Valuing Yahoo's stake in Alibaba

MarketWatch asks an interesting question with no easy answer. How much is Yahoo's stake in the Alibaba Group worth?

The easiest piece is of the puzzle is Alibaba.com. Yahoo still holds a 29% stake in Alibaba.com which is worth about US$2.9 billion (at a recent share price of HK$15.30).

The other businesses are much harder to value. Alipay reportedly holds a 75% market share in China, with 300 million registered users - compared to Paypal's 184 million accounts. Alipay has a reported daily transaction value of US$176 million.

Taobao has 190 million registered users (vs. eBay's 90 million active users) and goods worth US$29 billion traded on the platform in 2009. Ebay recorded US$60 billion in goods sold in 2009. Taobao's revenues are not known, but thought to be in the US$300 million range.

Citigroup analyst, Mark Mahaney estimates that Yahoo's stake could be worth US$13 billion in off-balance sheet value. Yahoo is currently valued at about US$21.5 billion. One way we could find out the value of that 40% is through a sale. At a recent shareholder meeting Alibaba's management said that they were ready and willing to buy back Yahoo's stake, but don't expect to see that announcement anytime soon. Yahoo will likely hold on for as long as they can as Alibaba's growth prospects are far better than theirs.

Unleashing the lawyers on the... lawyers

The opening of any venue inevitably features some teething problems. That is why it is surprising that the Marina Bay Sands chose to host a lawyer's association earlier this month! It will come as a shock to no one that this one has ended up in court.

The organiser, the Inter-Pacific Bar Association (IPBA), claims that rooms were unfinished, air conditioning malfunctioned, bathroom fixtures were not working and that there was a power failure during the keynote address.

No doubt, Sheldon Adelson, the controlling shareholder of the Las Vegas Sands Corp., has a few lawyers of his own on retainer. The Sands claims that the event was a success and that the overwhelming majority of delegates had no complaints.

Marina Bay Sands is seeking US$214,000 from IPBA and has filed suit in the Singapore High Court. IPBA has stated, “Now that we have been dragged to court we will defend the claim and issue a counterclaim as well.”

This one could drag on for awhile.

Global Sources to buy back shares at $9

Global Sources released first quarter results today. Revenues were US$33.9 million - down 2.6% compared with Q1 2009. The online and exhibitions businesses held steady, but print revenues fell from US$7.5 million last year to US$6.5 million in the recent quarter. GAAP net income increased to US$2.6 million - up from US$1.2 million in Q1 2009.

More interestingly, the company announced plans for a cash tender offer for up to US$60 million in outstanding common shares at US$9.00. That represents a 32% premium over yesterday's closing price of US$6.83. The company could end up buying back as many as 6.67 million common shares or close to 15% of outstanding shares.

Stay tuned to see how quickly the NASDAQ-listed shares move tonight.

HKTDC opens shop on Taobao

The Hong Kong Trade Development Council's (HKTDC) Design Gallery has opened a sales channel on Alibaba's Taobao.com. The HKTDC uses the Design Gallery to promote and sell products designed in Hong Kong. There are Design Gallery retail shops on-site at the Hong Kong Convention and Exhibition Centre, the Hong Kong airport and in Beijing, but this is its first serious online effort.

The site on Taobao gives the HKTDC access to Taobao's impressive 143 million registered users in China.

The HKTDC is proving to be quite open to experimenting new platforms and applications. In November last year, the trade promotion body launched iPhone and Blackberry apps for all of its 30+ Hong Kong-based exhibitions. If we are not mistaken, the HKTDC was the first exhibition organiser to offer these type of apps. It will be worth watching where the HKTDC takes this next. There are plenty of emerging opportunities to link exhibitions with online platforms and the HKTDC seems to be willing to explore.

Ali-Hedge Fund

During yesterday's Alibaba.com quarterly shareholders' meeting, CEO David Wei reportedly announced that billionaire George Soros invested in the Hong Kong-listed company in the third quarter of 2009.

The investment followed a visit with Jack Ma at Ali-HQ last summer in Hangzhou. Wei also said that Soros is now one of the largest individual shareholders of Alibaba.com.

After Bloomberg posted the story at mid-day today, Alibaba shares shot-up 15%, before settling back down at HK$15.82, a 5.33% increase. Not bad, as the Hang Seng Index was down 1.4% on the day. I am not sure if Soros is still considered a "value investor," but Alibaba.com has a sky-high PE of 74. Maybe George should stop by Hong Kong and visit Global Sources which looks like a steal with a PE of 21.

