February 10th, 2012
05:32 AM GMT
Hong Kong (CNN) – When Internet giant Yahoo bought a 40% piece of Chinese business-to-business online company Alibaba in 2005, the $1 billion deal was hailed as a unique coup for the U.S. web site – and a quick way to get a stronger toehold among China’s then-100 million online users.
What a difference seven years makes.
In recent months Yahoo has seen its CEO Carol Bartz and founder Jerry Yang shown the door, followed this week of four board members – including the chairman – departing, as shareholders lose patience with the firm’s performance.
The deal underlines how valuable Yahoo’s holdings in Alibaba have become, and how frustrated Yahoo’s shareholders have become with the company’s lackluster performance.
Meanwhile, the fortunes of Alibaba have risen in tandem with China’s online market, which now eclipses the U.S. with 500 million people online. There was speculation Alibaba – which runs online B-2-B portals and Taobao, an e-commerce website often called “China’s eBay” – may even make a play for Yahoo. Those rumors gained steam after reports its parent company, Alibaba Group, hired a Washington lobbying firm late last year, presumably to head off likely saber-rattling over a Chinese internet firm becoming a player in the U.S. market.
Regardless of how the Yahoo deal pans out, it’s clear Alibaba is looking for a way to expand its reach into the North American market – a mirror image of Yahoo’s China strategy when it bought its Alibaba stake.
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