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Yahoo stock surges in anticipation of Alibaba IPO

Published on NewsOK Modified: March 17, 2014 at 5:40 pm •  Published: March 17, 2014

SAN FRANCISCO (AP) — Yahoo is getting another lift from its stake China's Alibaba Group, a thriving Internet company that has helped mask Yahoo's own financial funk.

Investors latched on to Yahoo Monday in anticipation of a huge windfall from Alibaba's initial public offering of stock later this year. Alibaba triggered the latest wave of excitement about its forthcoming IPO with a Sunday announcement of its intention to list its stock on a U.S. exchange instead of in Hong Kong. The precise timing of the IPO is still unclear, although the documents for the filing are expected to be filed within the next six months.

Alibaba's IPO is anticipated to produce Yahoo's second multibillion dollar windfall in two years. The money could be used to pay stockholders a one-time dividend, buy back more stock or finance an acquisition of another Internet service that could help Yahoo bring in more revenue after years of contraction.

Yahoo's stock gained $1.51, or 4 percent, to close Monday at $39.11. The shares have nearly doubled in the past year, primarily because Yahoo's 24 percent stake in Alibaba has been the only way for most investors to buy a slice of a company that is likened to China's version of eBay and Yahoo now boasts a market value $39 billion — most of which analysts estimate is tied to Alibaba's success.

Even as Yahoo's stock surges, the Sunnyvale, Calif., company's long-running struggle to revive its revenue growth continues as online advertisers steadily shift more of their spending to Internet search leader Google Inc. and social networking leader Facebook Inc.

Yahoo Inc. hired its current CEO, Marissa Mayer, from Google in July 2012 in hopes of engineering a turnaround, but so far she hasn't been able to boost Yahoo's revenue. Mayer has said that it still may take another year or two before Yahoo's revenue is growing at the same rate as the overall Internet market, a timeline most investors are willing to tolerate because of the company's prized investment in Alibaba.

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