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Yahoo! balance! sheet! bulked! by! Alibaba!

Investors not upset by ad-slinging biz and cash stash sinking

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Yahoo! has released its third-quarter results, and the numbers aren't pretty.

The purple palace managed to drag $US1.14bn through the door, but that's five per cent less than the figure for 2012's third quarter. Earnings before interest, taxes, depreciation and amortization were $331 million, a 19 per cent drop compared the Q3 2012.

Worse still, the company had to work harder to make that lesser amount of cash, because it sold fewer ads at lower prices than it has done in the past. Search revenue was up $8m, but the company's cash stash now stands at $3.2 billion, down from the $6 billion in the kitty on December 31, 2012.

Plenty of that decrease can be attributed to acquisitions and share buybacks. The latter have kept shareholders smiling because the company's shares have gone from around $15 to $33.38 at the close of today's trading. Plenty of that increase is attributable to Yahoo!'s 24 per cent stake in tat bazaar Alibaba, which will soon go public. When the bazaar does so, Yahoo! stands to cash in, which could mean more stock buybacks at prices above those investors paid for their shares.

The company has also changed its arrangement with Alibaba so it does not have to sell as many shares once the bazaar goes public. That's a good thing because it means Yahoo! can hang on to more shares and sell them once Alibaba's value increases.

Investors are therefore not terribly fussed by the news of hard times in ad-slinging.

Yahoo! CEO Marissa Mayer isn't fussed either, instead preferring to talk up acquisition-and-new-service-derived increases in user numbers, plus deeper engagement with those who stop by Yahoo!'s various properties. Presumably those improvements will make ad sales easier in future.

Mayer also outlined plans to do better in mobile, noting audience increases among handheld device-wielders and declaring their efforts “under-monetised”. ®

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