For some time, Yahoo earnings have been more than a report card for the company. They have also been a window into the earnings of its partner, the Chinese online commerce giant Alibaba Group.
And with Alibaba’s initial public offering drawing ever closer, investors will surely scrutinize the little peek into the company’s financials that Yahoo’s latest quarterly report affords.
What they found on Tuesday may cause some excitement. The Chinese company reported $1.4 billion in profit for its fourth quarter, more than double the results in the period a year earlier. Revenue jumped 66 percent, to nearly $3.1 billion. (The results are available on page 18 of this presentation.)
Such a big jump may help allay concerns that Alibaba’s enormous growth had begun to slow. Those worries began to arise when Alibaba reported only a 51 percent gain in third-quarter revenue compared with figures in the period a year earlier.
Helping earnings in the fourth quarter were a few big shopping days, particularly Nov. 11 â€" known as Singles Day, China’s twist on Valentine’s Day and one of the busiest days for online shopping. Alibaba disclosed last year that its two main e-commerce platforms, Taobao and Tmall, sold roughly $5.75 billion worth of merchandise on Singles Day last year, an 80 percent gain from 2012.
Alibaba has been considered the brightest spot in Yahoo’s array of assets for years, given its enormous growth. When Yahoo first agreed to buy a 40 percent stake nine years ago, the company was valued at just $2.5 billion. But its estimated worth has skyrocketed since then, with analysts estimating that the company could fetch a valuation of more than $130 billion in its coming I.P.O.
In 2012, the two sides struck an agreement in which Yahoo sold about half its stake, reaping $7.6 billion before taxes. That money gave Yahoo a valuable war chest that it has used to make a flurry of acquisitions, including the $1.1 billion purchase of Tumblr.
Yahoo now owns about 24 percent of Alibaba. Under the terms of its pact, it will sell 10 percent of its stake in the I.P.O., which is expected within the next few weeks. After that, it can dispose of its remaining shares at any time.
