a media report.

Forbes.com reported Sunday that Yahoo was considering paying about $1 billion to acquire a 35% stake in Alibaba in a move brokered by Japanese investor Softbank Corp.

A spokeswoman for Yahoo, based in Sunnyvale, Calif., was not immediately available for comment. A spokesman for Alibaba in Hangzhou, China, declined to comment on the report.

Alibaba, whose largest investor is Softbank, had cash revenue of $68 million last year, more than double the $30 million it had in 2003.

The company was founded in 1999 by Jack Ma, an English teacher turned entrepreneur, as a business-to-business bridge between local Chinese producers and foreign buyers.

Softbank also is the biggest outside shareholder in Yahoo.

A tie-up between Yahoo and Alibaba would pose a challenge to EBay Inc. in China, where Alibaba competes with the U.S.-based online auction leader through auction site Taobao.com.

At the end of last year, Yahoo said in its annual regulatory filing that Softbank owned about a third of its Yahoo Europe and Yahoo Korea units. Yahoo owns one-third of Yahoo Japan Corp., which is controlled by Softbank.

The Forbes.com report follows the U.S. market debut of Baidu.com Inc., a Chinese Web search company whose shares rose almost fivefold Friday in their first day of trading.

Also Monday, Yahoo said it had begun allowing users to make telephone calls and search the Internet via its instant messaging system instead of relying only on Web browsers or e-mail.

The upgrade of Yahoo’s instant messaging service is designed to attract and hold a youthful audience accustomed to using broadband Web connections, analysts said.

The focus on voice and other enhancements in Yahoo’s instant messaging service follows similar improvements that Time Warner Inc.’s America Online has made in its AOL Instant Messenger, according to ComScore Media Metrix data.

Yahoo shares Monday rose 42 cents to $33.94.