Yahoo! Inc. (NASDAQ:YHOO) China has officially shut down its email service with a message to users that they should transfer to Alimail, Alibaba.com Limited (HKG:1688) (OTCMKTS:ALBIY)’s email service. The closure has been coming for a while, Catherine Shu reports on TechCrunch, and was announced on April 18.
Yahoo’s stake in Alibaba
Yahoo! Inc. (NASDAQ:YHOO) bought a 40 percent share in Alibaba.com Limited (HKG:1688) (OTCMKTS:ALBIY) back in 2005 for $1 billion, and since then Alibaba has become one of the biggest companies in the Chinese internet sector, while Yahoo China has been a more of a side player. Even though Alibaba bought back 16 percent of its stock from Yahoo a few years ago, it seems that Yahoo thinks its 24 percent stake is valuable enough to send custumers over to Alibaba instead of competing for business.
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Yahoo China’s music service was also shut down earlier this year, leading some to believe that closing down Yahoo China email had already been planned, but that doesn’t mean Yahoo has given up on the Chinese market entirely. Yahoo! Inc. (NASDAQ:YHOO) recently bought Ztelic, a Chinese social media startup, saying that it would play an important role in the company’s future, though it didn’t give any specifics about what that role would be. Considering Ztelic will stop supporting its existing products, Yahoo may have simply decided to buy the company as an easy way to bring proven talent into their social media research division.
Yahoo on a spending spree
Yahoo! Inc. (NASDAQ:YHOO) has been on a spending spree over the summer, buying seven other companies before Ztelic, including Tumblr and RockMelt, mostly focused on the growing mobile market. In light of those purchases, the closing of Yahoo China email services and the purchase of Ztelic could be seen as a strategic regrouping. Instead of fighting a losing battle over email, where there isn’t much money to be made anyway, Yahoo is looking to fight in the mobile space with the promise of strong growth from app purchases and targeted advertisements.
Yahoo! Inc. (NASDAQ:YHOO) still has cash on hand for more purchases, and no one should be surprised if CEO Marissa Mayer decides to bring more promising startups into the fold as the company seeks to redefine itself.