Yahoo! Inc. (YHOO) Rakes in $5.7 Billion from Alibaba Group Holding Ltd (BABA) IPO

Yahoo! Inc. (YHOO)

The Alibaba Group Holding Ltd (NYSE:BABA) IPO comes at a time when Yahoo! Inc. (NASDAQ:YHOO) has been struggling to get its footing in its core business as competitors steal the show for the California-based tech company. From simple arithmetic, Yahoo! Inc. is set to earn $5.7 billion from its sale of 120 million of its Alibaba shares.

Alibaba Group Holding Ltd (NYSE:BABA)  shares were priced at $68 a share during the IPO, one of the biggest IPOs in history. With that price tag, and after Yahoo! Inc. (NASDAQ:YHOO) pays a tax of roughly 38%, the company remains with about $5.7 billion.

“We congratulate our partners at Alibaba on completing today’s well-received IPO,” said Marissa Mayer, Yahoo! Inc. (NASDAQ:YHOO) CEO. “Yahoo has enjoyed a nine-year relationship with Alibaba, and we remain major investors in the company.”

Mayer was brought into the company when the stock wasn’t performing well and she has been working to put the company back on track and to strengthen the company’s core business, but with little success. With about half of the amount earned from Alibaba Group Holding Ltd (NYSE:BABA) IPO expected to be pumped back for the shareholders, it isn’t clear yet what the CEO will do in order to remain relevant and put the company back on its feet.

Yahoo! Inc. (YHOO)

Yahoo! Inc. (NASDAQ:YHOO) has been facing numerous challenges, ceding too much ground for its competitors such as Google Inc. and Facebook Inc. When it comes to searches, Google Inc. has stolen the show such that many people, instead of saying search for it on the website, simply say Google it. Such trends should make Yahoo! Inc. go back to the drawing board. Google Inc. and Facebook have also expanded their user base with Yahoo!’s market share dwindling drastically.

Yahoo! Inc. must come with a new game plan and make the right acquisitions that will strategically place put it on a path to success.

Alibaba Group Holding Ltd (NYSE:BABA)  IPO didn’t come with good news to Yahoo! Inc. (NASDAQ:YHOO) all round though. After the IPO, the stock went down 2.7% to close at $40.93 in New York. That shows that investors won’t be running to buy Yahoo! Inc. stock just yet, but will wait to see what the company does with the new earned cash.

This article has been written by Victor Ochieng.

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