Yahoo Spinning Off Alibaba Stake
Internet giant Yahoo is saying so long to its stake in Alibaba, said Vindu Goel and Michael J. de la Merced in The New York Times. CEO Marissa Mayer said this week that the firm would spin off its 14.4 percent stake in the Chinese e-commerce company. The decision “cheered shareholders,” who stand to “reap all the remaining profit from Yahoo’s prescient investment”—which cost next to nothing a decade ago but is now worth close to $40 billion. The move saves Yahoo some hefty taxes, but also strips the company “of its single most valuable asset.” Currently, the Alibaba stake represents “nearly 85 percent of Yahoo’s market value.”
Activist shareholders had long been urging Yahoo to divest its Alibaba holdings, said John Jannarone in CNBC.com. But with that done, it’s now “much easier to notice what’s going on in the core business.” Yahoo faces higher costs even as ad revenue stagnates, and rivals such as Google and Facebook have proven much more adept at selling ads “based on a fairly specific profile of the person who sees them.” Mayer’s decision to spin off the Alibaba shares “likely extended her life as Yahoo’s CEO,” but reversing the company’s overall fortunes remains a considerable challenge.
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