Yahoo to Aggressively Broaden R&D in China Despite Spat with Alibaba

Yahoo (YHOO) Chief Product Officer Blake Irving said in Beijing Wednesday that the company is aggressively expanding research and development in China despite worsening tensions between Yahoo and Alibaba Group Holding Ltd., the operator of its Chinese website, the Wall Street Journal reports.

Irving says Yahoo added more than 100 people to its Beijing R&D center last year and will hire at a similar rate this year. Irving also said the China R&D operation has “hundreds” of employees—he didn’t specify a figure—and is Yahoo’s third biggest after centers in California and Bangalore, India.

The executive’s remarks come at the heels of a disclosure last week that China’s largest e-commerce company, Alibaba Group, in which Yahoo is a major stockholder, had spun off its more lucrative business Alipay, Alibaba’s online payment service, to a separate company owned by Alibaba chief Jack Ma. Yahoo said the transfer was done without the knowledge or approval of Alibaba Group’s board.

Shareholders, concerned that Yahoo’s 43% stake in Alibaba will now become less valuable, sent Yahoo’s stock down. Yahoo shares began nosediving on May 10, from $18.50 down to $15.75 in midday trading on Wednesday. Both tech leaders have attempted to present a united front. Over the weekend they released a statement saying they were in “productive negotiations” to resolve differences.

“Alibaba Group, and its major stockholders, Yahoo! Inc. and Softbank Corporation [a longtime investor in Alibaba], are engaged in and committed to productive negotiations to resolve the outstanding issues related to Alipay in a manner that serves the interests of all shareholders as soon as possible,” the statement said.

Alibaba is considered one of Yahoo’s most valuable assets.

In the first quarter, Yahoo’s net income fell 28 percent. The Sunnyvale, California – based web portal reported Q1 net earnings of $223 million versus $310 million for the same quarter a year ago.

Shares of Yahoo were down 12 cents, or 0.66%, to $15.90 at 1:02 pm ET on Wednesday. YHOO shares have traded between $12.94 and $18.84 over the last 52 weeks.

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