Yahoo! Inc. (YHOO) Could Revive Its Business With Fresh Cash Flow From Alibaba IPO

With Alibaba’s IPO due next week, Yahoo! Inc. (NASDAQ:YHOO) is about to receive at least $7 billion from the IPO. A $1 billion investment has become the golden ticket for Yahoo! Inc. (NASDAQ:YHOO) to revive its business in the current technology market.

Jerry Yang, founder of Yahoo, made $1 billion investment in Alibaba in 2005 for 40% stake in the company. According to IDC analyst, Crawford Del Prete,

“You have to credit Jerry Yang for seeing the possibilities and really understanding the potential of Alibaba. He ended up making an investment that paid off handsomely.”

He further added,

“In many ways Jerry Yang set them up with the golden ticket, and this is their chance to use that golden ticket to further Marissa’s vision of transforming the company.”

Yahoo! Inc. (NASDAQ:YHOO) has announced that the company will distribute 50% of the proceedings to its investors. Yahoo’s stake in Alibaba and the dedication of the CEO, Marissa Mayer, has kept the investors interested for this long.

Yahoo! Inc. (YHOO)

However, several analysts are of the opinion that Alibaba’s IPO might slow down the momentum of Yahoo, as a larger number of investors invested into the company because of its 22% stake in Alibaba. Yahoo! Inc. (NASDAQ:YHOO) enjoyed a two-fold increase in its share prices primarily because of its stake in Alibaba as shown after its May earnings that highlighted the depleting profits of the technology firm.

According to Youssef Squali, Cantor Fitzgerald analyst, with a proposed market cap of $158.3 billion for Alibaba, Yahoo! Inc. (NASDAQ:YHOO) is likely to make up $8.8 from the sale of 140 million shares. This IPO could certainly change the proceedings for Yahoo with a fresh cash infusion.

This article has been written by Prakash Pandey.

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