2011-06-01 16:35

The Alipay transfer and its timing is only a small act in a larger drama playing out among Alibaba Group, Softbank and Yahoo, led by CEO Carlo Bartz.

Alibaba's Ma has made it clear he wants to reduce Yahoo's stake in the company, while Softbank and Yahoo in March were in advanced talks for Yahoo to leave its Japanese joint venture transferring its stake to Softbank.

Elinor Leung, a CLSA analyst in Hong Kong, said that even if the two companies were able to agree on Alipay's asset transfer issue, the bad blood that runs between the two is unlikely to change.

"I don't think it's going to resolve the tensions between Yahoo and Alibaba Group," she said. "If they can agree on something right now, the concern (regarding this issue) may become smaller in the future but whether Yahoo's CEO agrees with Alibaba's way of running its business in China are two different things."

Last week Yahoo's Morse said Yahoo had made "some nice progress" in looking at a number of tax-efficient options, including a traditional spinoff or issuing a so-called tracking stock, which would track the performance of the Japanese unit without conferring ownership.

"We really want to do something with these assets. We're not up here saying 'yeah, yeah, we're talking,'" Yahoo Chief Executive Carol Bartz told investors during the analyst meeting last week.

Yahoo is still mulling a number of options, including the separation of its entire Asian businesses, including Alibaba, said a source close to the matter.

Some investors believe those assets could potentially be worth as much as Yahoo's entire current market value and are betting that an IPO by Alibaba, or one of its subsidiaries, could boost Yahoo's valuation.

In the past, investors have also called for Yahoo to sell off part of its investments and buy back its own shares.