Will Alibaba Buy Yahoo?

Alibaba (1688.HK) reported 49% increase in net profits. Cannot find anything ugly with that. That’s following a year of investment. So therefore management has made the correct moves. The China economy continues to be a powerhouse even with a potential slow down. Yahoo (YHOO) owns 39% and can only be happy with the trend line.

Google (GOOG) is in a snit with China. The Chinese are smack talking Google challenging them to like make up their mind about following the rules. Google next move will not resonate well.

Organic growth in Alibaba is encouraging but they clearly are looking for acquisitions. The Chinese have a great deal of pride. So why not buy Yahoo. Yahoo shareholders are lost children in a big forest crying out for help and rescue. Microsoft says it will not buy Yahoo. The western world cannot keep expanding into China without Chinese entities buying into Western companies.

Is Yahoo strategic? If Obama wants to avert a stupid trade war he will allow the purchase.

Speculation sure. But don’t for a second think a strategic thinker in Beijing has not gamed this one out. The Beijing power elite would be most pleased to see this one come together.