After successfully selling half of its stake in Chinese based Alibaba.com Limited (HKG:1688), Yahoo! Inc. (NASDAQ:YHOO) has said that it will return $3 billion to shareholders. This amount will be added to another $646 million that had already been allocated to a stock buyback program. As such, investors will have a total of around $3.65 million at their disposal.
While it is certain that the $3 billion will be given back to investors, the manner in which it will be given back is still not clear. Speculation however, points towards stock repurchases.
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Marissa Mayer, the CEO, has doubled her efforts ever since she made an in on the embattled company not long ago. Not only has she provided oversight to the Alibaba deal, but she has also made sure that the money raked from the deal goes to good use.
Yahoo! Inc. (NASDAQ:YHOO) managed to net a figure of around $4.5 billion- this was of course after tax collectors took their share from the initial $7.6 billion. Now that $3 billion of the $4.5 billion already has a definite purpose, speculation is rife that the remaining $1.5 billion will be used for acquisitions.
All the same, this is not certain, as Yahoo has not yet officially addressed the issue. Perhaps CEO Mayer may opt for a more quiet PR and withhold her plans for the money. Whatever the case, current and prospective investors are glued to the edges of their seats in wait for Mayer’s move. She had earlier indicated that she had major plans for the money.
As reported yesterday, the deal between Yahoo and Alibaba.com Limited (HKG:1688) completely changed the dynamics of their relationship. Yahoo’s 40 percent stake in Alibaba has now been reduced by 50 percent, giving it a 20 percent stake in the Chinese e-commerce heavyweight. All the same, both parties seemed to gain from the deal.
Looking at Yahoo! Inc. (NASDAQ:YHOO), it now has the chance to revive its prospects and instill confidence in shareholders. The importance of confidence at such a time cannot be overlooked. The company has engaged in a pattern of posting disappointing earnings alongside other bearish tendencies. Giving money to investors is therefore a sure way of quelling the disappointment in shareholders, and increasing the possibilities of reversing fortunes.
On the other hand, some Alibaba.com Limited (HKG:1688)’s restrictions in the global market will be lifted. The same will also apply to Yahoo, as some of the restrictions limiting it to compete in China will be lifted.