Alibaba IPO eclipsed by Yahoo's bad day at Congress
Tuesday should have been a day of celebration for Yahoo founder and Chief Executive Jerry Yang.
Alibaba.com, a business-to-business site of which Yahoo owns nearly 30 percent, went public on the Hong Kong market and nearly tripled in price. And Yang turned 39.
Instead of partying in the halls of Sunnyvale, Calif.-based Yahoo, Yang, and Yahoo General Counsel Michael Callahan were in Washington, D.C. getting called moral "pygmies" in a hearing before the U.S. House of Representatives.
Their crime? Providing information to the Chinese government about a Chinese journalist that landed him in jail for 10 years for allegedly leaking "state secrets." Callahan told Congress at a February 2006 hearing on tech companies cooperating with the Chinese government that Yahoo didn't know the nature of the investigation when it gave information to Chinese authorities. Callahan says he learned six or so months later what the details of the investigation were and should have provided that updated information to Congress.
Not only were Yang and Callahan berated for Yahoo's cooperation with the Chinese government in several cases that led to dissidents being jailed, but Yang was asked to beg forgiveness from the mother of one of the jailed men as she sat directly behind him crying. Lawmakers also pressured Yang to compensate the victim's families.
Definitely not how Yang wanted to spend his birthday, I'm sure.
While Yahoo's leader was getting verbally lashed in public, the value of the company's assets were growing as Alibaba.com's stock rose to nearly HK$40 after opening at HK$13.50. The IPO raised $1.5 billion in what was the largest IPO for a Chinese company. Yahoo Japan shares also rose, about 20 percent. But Yahoo's shares in the U.S. were down 4.5 percent to $29.93.
Bear Stearns raised its price target on Yahoo from $30 to $34 based on the performance of its Asian assets, particularly the Alibaba.com IPO.
"We are clear leaders in both Hong Kong and Taiwan, while collaborating with the China Yahoo team to roll out a series of innovative services like People Search, Omni Search and others," a Yahoo spokeswoman said before the Alibaba.com IPO. "China is also one of the fastest growing Internet markets in the world, and it's an important market in which to have a leadership position."
