Yahoo's third-quarter earnings soared as the Internet company collected a huge windfall from Alibaba's recent IPO. Revenue also rose slightly from the previous year, a welcome change for a company that has been posting quarterly declines for most of the past five years.
The uptick included more than $200 million in revenue from mobile devices. That represented 17 percent of Yahoo's total revenue for the three months that ended in September, an indication that CEO Marissa Mayer's emphasis on designing sleeker applications for smartphones and tablets is starting to pay off.
Continue Reading Below
Yahoo's stock climbed $1.12, or nearly 3 percent, to $41.30 in extended trading Tuesday.
The Sunnyvale, California, company earned $6.8 billion, or $6.70 per share, in the third quarter. That compares with income of $297 million, or 28 cents per share, last year.
Alibaba Holding Group Ltd.'s initial public stock offering last month accounted for most of that huge difference. Yahoo Inc. sold 140 million shares in the Chinese company's IPO last month, to bring in $9.5 billion before taxes. Yahoo still retains a 16 percent stake in Alibaba that is worth about $35 billion. If not for the Alibaba gain and certain other times, Yahoo said it would have earned 34 cents per share in the latest quarter. That figure topped the analyst estimate of 32 cents per share among analysts surveyed by FactSet.
Yahoo's third-quarter revenue totaled $1.15 billion, a 1 percent increase from last year. After subtracting ad commissions, Yahoo's revenue stood at $1.09 billion — about $50 million above analysts' projections.