Dive Brief:
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Sunnyvale, CA-based Yahoo Inc. had a good Q3 thanks mostly to its investment in — and divestment from — Chinese e-retailer Alibaba Holding Group Ltd. In Q3 Yahoo earned $6.8 billion, or $6.70 per share, compared to $297 million, or 28 cents a share a year ago.
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Alibaba’s massive IPO in September helped push those numbers up so high: Yahoo was obligated to sell some of its interest — 140 million shares — in Alibaba at IPO time, which made Yahoo $9.5 billion before taxes.
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Yahoo still has a 16% interest in Alibaba worth $35 billion. Without those IPO gains, Yahoo said it would have earned $.34 per share, beating analysts’ expectations of closer to $.32.
Dive Insight:
Yahoo is certainly flush with this infusion of cash from the big Alibaba IPO, but the question immediately becomes: How will the company spend it? The company is expected to shop around for tech startups that could add to its cred, its capabilities, and maybe even its cool, in order to effect its long-awaited turnaround.