Alibaba is closer to leaving the Yahoo! nest.

Yahoo has made a whole lot of mistakes in recent years.  Since ousting founder Jerry Yang in 2008 as CEO, the company has had five bosses.  Their most recent CEO was fired over his inaccurate resume and false credentials.  They’ve lost so much of their market share to Google, have been the target of multiple buy-out bids, and are struggling to find a new direction.  The one thing Yahoo has done right was invest in Alibaba, a Chinese web portal that has become the Google of China.  Yahoo is selling part of its share of Alibaba for a staggering $7.1 billion dollars; Yahoo bought into Alibaba for $1 billion in 2005 and that investment has paid off handsomely.

“The transaction will establish a balanced ownership structure that enables Alibaba to take our business to the next level as a public company in the future,” said Alibaba CEO Jerry Ma.

According to the terms of the deal, Yahoo will sell off half of its share of Alibaba and will license its brand and some proprietary technology to Alibaba, which has become a $35 billion dollar company in recent years.  Yahoo will receive $800 million in preferred stock and $6.3 billion dollars in cash.  Yahoo plans on buying back about $5 billion in stock to improve performance for shareholders and to make up for the loss of some of Alibaba’s income stream.  Yahoo made $172 million from its investments in the first quarter of 2012, most of which comes from Alibaba.

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