Yahoo Earnings Shed More Light on Alibaba's Growth
Qilai Shen for The New York Times
While Yahoo is nominally the focus of its fourth-quarter earnings report, another company is receiving just as much scrutiny: Alibaba of China.
And based on Yahoo's latest results on Tuesday, Alibaba, the Chinese e-commerce behemoth, is still growing fast.
According to Yahoo's investor presentation, Alibaba reported nearly $1.8 billion in third-quarter revenue, a 51 percent gain compared with the same period in the previous year. And the company swung to an $801 million profit, from a $246 million loss during the year-ago period. (The loss in 2012 arose primarily from a $550 million payment to Yahoo related to royalties tied to intellectual property agreements.)
Some might complain that Alibaba's growth has slowed, considering the company reported a 61 percent gain in revenue for its second quarter in 2013. But people close to the Chinese concern expect next quarter to show big gains, especially because it will include sales from Nov. 11 and Dec. 12. Both dates - think 11/11 and 12/12 - are considered two of the busiest shopping days in China.
All told, Yahoo's stakes in both Alibaba and Yahoo Japan, a separately owned affiliate, contributed about $222 million to the American company's bottom line this quarter, up 49 percent from the same time a year ago.
Over all, Yahoo reported $351.7 million in net income for the quarter.
The enormous growth of Alibaba has been considered one of the main ballasts for Yahoo's own financial performance. The two companies first joined in 2005 when the American web pioneer took a 40 percent stake for about $1 billion (Yahoo now owns about a 24 percent stake in Alibaba).
A number of investors have treated investments Yahoo as a way to gain some exposure to its Chinese partner.
That may change once Alibaba holds an initial public offering, which would be one of the most highly anticipated market debuts of recent years. Rumors over when the company would go public, as well as its enormous growth, have pushed estimates of Alibaba's worth ever higher.
As of a few weeks ago, analysts and investors had speculated that Alibaba is now worth somewhere around $100 billion to $150 billion, with a few outlier guesses approaching the $200 billion mark.
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