|
Yahoo
rakes in
another
jackpot
from
Alibaba's
IPO
BY
MICHAEL
LIEDTKE
AP
Technology
Writer
SAN
FRANCISCO
- Yahoo
is
making
amends
for
years of
blundering
with one
smart
move: an
early
investment
in
China's
Alibaba
Group
that has
turned
into a
multibillion-dollar
boon.
The
latest
windfall
will be
delivered
with
Alibaba's
record-setting
IPO
completed
late
Thursday,
which is
expected
raise up
to $25
billion
for the
e-commerce
company
and its
early
backers.
Alibaba's
shares
will
begin
trading
for the
first
time on
Friday
on the
New York
Stock
Exchange.
Yahoo is
in line
to make
anywhere
from
$8.3
billion
to $9.5
billion
from the
initial
public
offering,
depending
on
whether
investment
bankers
exercise
their
right to
buy
additional
stock in
the
deal.
The
payoff
supplements
the $7.6
billion
jackpot
that
Yahoo
collected
two
years
ago
after
selling
another
chunk of
its
Alibaba
holdings
and
reworked
a
licensing
agreement
with the
Chinese
company.
Even if
Yahoo
ends up
selling
its
maximum
allotment
of 140
million
shares
in the
IPO, the
Sunnyvale,
California,
company
will
still
retain a
roughly
16
percent
stake in
Alibaba
Group
Ltd.
worth
another
$26
billion
to $27
billion.
Not a
bad
return,
considering
Yahoo
acquired
its
Alibaba
stake
for $1
billion
in 2005
in a
deal
engineered
by
company
co-founder
Jerry
Yang and
former
CEO
Terry
Semel.
The
Alibaba
investment
has
helped
ease the
pain of
Yahoo's
struggles
in
Internet
advertising,
the
heart of
its
business.
Yahoo's
annual
revenue
has
slipped
from a
peak of
$7.2
billion
to
projected
$4.5
billion
this
year, a
decline
of
nearly
40
percent.
The
downturn
has
occurred
even as
advertisers
steadily
shift
more of
their
budgets
to the
Internet
and
mobile
devices,
but most
of that
money is
flowing
to Yahoo
rivals
such as
Google
Inc. and
Facebook
Inc.
-companies
that
have
built
more
compelling
digital
services.
Yahoo
has gone
through
seven
different
CEOs
since
2006,
including
current
leader
Marissa
Mayer,
trying
to
figure
out how
to
rejuvenate
its
growth.
Wall
Street's
exasperation
with
Yahoo's
financial
malaise
caused
the
company's
stock to
sink
below $9
in late
2008.
The
company's
stock is
now
hovering
around
$43, a
level
that
hasn't
been
touched
since
2006.
Most of
the
comeback
occurred
during
the last
two
years as
investors
latched
on to
Yahoo's
stock to
profit
from
Alibaba's
success
leading
up to
the IPO.
Yahoo
now must
decide
what to
do with
the
money
that
will
pour in
from
Alibaba's
IPO.
Mayer
has
promised
that at
least
half the
amount,
after
taxes,
will be
returned
to
shareholders
through
dividends
or, more
likely,
buying
back
stock.
That
leaves
open the
possibility
that
Yahoo
might
use the
rest of
the
money
from the
Alibaba
IPO to
help
finance
an
acquisition
of
another
Internet
company
such as
AOL Inc.
or a hot
startup
such as
social
media
company
Pinterest
in its
latest
attempt
to
revive
its
business. |