John Paczkowski

Recent Posts by John Paczkowski

Yahoo Returning $3.65 Billion to Shareholders, but in Buybacks or Dividends?

Yahoo CEO Marissa Mayer has decided what to do with most of the money the company made from the divestiture of its Alibaba stake: Return it to the company’s shareholders.

In an announcement issued moments ago detailing the Alibaba agreement, Yahoo said it will return approximately $3.65 billion in after-tax proceeds to shareholders. That’s about 85 percent of what it made on the deal. It will keep the remainder, about $650 million.

“This outcome is terrific for Yahoo,” Yahoo CEO Marissa Mayer said in an all-hands memo to employees. “It generates liquidity to create substantial value for our shareholders, while retaining a meaningful amount in the company to invest in our future. Also, because we still own 23 percent of Alibaba’s common stock, we have the opportunity to benefit from future upside when Alibaba IPOs.”

Yahoo has been considering returning money to its shareholders for some time now, so this news isn’t exactly a surprise — though the dollar figure is quite high. The big question now is just how this will all play out. Will Yahoo return $3.65 billion to shareholders through buybacks or dividends? The company has talked about buybacks in the past. CFO Tim Morse even hinted at one on Yahoo’s last earnings call. A buyback, of course, would likely increase the value of Yahoo’s stock.

But Yahoo is not ready to disclose its decision on the form of the buyback.

“We haven’t announced specifics around the form of return of proceeds,” a Yahoo spokesperson told AllThingsD. “The form and timing of returning proceeds will be determined by the board and management, taking into consideration the best interests of the company and its shareholders.”

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