Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Yahoo to keep more of Alibaba, share half of IPO proceeds

Published 07/15/2014, 04:18 PM
Updated 07/15/2014, 04:34 PM
Yahoo to keep more of Alibaba, share half of IPO proceeds

Yahoo to keep more of Alibaba, share half of IPO proceeds

By Alexei Oreskovic

SAN FRANCISCO (Reuters) - Yahoo Inc pledged to pay its shareholders at least half the proceeds from Alibaba Group Holding Ltd's mega-IPO this fall and plans to keep a larger stake in the Chinese e-commerce company than expected.

Yahoo's roughly 24 percent stake in the world's largest Internet retailer is viewed on Wall Street as its most prized asset. On Tuesday, it said Alibaba had agreed to reduce the number of shares Yahoo is required to sell in the IPO to 140 million shares from 208 million previously.

That news helped offset the U.S. company's disappointing results on Tuesday. Yahoo also forecast third-quarter net revenue, excluding fees paid to partner websites, of $1.02 billion to $1.06 billion, less than the $1.1 billion Wall Street analysts had expected on average.

"What you see is the fundamentals at core Yahoo continue to deteriorate, but there's at least some good news on the Alibaba front," said Macquarie Research analyst Ben Schachter.

"The idea is that Yahoo shareholders can participate and benefit from the upside to Alibaba post the IPO, as opposed to just having to sell more stock in the IPO."

Alibaba is expected to list its shares on the New York Stock Exchange later this year in what could be the largest ever U.S. technology initial public offering. Investors have valued the company, which handles more e-commerce than Amazon.com Inc and eBay Inc combined, at as much as $200 billion.

Finance Chief Ken Goldman said in a statement accompanying Yahoo's results on Tuesday that the company was committed "to return at least half of the after-tax IPO proceeds to shareholders."

Yahoo is trying to revitalize a stagnant online advertising business as Chief Executive Marissa Mayer marks her 2-year anniversary at the Internet company.

The former Google Inc executive has revamped many of Yahoo's Web products but its ad sales are still weak while rivals such as Google and Facebook Inc continue to post strong, double-digit revenue growth.

Yahoo's net revenue, which excludes fees paid to partner websites, decreased 3 percent year-on-year to $1.04 billion in the three months ended June 30. Analysts polled by Thomson Reuters I/B/E/S were looking for net revenue of $1.084 billion.

Revenue in Yahoo's display advertising business decreased 8 percent to $436 million in the second quarter. The average price per ad decreased 24 percent, while the number of display ads sold increased 24 percent.

© Reuters. A Yahoo logo is pictured in front of a building in Rolle

Shares of Yahoo were barely changed at $35.57 in after-hours trading.

(Reporting by Alexei Oreskovic; Editing by Richard Chang)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.