On Thursday, Yahoo, the US portal, announced it would pay $US1 billion ($1.3 billion) as part of a deal to gain a 40 per cent stake in Alibaba, a Chinese e-commerce company that had cash revenues of only $US68m in 2004. The deal followed hard on the heels of a stunning Nasdaq debut this month by Baidu.com, the Chinese internet search company. Baidu’s shares quickly soared to levels that gave it a price-to-earnings ratio of more than 2000.
For some observers, such valuations are a return to the internet insanity of the final years of the last century. But the hopes and money being invested in Chinese internet ventures are not so easily dismissed.
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