Marissa Mayer’s Yahoo! turnaround is a work in progress — but the No. 1 Web portal can still count on its investment in Alibaba Group to draw value.
Yahoo! announced first-quarter earnings yesterday, and the bright spot was money made from its stake in the Chinese e-commerce company Alibaba and Yahoo! Japan.
The Asian investments represented $217.5 million in profit — with Yahoo!’s core business earning $186 million.
“If you own the stock because you want exposure to Alibaba, that’s great because you’re doing fine,” said Colin Gillis, analyst with BGC Partners.
Gillis said earnings from Alibaba and Yahoo! Japan blew past his forecast of $134 million for the period, while the rest of the earnings pie was less than predicted.
Yahoo! beat Wall Street’s estimates on the quarter, earning $390 million, or 35 cents a share. Still, a weak forecast for the current quarter and a dip in its display advertising business sent shares down after hours.
The stock dipped more than 4 percent to $22.80 in extended trading.
Yahoo!’s revenue was $1.07 billion, while analysts forecast $1.1 billion.
“I’m confident that the improvements we’re making to our products will set up [Yahoo!] for long-term growth,” Mayer, who took over as chief executive in July, said in a statement yesterday.
Mayer is still reorganizing the company in her image.
The 37-year-old former Google executive has a new sales team, struck an ad deal with her former employer and bought a slew of startups, among a number of executive moves during her tenure.
Still, Alibaba continues to comprise a large portion of Yahoo!’s value as the Chinese company grows and moves toward an eventual initial public offering, presenting more potential upside for investors.