What’s next for Yahoo after Alibaba IPO?

Alibaba shares are up, Yahoo shares are down. How is Yahoo — which owns nearly a quarter of Alibaba — being affected by Alibaba’s IPO today?

In the run-up to the Alibaba IPO and Yahoo’s expected windfall, the Silicon Valley company’s shares had risen 20 percent in the past three months. But as Mike Murphy wrote in Biz Break, investors started cashing out yesterday. And Yahoo shares are down about 3.5 percent today.

What will Yahoo, which has struggled to compete against Google, Facebook and others, do with the billions of dollars it’s reaping from the IPO? The company has said it will return some of it to shareholders. Regarding the rest, there’s speculation galore about buying companies such as AOL, and other “irresponsible” things Yahoo could do with that money.

Analysts quoted in the many stories being written about Yahoo and Alibaba say Yahoo CEO Marissa Mayer will now be in the hot seat. (As if she hasn’t already been there since becoming CEO a couple of years ago.)

“There will be mixed emotions,” said Sameet Sinha, an analyst at the investment firm B. Riley and Co., according to CNet. “Marissa will be happy, but there will be a lot of pressure.”

Anyone paying close attention to Yahoo knows that for the past few years, its allure to investors has been its stake in Alibaba. (It certainly hasn’t been its flat growth or revenue.) Now investors can buy into Alibaba shares themselves. That’s why what Yahoo does with its windfall, what it does on its own, is so important.

And the speculation doesn’t stop at who Yahoo will buy. How about who might buy it? As we wrote earlier today, Bloomberg asked Alibaba Chairman Jack Ma whether he’s interested in buying Yahoo. He laughed and said no.


Photo by Gary Reyes/Mercury News archives


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  • Bill Henderson

    This is a resounding “NO Confidence” vote for Ms. Mayer. Her record stands for itself. Poor leadership , poor hires, poor company acquisitions with some exceptions. Anyone can spend with an open checkbook. She went way overboard with little to show for it. Now that the hype is over I’m hoping she steps down or gets ousted because she isn’t the right person for the job. Also, I don’t want to here again and again how she brought a company from oblivion to it’s current stock price as some kind of wonderful. Whats the cliche? When the game gets tough….. you know the rest. Shes done here.

    • Mike Hall

      Ms. Mayer said several years just to right the ship. I want her to have the time she needs. I am hoping she’ll stop selling so much of her stock going forward.

  • jimmy

    allibaba wants to buy yahoo for sure. yahoo has so much for ma’s ambition here, but only if our government oks with it. yahoo looks small and cheap to buy, but its huge user base makes it sensitive. also hope marrisa can take some really long leaves, so she does not waste yahoo money again soon.

  • Robert Davis

    Owning Yahoo shares now still gives the stockholder a piece of Alibaba that is now much less expensive than having to buy Baba on the open market. Same applies to Softbank which owns more Baba than Yahoo. One should be long in both of these

  • Vic

    I am a big fan of Yahoo and have been using it since its inception. Although its rivals and competitors might have surpassed it in stock value, and probably market share, Yahoo is the pioneer, and pretty much the standard, in the business of Internet search engines.

    I believe Yahoo has a bright future with one major step ahead, that is developing, marketing and distributing its own Internet web browser.