Yahoo! Inc. (NASDAQ:YHOO) and Chinese Dragon

by Paul Wilson | Friday, Mar 28, 2014 | 1328 views

Yahoo! Inc. (NASDAQ:YHOO) is all set to gain from the highly anticipated IPO of Alibaba which is expected to come at the later part of the Year. Yahoo! is going to gain cash by the selling stock in the IPOs. However, the company is not going to sell all the shares of the Alibaba instead it will be keeping the major part of it which is going to aid the bottom line of Yahoo! This is welcome news for shareholders and it will be helpful in driving the stock.

Higher Earnings for Yahoo! 

Yahoo! Inc. (NASDAQ:YHOO) has total 24% stake in alibaba. In the public offering, the 10% stock held by Yahoo! will be sold, which is scheduled to take place in the later part of the Year. That will reduce Yahoo! stake in alibaba to 14% which Yahoo! is keeping for its future growth and profit. The U.S. Initial public offering of the e-commerce giant alibaba in which Yahoo! is a major shareholder is being considered as the biggest technology debut ever.

Since the last few years Yahoo! is riding high on the performance of Yahoo! Japan and Aliaba. As they are turning out be money spinner for the Yahoo!. In the 2013 income from these two constitutes 65% of its total income and total earnings were $897 million. It is interesting to note that Softbank is another major partner in Alibaba whose firm eAccess has been recently acquired by the Yahoo! On the other hand, Alibaba is doing well in the market and compared to loss of last year this year the growth in revenue was by 51% to $1.78 billion and net income of $792 million.

Yahoo! Dismal Growth Rate

Although Yahoo! Inc. (NASDAQ:YHOO) user base in 2013 grew close to 800 million monthly and mobile based user rocketed to 400 million. But revenue pattern of Yahoo! is not following the user growth pattern. Its revenue is declined by 9% in the year 2013.

So Yahoo! is expecting to earn big in IPO of Chinese e-commerce giant alibaba. We hope that this will turn out for Yahoo! as they are expecting giving a major boost to its profit in 2014 and 2015. Time will tell what would be the outcome of the IPO and how Yahoo! Inc. (NASDAQ:YHOO) performs in it.

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