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Global Sources (ticker: GSOL), which competes with Alibaba and has a strategic agreement with eBay (ticker: EBAY) reported Q2 2005 earnings results today. Chairman and CEO Merle Hinrichs made the following assessment of Yahoo's (ticker: YHOO) acquisition of a 40% stake in Alibaba:

...Well, we're probably as puzzled as many about the pricing of this transaction.

....Yahoo, or, let's say alibaba's purchase of cray hue, doesn't really change the competitive landscape for us. We did not compete with yahoo before. I don't see that we will be competing with yahoo service in the future. Our service with eBay is very specific to the suppliers of China that need and are looking forward to a more direct channel of distribution. And as you know, eBay has the world's largest auction site, and we believe that we have got the right partner in -- both in terms of size, in terms of distribution, global distribution, and certainly in terms of revenue and commitment.

(Quotes are from the CCBN StreetEvents transcript.)

Comment: China blogger Bill Bishop believes the deal creates a powerful Internet business whose only missing component is a games division. He suggests that eBay (ticker: EBAY) stands to suffer from the deal as Alibaba's Taobao has already been taking market share from the US online auction company on a smaller budget. See here.

GSOL chart.

Gsol811

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Source: Alibaba competitor reacts to Yahoo deal (GSOL 2Q05 conf call quotes)