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Housing: Even More Red Flags

Thursday, 11 August 2005 12:00 AM

Scouring the globe for investment opportunities has led investors to conclude that there is one thing hotter than China right now.

Speculators are pouring money into Chinese Internet companies.

Witness last week's IPO of Baidu.com, the Chinese equivalent of America's Google. Baidu's shares quadrupled on the day of the launch, bringing back strong memories of how IPOs used to be during the tech bubble.

Internet-monitoring service Alexa ranked Baidu.com at No. 6 in its global 500 rankings – despite the company's 2004 revenues, which were a meager $14 million.

Companies are increasing the stakes when it comes to getting in on the Chinese economic and Internet miracle.

So it's no surprise that Yahoo! has stepped up to the plate in a bid to buy a sizeable stake in online auction and trading web portal Alibaba.com.

Alibaba – which is also included on Alexa's list of the top 40 global companies – is at an advanced stage of talks with Yahoo!, whose

35% stake in the company might be worth as much as $1 billion.

That would make this the most expensive Internet purchase by a foreigner within China.

China is pushing the envelope in terms of Internet presence.

The rising tide of Internet and mobile phone users in the Asian nation has seen the presence of e-commerce swell, making it a valuable target for growing businesses.

Like Google and Microsoft, Yahoo! has already acquired a stake in other Chinese portals.

This move, however, might thwart the ambitions of eBay, which has also been buying up assets in Chinese online auction companies. It has also made overtures toward Alibaba.com.

For Alibaba, an alliance with Yahoo! could make more sense. That union would create less of an overlap in its core business than a deal with eBay would. Plus, Yahoo's search expertise could possibly outweigh anything that eBay could offer Alibaba.

Alibaba was formed in 1999 but was able to survive the burst of the tech bubble.

From Yahoo's perspective, they could be getting a bargain in light of the rapid rise in the valuation of Baidu.com.

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Scouring the globe for investment opportunities has led investors to conclude that there is one thing hotter than China right now. Speculators are pouring money into Chinese Internet companies. Witness last week's IPO of Baidu.com, the Chinese equivalent of America's...
Housing:,Even,More,Red,Flags
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2005-00-11
Thursday, 11 August 2005 12:00 AM
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