Yahoo to retain larger stake in Alibaba

Yahoo Inc's plans for keeping a larger-than-expected stake in Chinese e-commerce giant's Alibaba Group Holding Ltd, has received the enthusiastic approval of its investors, even as its core online advertising business continues to be soft.

Yahoo was up nearly 1 per cent to $33.70 in after hours trading as it said it would sell fewer shares than originally agreed from its 24-per cent stake with Alibaba going public.

Yahoo's core business of online display selling and search advertising continued to be soft in the third quarter in face of fierce competition from Facebook Inc and Google Inc.

Prices for Yahoo's display ads were down 7 per cent year-over-year, even as the number of display ads sold rose roughly 1 per cent.

Revenue from search advertising, accounting for 39 per cent of the total, was up 3 per cent year-over-year, which excluded certain costs.

Yahoo chief executive Marissa Mayer pointed to improvements in user traffic to the company's various web destinations and said the increasing usage would start showing up in Yahoo's revenue growth over the coming year.

Meanwhile, Alibaba Group Holding Ltd, China's online marketplace for everything from apples to Boeing 737s, more than doubled second-quarter earnings as it headed toward the biggest initial public offering since Facebook Inc.

Net income attributable to ordinary shareholders was up at $707 million in the three months ended June as against $273 million a year earlier, according to a presentation released yesterday by Yahoo! Inc owner of a stake in Alibaba.

Revenue was up at $1.73 billion from $1.08 billion a year earlier.

The company was established by Jack Ma and partners in 1999 as an online marketplace for Chinese companies, and had grown explosively as the wave of economic liberalisation spurred a boom in manufacturing and trade.

Alibaba is introducing instant messaging, is working on acquisitions and expanding into TVs that connected to the internet to garner a greater slice of China's web users and shoppers.

The worth China's biggest e-commerce operator has been worked out by investment banks at as much as $120 billion. It had been considering moving toward a listing in the US after Twitter Inc went public as soon as this year.

Yahoo, with a 24-per cent holding of the Hangzhou, China-based e-commerce operator, said yesterday that the maximum number of shares it was required to sell in an Alibaba IPO was down at 208 million from 261.5 million.

Alibaba though, does not sell merchandise itself, rather it runs platforms including Taobao Marketplace and Tmall.com that connected retail brands with consumers, a cross between Amazon.com Inc. and EBay Inc. Most of its revenues come from commissions and advertising.