(Adds detail on share sales)
By Alexei Oreskovic
SAN FRANCISCO, July 15 Yahoo Inc
pledged to pay its shareholders at least half the proceeds from
Alibaba Group Holding Ltd's IPO-BABA.N mega-IPO this fall and
plans to keep a larger stake in the Chinese e-commerce company
Yahoo's roughly 24 percent stake in the world's largest
Internet retailer is viewed on Wall Street as its most prized
asset. On Tuesday, it said Alibaba had agreed to reduce the
number of shares Yahoo is required to sell in the IPO to 140
million shares from 208 million previously.
That news helped offset the U.S. company's disappointing
results on Tuesday. Yahoo also forecast third-quarter net
revenue, excluding fees paid to partner websites, of $1.02
billion to $1.06 billion, less than the $1.1 billion Wall Street
analysts had expected on average.
"What you see is the fundamentals at core Yahoo continue to
deteriorate, but there's at least some good news on the Alibaba
front," said Macquarie Research analyst Ben Schachter.
"The idea is that Yahoo shareholders can participate and
benefit from the upside to Alibaba post the IPO, as opposed to
just having to sell more stock in the IPO."
Alibaba is expected to list its shares on the New York Stock
Exchange later this year in what could be the largest ever U.S.
technology initial public offering. Investors have valued the
company, which handles more e-commerce than Amazon.com Inc
and eBay Inc combined, at as much as $200
Finance Chief Ken Goldman said in a statement accompanying
Yahoo's results on Tuesday that the company was committed "to
return at least half of the after-tax IPO proceeds to
Yahoo is trying to revitalize a stagnant online advertising
business as Chief Executive Marissa Mayer marks her 2-year
anniversary at the Internet company.
The former Google Inc executive has revamped many
of Yahoo's Web products but its ad sales are still weak while
rivals such as Google and Facebook Inc continue to post
strong, double-digit revenue growth.
Yahoo's net revenue, which excludes fees paid to partner
websites, decreased 3 percent year-on-year to $1.04 billion in
the three months ended June 30. Analysts polled by Thomson
Reuters I/B/E/S were looking for net revenue of $1.084 billion.
Revenue in Yahoo's display advertising business decreased 8
percent to $436 million in the second quarter. The average price
per ad decreased 24 percent, while the number of display ads
sold increased 24 percent.
Shares of Yahoo were barely changed at $35.57 in after-hours
(Reporting by Alexei Oreskovic; Editing by Richard Chang)