Tomahawk, WI 03/04/2014 (Basicsmedia) – Though Yahoo! Inc. (NASDAQ:YHOO) has been particularly quite in the news, its stake in Alibaba as well as fears over NSA spying scandal continue to make news frequently.

Should You Buy Yahoo Inc?

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The Alibaba Tangle:

Yahoo! Inc. (NASDAQ:YHOO) had invested in Alibaba when the company was struggling to rise on its feet. The stake has now grown multi fold and by all reckoning Yahoo has recovered more than its investment. It now holds a 24% stake in the company and will have to liquidate another 10% before the reported IPO of Alibaba. Analysts value Alibaba to be worth $35-$40 billion, so Yahoo can expect $3.5 – $4 billion from its 1% stake sale. The IPO has been postponed several times and recently rumors surfaced that Alibaba is trying to list on American markets. Though the rumors have been quelled by the company, doubts still remain. In case the IPO does not happen by 2014, Alibaba will have to renegotiate the deal with Yahoo.

The NSA Tangle:

More worrisome than the Alibaba IPO is news that NSA had access to millions of webcam chat users using Yahoo’s platform. It is also said that both NSA as well as GCHQ, the British spy agency, had access to very intimate and explicit images and they may have stored these images for future use. This can have a ripple effect on Yahoo! Inc. (NASDAQ:YHOO). It has also been reported that many users have deleted their Yahoo accounts over these fears. However, the real cause of concern lies in the Asian markets. The company has over 80 million active monthly users in Southeast Asia. China has already reacted very strongly when the news broke that NSA was spying on its partners as well as enemies using such companies services. Many American companies have been hit, Cisco Systems Inc (NASDAQ:CSCO) reported a 18% fall in revenues from the Chinese markets in three months while International Business Machines Corp. (NYSE:IBM) has also reported a fall of 22%. The loss of consumer faith would be very difficult to heal.

It seems that Yahoo! Inc. (NASDAQ:YHOO)’s prospects are very closely tied with China, one way or the other.

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