SAN FRANCISCO — Yahoo reported flat revenue and profits Tuesday for the first quarter of the year, but Wall Street really didn’t care about that.
All that investors could think about was China, where Yahoo’s investment in Alibaba, China’s leading e-commerce company, is flying high. Yahoo shares were up nearly 8 percent in after-hours trading.
Despite turnaround efforts by its chief executive, Marissa Mayer, who was appointed nearly two years ago, Yahoo has continued to report lackluster financial results for its core business. Mayer initially focused on creating new products and regaining lost user traffic, but she has largely let advertising, the company’s principal source of revenue, languish.
Still, the stock has more than doubled since she was named to the job in July 2012, a rise that has been tempered only slightly in recent weeks as investors have widely pulled back from Internet stocks.
Shareholders are far more excited about what the company owns — a 24 percent stake in Alibaba and a 35 percent stake in Yahoo Japan — than anything it does with its Web portal, email or news offerings.
Alibaba is expected to file paperwork as early as next week to sell stock in an initial public offering. When the IPO occurs later this year, Yahoo will cash out big, selling about 40 percent of its stake in the Chinese company.
Depending on the valuation of Alibaba, which analysts predict could range from $100 billion to $150 billion, or more, Yahoo would reap at least $10 billion before taxes.