Alibaba's IPO will be one for the history books, and the billions they raise will give them a unique opportunity as they expand around the globe. Bobbi Rebell reports. ReutersE-commerce
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That puts Yahoo's market capitalization at around $40 billion, which is less than the combined $45.2 billion value of the Sunnyvale, California-based company's Asian assets. Yahoo's remaining stake in Alibaba is now valued at about $37 billion, and the company also owns a piece of Yahoo Japan Corp. that is worth $8.2 billion, according to data compiled by Bloomberg.
Yahoo, led by Chief Executive Officer Marissa Mayer, has benefited for years from its stakes in Yahoo! Japan and Alibaba - and today's stock action shows just how much the company depended on those businesses for value. As investors take gains on Yahoo after the Alibaba IPO, the true worth of Yahoo's core business of online advertising is being laid bare.
Sarah Meron, a spokeswoman at Yahoo, didn't return a request for comment.
More Declines
Declines in Yahoo's share price may continue as investors are more likely to move into Alibaba and out of Yahoo now that they can own the Hangzhou, China-based e-commerce company's shares directly, said Neil Doshi, an analyst at CRT Capital Group LLC.
With Alibaba, 'people got their allocations and they're just dumping their Yahoo shares because that trade is kind of unwinding now,' said Doshi, who rates Alibaba a buy and has the equivalent of a hold on Yahoo.
All of this increases pressure on Mayer, who has been working to turn around the Web portal since she took the CEO role in 2012. As Alibaba prepared for its IPO, Mayer has tried to shore up Yahoo's business by acquiring startups and investing in content and services to woo more Internet users and attract advertisers.
So far, her efforts have failed to narrow the company's widening gap in online advertising with Google Inc. and Facebook Inc. Second-quarter sales, excluding revenue shared with partner websites, fell to a less-than-projected $1.04 billion. Analysts on average estimate sales this year will slip to $4.35 billion, the lowest level since 2005, according to data compiled by Bloomberg.
Yahoo, which would have made $8.3 billion by selling Alibaba shares and around $5.1 billion after taxes, will still have an opportunity to sell off additional Alibaba shares.
Yet questions remain about how much of that cash would be hit by taxes, said Ben Schachter, an analyst at Macquarie Securities USA Inc. The stake the company sold at IPO was fully taxed at a rate of about 38 percent, he said.
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Yahoo! Inc. is now worth less than the value of its Asian assets.
The Web portal's shares fell as much as 6 percent after Alibaba Group Holding Ltd. - which Yahoo owns a stake in - made its stock market debut today. Yahoo, which sold more than 120 million of its 524 million Alibaba shares in the initial public offering, declined 3.3 percent to $40.69 at 2:09 p.m. in New York.
Alibaba's IPO will be one for the history books, and the billions they raise will give them a unique opportunity as they expand around the globe. Bobbi Rebell reports. Reuters E-commerce
Alibaba may be well known on Wall Street ahead of its market debut, but a new poll shows 88 percent of Americans don't know who the e-commerce company is, a challenge it will have to overcome. Sasha Salama reports. Reuters E-commerce
e-commerce
That puts Yahoo's market capitalization at around $40 billion, which is less than the combined $45.2 billion value of the Sunnyvale, California-based company's Asian assets. Yahoo's remaining stake in Alibaba is now valued at about $37 billion, and the company also owns a piece of Yahoo Japan Corp. that is worth $8.2 billion, according to data compiled by Bloomberg.
Yahoo, led by Chief Executive Officer Marissa Mayer, has benefited for years from its stakes in Yahoo! Japan and Alibaba - and today's stock action shows just how much the company depended on those businesses for value. As investors take gains on Yahoo after the Alibaba IPO, the true worth of Yahoo's core business of online advertising is being laid bare.
Sarah Meron, a spokeswoman at Yahoo, didn't return a request for comment.
More Declines
Declines in Yahoo's share price may continue as investors are more likely to move into Alibaba and out of Yahoo now that they can own the Hangzhou, China-based e-commerce company's shares directly, said Neil Doshi, an analyst at CRT Capital Group LLC.
With Alibaba, 'people got their allocations and they're just dumping their Yahoo shares because that trade is kind of unwinding now,' said Doshi, who rates Alibaba a buy and has the equivalent of a hold on Yahoo.
All of this increases pressure on Mayer, who has been working to turn around the Web portal since she took the CEO role in 2012. As Alibaba prepared for its IPO, Mayer has tried to shore up Yahoo's business by acquiring startups and investing in content and services to woo more Internet users and attract advertisers.
So far, her efforts have failed to narrow the company's widening gap in online advertising with Google Inc. and Facebook Inc. Second-quarter sales, excluding revenue shared with partner websites, fell to a less-than-projected $1.04 billion. Analysts on average estimate sales this year will slip to $4.35 billion, the lowest level since 2005, according to data compiled by Bloomberg.
Yahoo, which would have made $8.3 billion by selling Alibaba shares and around $5.1 billion after taxes, will still have an opportunity to sell off additional Alibaba shares.
Yet questions remain about how much of that cash would be hit by taxes, said Ben Schachter, an analyst at Macquarie Securities USA Inc. The stake the company sold at IPO was fully taxed at a rate of about 38 percent, he said.
Follow us on Twitter: @GlobeInvestor
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