Feeds

Yahoo! pulls Alibaba out of hat, posts big Q1 profit jump

Enough to fend off Microsoft?

Designing a Defense for Mobile Applications

Jerry Yang today hailed Yahoo!'s "extraordinary" Q1 results, citing the besieged firm's ability to execute, against a backdrop of economic uncertainty and Microsoft's unwelcome bid to buy the company.

And extraordinary they were, as the Yahoo! CEO claims, with net income jumping massively to $542m, or 37 cents a share (Net income, Q1 '07: $142.4m). But performance and execution had nothing to do with the uplift - which came courtesy of a $401m non-cash equity gain. This was a recognition of the value crystallised through last year's IPO of Alibaba.com, the Chinese ecommerce firm in which it has an indirect stake through a 40 per cent ownership of Alibaba, the parent company.

Back at Yahoo!, earnings from operations fell year over year to $120.6m (Q1 07: $169m).

Other financial metrics were pretty good too. Gross revenue was $1.8bn, up nine per cent on last year (Q1 07: $1.67bn). Net revenues, excluding traffic acquisitions costs, climbed 14 per cent to $1.35bn (Q1 07: $1.18bn).

But is this enough to fend off Microsoft?

On February 1, Microsoft offered $44.6bn in cash or shares for Yahoo!. Since then the value of the offer has declined, thanks to a drop in Microsoft's own share price. Yahoo! has scrambled to find a white knight, either to merge with (AOL), to sell its inventory (Google) or to buy the company outright (News Corp.). None of the company's would-be suitors can match Microsoft's money. Not even Google. And Yahoo! shareholders appear to have little appetite in seeing their company remain independent.

In the earnings conference call today, Yahoo!'s Yang said the company was "open to all alternatives, including a sale to Microsoft". But he re-iterated the company's belief that the Microsoft bid is too low-ball for a "one of a kind global franchise". He characterised the firm's search for strategic alternatives to Microsoft as "expeditious".

Microsoft shows no signs yet of offering a better price. The original offer incorporated a big premium to facilitate a friendly and quick takeover, Microsoft boss Steve Ballmer declared earlier this month. In an open letter to the Yahoo! board, he voiced frustration with what Microsoft sees as dilatoriness and refusal to come to the negotiating table.

Microsoft has imposed a deadline on the Yahoo! board to agree a deal by the weekend. Or it will kick off a proxy battle to install its own directors.

Let's see what next week brings. ®

The smart choice: opportunity from uncertainty

More from The Register

next story
BBC goes offline in MASSIVE COCKUP: Stephen Fry partly muzzled
Auntie tight-lipped as major outage rolls on
There's NOTHING on TV in Europe – American video DOMINATES
Even France's mega subsidies don't stop US content onslaught
You! Pirate! Stop pirating, or we shall admonish you politely. Repeatedly, if necessary
And we shall go about telling people you smell. No, not really
Airbus promises Wi-Fi – yay – and 3D movies (meh) in new A330
If the person in front reclines their seat, this could get interesting
UK Parliament rubber-stamps EMERGENCY data grab 'n' keep bill
Just 49 MPs oppose Drip's rushed timetable
Samsung threatens to cut ties with supplier over child labour allegations
Vows to uphold 'zero tolerance' policy on underage workers
Dude, you're getting a Dell – with BITCOIN: IT giant slurps cryptocash
1. Buy PC with Bitcoin. 2. Mine more coins. 3. Goto step 1
US freemium mobile network eyes up Europe
FreedomPop touts 'free' calls, texts and data
prev story

Whitepapers

Reducing security risks from open source software
Follow a few strategies and your organization can gain the full benefits of open source and the cloud without compromising the security of your applications.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
Application security programs and practises
Follow a few strategies and your organization can gain the full benefits of open source and the cloud without compromising the security of your applications.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.
Consolidation: the foundation for IT and business transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.