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Tuesday, September 18, 2012

Yahoo! Ends Alibaba Alliance; Searches for New Ventures

Posted by @ 3:35 pm

The partnership between Yahoo! and China’s Alibaba Group has come to a long-awaited end with the search company netting a generous $US7.6 billion.

The dissolution of the partnership turns out to be a good one for both companies. Alibaba has less of Yahoo! breathing down its neck. Meanwhile, after a rough year, Yahoo sorely needs the money as it is reported as having only about $1.5 billion in cash and equivalents on its balance sheet as of the end of June.

Yahoo paid $US1 billion for a 40% stake in Alibaba back in 2005 and it is one of the few deals that Yahoo! has completed in recent years that has been positive, so now the company is reaping a huge return. Alibaba is paying $US7.1 billion in cash and stock to buy back half of Yahoo’s holdings. Another $US550 million is being paid to Yahoo under a revised technology and patent licensing agreement with Alibaba.

“We are grateful for Yahoo!’s support of our growth over the past seven years, and we are pleased to be able to deliver meaningful returns to our shareholders including Yahoo!” said Alibaba Chairman and CEO Jack Ma

This windfall is sure to ease the strain that Yahoo! shareholders have endured in recent years and it’s CEO Marissa Mayer has been quick to outline what she plans to do with the money. While the majority of the proceeds will go back to shareholders, around $US1.3 billion will remain which Mayer says will be used to finance new acquisitions or hire new talent.

“This yields a substantial return for investors while retaining a meaningful amount of capital within the company to invest in future growth,” Ms Mayer said in a statement.

What will Yahoo! look at “acquiring” with this money? Analysts speculate that Yahoo! may try to buy one of the Internet’s hot websites, such as online scrapbook Pinterest or check-in service Foursquare. Stay tuned!

Courtney Mills Courtney is an online marketing and communications specialist at ineedhits - a leading search engine marketing firm with over 16 years experience. Courtney has been living and breathing online marketing for over 5 years. She specializes in web and communication marketing, while providing news and opinion to online marketing communities.

View Courtney Mills's profile

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