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A Look Into Yahoo! Inc. (NASDAQ:YHOO)’s Alibaba Cash

Boston, MA 07/10/2014 (wallstreetpr) – Yahoo! Inc. (NASDAQ:YHOO) counts Google Inc (NASDAQ:GOOG) and Facebook Inc (NASDAQ:FB) among its chief enemies in getting advertising dollar. As such, most of the growth strategies in the company are viewed to be directed at wrestling the market share from the two rivals that have continued to increase their revenue at the expense of Yahoo!

With Alibaba initial public offering fast approaching, expected sometime later this year, analysts have been weighing in on the likely shape and position of Yahoo! after the much touted Alibaba IPO.

Huge cash windfall

Yahoo! Inc. (NASDAQ:YHOO) is one of the largest investors in the Chinese e-commerce giant Alibaba. It owns nearly 24 percent stake in Alibaba and experts speculate that Alibaba could be worth somewhere in the region of $150 – $200 billion once its shares start public trading.

Based on that speculation, Yahoo!’s stake in Alibaba could be worth between $36 and $48 billion, bigger than the market value of Yahoo! itself. Yahoo! has a market cap of about $35 billion.

Because Yahoo! Inc. (NASDAQ:YHOO) is required to trade 12 percent of its stake in Alibaba in the IPO, the company is likely to fetch significant cash that will boost its balance.

With an improved balance sheet, experts speculate that the Yahoo! will use its new found wealth to make acquisitions especially of smaller companies to boost its position in search and advertising.

Some of the names being cited as position targets in the anticipated Yahoo! acquisition includes Pinterest, Foursquare, Quora, Yelp Inc (NYSE:YELP), AOL, Inc. (NYSE:AOL) and several others that can add value to its core business, which is search and display advertising.

The aforementioned companies have the potential of improving the company’s revenue and engagement as well.

 Mobile population

Yahoo! Inc. (NASDAQ:YHOO) is transitioning to the mobile age, which is the next battle ground for tech companies because Facebook and Google are already in the transition. In its 1Q update, Yahoo! CEO Merissa Mayer told investors that the company has over 430 million mobile users, demonstrating growth of about 30 percent on a year-over-year basis. With more than 430 users on mobile, that means Yahoo! has more than half of its monthly audience accessing it on mobile platforms.

Published by Christine Lawrence

Christine Lawrence is a financial analyst. She loves analyzing socioeconomic trends in the background of financial moves. She has overall seven years of experience in Auditing, Finance and Writing.

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