Alibaba's blowout IPO raises bar for Internet valuations everywhere

You know that tech IPOs are back in style when financial reporters keep describing them in sentences that end with "the biggest SOMETHING since Google."

In August, it was VMWare, the virtualization software company that executed the biggest tech offering since Google's debut in August, 2004.

This week, it's the turn of Alibaba.com, the Chinese e-commerce company that raised just over $1.5 billion in the largest Internet-related IPO since Google and the largest tech offering ever on the Hong Kong exchange.

The company's shares nearly tripled in their first trading day, giving Alibaba a market value north of $25 billion, or $1,000 for each of its 25 million registered users.

Alibaba earns its money charging fees to businesses that list goods for sale on its site, where buyers and sellers from mainland China and elsewhere can find each other. The firm's parent company, which has been slugging it out with eBay in the Chinese e-commerce market, also operates the auction site Taobao.com and the Alipay electronic payment service.

Now, clearly, this company may be overpriced right now, given that it's trading either a little over or under 200 times expected earnings, depending on how you measure earnings and whether you're talking about 2007 or 2008 results.

But the strong early demand shows that investors' appetite for fast-growing tech companies extends beyond the U.S. investors who bought VMWare and now includes overseas investors.

Given that IPO's, like acquisitions, help set the prices of future deals, the Alibaba offering is good news for the executives and investors in Internet startups who think they're close to ready for one of those two equity exits.

The IPO should also give a nice bump to the financials of Yahoo, which took a 40% stake in Alibaba when the former rivals merged their China operations.