Yahoo! Inc (NASDAQ:YHOO) and Alibaba deal is all over the news these days and experts are suggesting that if Yahoo! Inc (NASDAQ:YHOO) succeeds in acquiring a major chunk of Chinese e-commerce giant, it will be a great push for its plunging ship in the market. Discussing Yahoo earnings and the effect of Alibaba on Yahoo in a program on Bloomberg, Cory Johnson and Jon Erlichman said that Yahoo! Inc (NASDAQ:YHOO) earnings, without Alibaba dividends are seriously suffering and it’s a great concern for the investors because Yahoo has not be performing well in the past couple of quarters.
“I think of what’s gonna start to happen here with this company is people are gonna look at the results of Yahoo and not the results of Yahoo plus Alibaba, and they are significantly different. The company has had such great benefit from Alibaba from the money that they have been paid out,” said Johnson.
Johnson added that Yahoo! Inc (NASDAQ:YHOO)’s operating profits dropped by $30 million which is a red flag for the company. Yahoo isn’t getting much mainstream products in the market and there are no dedicated platforms where the company can focus on for the revenues.
Erlichman said that ad-based revenue is the only revenue generation domain for Yahoo! Inc (NASDAQ:YHOO) these days and this is the reason why company has launched online streaming video concerts and services. He said that nothing can be said about the smartness of this move but this strategy will create some revenue for the struggling company.
Yahoo without Alibaba is struggling to make any different in the strong tech market. Its EBIT margins have dropped to just 3%. Experts now think that the real problem for Yahoo! Inc (NASDAQ:YHOO) is that it has no market ground without Alibaba.