Finance Finance News How Alibaba is saving Yahoo

How Alibaba is saving Yahoo

Marissa Mayer
Getty
Share
Twitter Facebook Reddit Pinterest Email

Yahoo continues to struggle to boost revenue with a 20 per cent fall in profit from last year, but its woes are being overshadowed by the success of Chinese e-commerce giant Alibaba in which it is a key shareholder.

Alibaba, of which Yahoo owns 24 per cent, is expected to raise $15 billion in a titanic IPO this year reported a whopping 66 per cent jump in revenue, to $3.06 billion.

That sent Yahoo shares up 11 per cent, to $37.05, in after-hours trading yesterday, despite Yahoo’s first quarter results showing profits down 20 per cent and revenue nearly flat.

“All the usage figures are up, but the revenue isn’t,” chief analyst at Jackdaw Research Jan Dawson says.

“For Yahoo to do that, it needs to improve search and video revenue — which (CEO) Marissa Mayer is pursuing.”

Yahoo chief executive Marissa Mayer said the results were stronger than expected and showed growth in the web giant’s “core” business.

The California internet company said it earned $US312 million ($A332.39 million) on revenues of $US1.1 billion, topping most analyst forecasts.

“And, with mobile pivotal to our future growth, we’re delighted to now see more than 430 million monthly mobile users accessing Yahoo’s new products,” she said in the earnings release.

Yahoo shares vaulted higher by some eight per cent in after-hours trade following the release to $US37.

Under Mayer, Yahoo has been revamping many of its offerings while emphasising mobile services and using cash for a series of acquisitions.

Yahoo is also moving more into video, with plans for its original television programs in the works.

Market analyst eMarketer says Yahoo’s share of the $120 billion worldwide digital advertising market fell from 3.4 per cent to 2.9 per cent last year, estimating it will fall further this year.

The internet company also lost its spot at number two digital advertiser in the US to Facebook for the first time. Google and Facebook both grew their ad share this year.

– with AAP