How Alibaba Helps Yahoo Mask Business Woes

Alibaba Group Holding, the Chinese e-commerce giant, has done a lot more for Yahoo than boost the company’s stock price by 80% over the past year.

Royalties that Alibaba paid to Yahoo for continuing to use the Web brand’s name on some Chinese websites, among other things, also made Yahoo’s deteriorating core business seem healthier than it was.

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And that's why Yahoo investors continue to pay close attention to Alibaba. The e-commerce company’s financial performance has been on a tear, boosting the value of Yahoo’s stake and thus its share price. Some analysts say that the Alibaba stake makes up more than half of Yahoo’s $37 billion market valuation. That’s why the most important part of Yahoo’s earnings report on Tuesday will be its expected disclosure of Alibaba’s third quarter 2013 results.


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