Feeds

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

Enough to fend off Microsoft?

Boost IT visibility and business value

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. ®

Best practices for enterprise data

More from The Register

next story
Amazon says Hachette should lower ebook prices, pay authors more
Oh yeah ... and a 30% cut for Amazon to seal the deal
Philip K Dick 'Nazi alternate reality' story to be made into TV series
Amazon Studios, Ridley Scott firm to produce The Man in the High Castle
Nintend-OH NO! Sorry, Mario – your profits are in another castle
Red-hatted mascot, red-colored logo, red-stained finance books
Sonos AXES support for Apple's iOS4 and 5
Want to use your iThing? You can't - it's too old
Joe Average isn't worth $10 a year to Mark Zuckerberg
The Social Network deflates the PC resurgence with mobile-only usage prediction
Chips are down at Broadcom: Thousands of workers laid off
Cellphone baseband device biz shuttered
Feel free to BONK on the TUBE, says Transport for London
Plus: Almost NOBODY uses pay-by-bonk on buses - Visa
Twitch rich as Google flicks $1bn hitch switch, claims snitch
Gameplay streaming biz and search king refuse to deny fresh gobble rumors
Stick a 4K in them: Super high-res TVs are DONE
4,000 pixels is niche now... Don't say we didn't warn you
prev story

Whitepapers

7 Elements of Radically Simple OS Migration
Avoid the typical headaches of OS migration during your next project by learning about 7 elements of radically simple OS migration.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
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.
Solving today's distributed Big Data backup challenges
Enable IT efficiency and allow a firm to access and reuse corporate information for competitive advantage, ultimately changing business outcomes.
A new approach to endpoint data protection
What is the best way to ensure comprehensive visibility, management, and control of information on both company-owned and employee-owned devices?