UPDATE 2-Yahoo seeking up to $500 mln for small business unit

* Yahoo seeking up to $500 mln for small business unit

* Private equity, corporate buyers could be interested

* Yahoo Hot Jobs, Zimbra also up for sale (Adds quotes, details on Yahoo strategy, Zimbra sale, shares)

By Alexei Oreskovic and Anupreeta Das

SAN FRANCISCO/NEW YORK, Sept 21 (Reuters) - Yahoo Inc (YHOO.O) hopes to get up to $500 million for a unit that hosts websites for small companies, after putting it on the market for several months, two people familiar with the matter said.

Yahoo has received interest from corporate buyers and private equity firms, one of the sources familiar with the situation said. It is unclear if any party has made an offer.

But some potential corporate buyers who have looked at the asset in recent months have decided not to bid because they think the price is too high, a second source said.

"Yahoo's price expectations are higher than what buyers were willing to pay," this person said, adding that Yahoo was seeking $350 million to $500 million. "People would like to own this asset, but not at the asking price."

As part of its strategy to shed assets that are no longer core to its brand, Yahoo put the unit called Yahoo Small Business up for sale about six months ago, along with HotJobs, its online job classified site, the sources said.

Last week, Yahoo sold its stake in China's top e-commerce company Alibaba.com for $150 million.

The sources spoke on condition of anonymity because the sale process has not been made public. A Yahoo spokeswoman said the company does not comment on rumors or speculation.

The small business division provides domains, email, Web hosting and other merchant services to customers. Sunnyvale, California-based Yahoo, which posted $7.2 billion in revenue last year, does not break out the unit's performance.

STRATEGIC BUYER PREFERRED

Yahoo prefers to sell to another company rather than a buyout shop, believing that a strategic buyer would be more likely to pay a higher multiple for the synergies that the unit has with its own business, the sources said.

The sources suggested that private equity firm General Atlantic LLC may be a potential buyer for the Yahoo unit because it owns Network Solutions, a company that provides similar services to small enterprises. A General Atlantic spokeswoman declined to comment.

Tricia Salinero, the managing director of Foster City, California-based M&A advisory firm Newforth Partners, said there was previously a sense that Yahoo would hold on to the small business unit if the company could not get its desired price.