Yahoo, Alibaba: We're "committed to" negotiations

May 15, 2011 - 5:44 PM

NEW YORK (AP) — Yahoo Inc. and Alibaba Group released a joint statement Sunday saying they are "engaged in and committed to productive negotiations," giving few details but aiming to present a united front as tension grows between the two tech giants.

Silicon Valley-based Yahoo owns 43 percent of Alibaba, a powerful Internet company in China, but the relationship has been strained. On Tuesday, Yahoo surprised Wall Street when it said that Alibaba had spun off its online payment service, Alipay. Investors, worried that Yahoo's stake in Alibaba will now become less valuable, sent the stock down. Yahoo closed at $16.55 on Friday, down 11 percent from its Tuesday close.

The one-sentence statement, released Sunday afternoon, said: "Alibaba Group, and its major stockholders Yahoo! Inc. and Softbank Corporation, are engaged in and committed to productive negotiations to resolve the outstanding issues related to Alipay in a manner that serves the interests of all shareholders as soon as possible."

The statement echoed an equally vague statement that Yahoo had made Tuesday. Dana Lengkeek, a Yahoo spokeswoman, declined to comment on questions about who was involved in the negotiations or what Yahoo wants from them. Representatives for Alibaba and Softbank, a Japanese firm that is also a longtime investor in Alibaba, didn't immediately return messages for comment.

Alibaba's success has helped bolster Yahoo as the Sunnyvale, Calif., company has struggled to keep up with Google Inc. The six-year investment has also been a way for Yahoo to keep a toehold in fast-growing China after it and other companies, including Google, have had a hard time growing their own businesses in the heavily regulated and politicized country.

In the first quarter, Yahoo's net income fell 28 percent. The net income of Alibaba.com, the flagship company of Alibaba Group, rose 37 percent.

In Tuesday's regulatory filing, Yahoo said that Alibaba had spun off Alipay to another company owned by Alibaba Group's CEO, Jack Ma, so it could more quickly obtain "an essential regulatory license." Yahoo also said at the time that it was engaged with Alibaba and Softbank in "ongoing discussions regarding the terms of the restructuring and the appropriate commercial arrangements related to the online payment business."

Ma has become more antagonistic since Carol Bartz, a brash Silicon Valley veteran, became Yahoo's CEO in January 2009. With Alipay under his control, analysts believe Ma could have more negotiating power if Yahoo tries to sell its stake in Alibaba.