Alibaba stake props up Yahoo’s anemic core business
Shares in e-commerce firm help notch small sales gains amid CEO’s turnaround effort
SAN FRANCISCO— Yahoo forecast second-quarter sales that met some analysts’ estimates, as chief executive officer Marissa Mayer continued to benefit from the company’s stake in Alibaba Group Holdings.
Yahoo shares soared as much as 10 per cent in extended trading after the company reported first-quarter earnings, which included strong results from Alibaba. Yahoo’s financials contain Alibaba results because the Sunnyvale, Calif.-based web portal owns about 24 per cent of the Chinese e-commerce company. Alibaba posted a 66-per-cent sales surge in the final quarter of 2013 ahead of a potential U.S. initial public offering.
Yahoo also projected second-quarter sales, excluding revenue passed to partner sites, of $1.06 billion to $1.1 billion (U.S.). That was in line with analysts’ average estimate of $1.08 billion, according to data compiled by Bloomberg. Mayer, almost two years into her tenure, has revamped services and added content to attract users and the advertisers that follow them. Yet the company’s core business is still showing anemic growth, even as investors have bought into the stock to get a piece of Alibaba’s results. “The Alibaba numbers were very, very strong,” said Brian Wieser, an analyst at Pivotal Research Group. “It’s certainly a very strong positive for Alibaba — and for Yahoo.” Yahoo shares rose to as high as $37.70 in extended trading, after increasing 2.3 per cent to close at $34.21 in New York. For the first quarter, sales, excluding revenue passed onto partner sites, was $1.09 billion, up from $1.07 billion a year earlier, the company said in a statement. That compared with analysts’ average estimate of $1.08 billion, according to data compiled by Bloomberg. Profit, minus items such as stock- based compensation, was 38 cents a share, while analysts had projected 37 cents a share. The first-quarter sales gains were the first from Yahoo since the fourth quarter of 2012.