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Yahoo investors disappointed by slowing Alibaba growth

Investors were not just disappointed in Yahoo¿s fourth-quarter results Tuesday. They were also disappointed in the growth of Chinese e-commerce giant Alibaba, in which Yahoo has a 24% stake.
(Justin Sullivan / Getty Images)
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SAN FRANCISCO -- What would happen to Yahoo if its golden goose stopped laying golden eggs?

Investors were not just disappointed in Yahoo’s fourth-quarter results Tuesday. They were also disappointed in the growth of Chinese e-commerce giant Alibaba, in which Yahoo has a 24% stake.

That stake has helped Yahoo’s share price double in the last year -- even as its online advertising business has continued to decline -- because Alibaba is preparing for a blockbuster initial public offering this year.

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But Yahoo reported Tuesday that Alibaba’s revenue was $1.78 billion in the fourth quarter. That’s a 51% increase from a year earlier. But it pales in comparison to the 61% year-over-year revenue growth in the third quarter and 71% in the second quarter.

“While still very impressive, the trend shows deceleration,” said Cantor Fitzgerald analyst Youssef Squali.

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