Xinhua Finance Faces Delisting in Tokyo

It has been a long, unfortunate ride down to the bottom for Tokyo-listed Xinhua Finance. Reuters reported yesterday that the company is now facing delisting due to the continually delayed release of its 2009 results.

It was once one of the more interesting and entrepreneurial business media companies in Asia. Founded by Fredy Bush in 1999, the company was primarily focused on providing business and financial information on companies operating in China. Through acquisitions, the company built portfolio products and services including financial ratings, indices and data.

Then everything seemed to come undone. In 2008, the company sold off most of the companies it had acquired just a few years earlier, revenues plummeted, Fredy Bush resigned and left the company altogether - although she maintains some ownership. With a delisting in the works and the law suits that will certainly follow, its seems the company's troubles are far from over.

RBI holds on to shuttered brands

Reed Business Information (RBI) announced that it will hold on to the brands of the unsold titles it closed last month. After stating that the company would shut down some 23 titles, other B2B publishers and former RBI staff lined up for the chance to acquire the assets of some of these closing titles.

RBI is retaining Chain Leader, Converting, Graphic Arts Blue Book, Graphics Arts Monthly, Purchasing, Restaurants & Institutions and Trade Show Week.

Since RBI made the announcement last month, the following deals have been inked:

MB Media, set-up by former RBI publishers, acquired Construction Equipment and Professional Builder, Building Design+Construction, Construction Bulletin, Custom Builder, Housing Giants, Professional Remodeler, SpecCheck, BDCnetwork.com, ConstructionEquipment.com, HousingZone.com, LogInAndLearn.com and VisibleCity.com.

Former RBI publisher, Dan Hogan, reportedly acquired Hotels and Foodservice Equipment and Supplies.

Peerless Media with the backing of EH Publishing, acquired Logistics Management, Material Handling Product News, Modern Materials Handling and Supply Chain Management Review.

It looks like RBI is waking up to some of the value it walked away from perhaps a little too quickly.

Chinese exporters prefer exporting...

The South China Morning Post reports that China's Ministry of Commerce has largely failed in its efforts to convince exporters to sell to domestic retailers and wholesalers.

Challenges include small order quantities, unattractive payment terms and intellectual property theft.

Beijing has been experimenting with strategies to lessen the economy's reliance on exports. As part of that, some 8,000 large- and medium-sized domestic retailers were encouraged to attend the Canton Fair which closed last week.

Exporters claim that the domestic market is complicated, fragmented and loaded with risks. Dealing with overseas buyers results in (close to) risk-free payments and larger orders. Export order terms are typically 30% in advance and the remainder is paid by in cash or a letter of credit before the goods ship. In the domestic market, retailers pay 90 days after the goods arrive. Which would you prefer?

The full article is here (behind the South China Morning Post's payment wall).

Taobao pushes outside China

Taobao took a big step towards internationalizing its reach today. The Alibaba Group subsidiary and Yahoo Japan have announced a deal to allow sellers from both platforms to sell in either market.

Yahoo Japan will host Taobao sellers in the "China Mall" section on its website. This will grant Taobao sellers access to the 60 million plus users of Yahoo Japan. The "TaoJapan" section of the Taobao platform will give Japanese merchants the chance to sell to TaoBao's registered user base which is now more than 190 million.

When the new service launches in June, some 50 million Chinese products are expected to be listed on Yahoo Japan and Taobao is expected to list eight million Chinese products.

If Taobao goes increasingly international, the difference between a listing on Taobao and Alibaba.com could become blurry. Taobao is a B2C-focused e-commerce platform and Alibaba.com is B2B, but that distinction will erode as the two companies compete for very similar product listings.

Tarsus moves to fill Tradeshow Week space

Tarsus Online Media, a subsidiary of the U.K.-based Tarsus Group, has announced plans to redesign its Trade Show News Network (TSNN) website. The move follows the 16^th April announcement by Reed Business Information stating that it has shuttered 23 titles including Tradeshow Week.

TSNN will develop online content and offer a number of exhibition industry blogs. TSNN will also launch an event (as part of its MTO Summit) designed to replace Tradeshow Week’s “Fastest 50” which focused on recognizing the fastest growing exhibitions in the U.S. and Canada.

Adam Schaffer, the former publisher of Tradeshow Week, was quoted in the TSNN press release:

“I am thrilled to see that the spirit of innovation and service to our industry continues with TSNN and Tarsus stepping into these important shoes. Their commitment and dedication is clear, even at this early stage, by engaging important industry thinkers and writers and also by setting a date for the awards event this November.”

More details are available here.