Yahoo Oct. 21 released its Q3 2014 results, with the company posting earnings per share of 52 cents on $1.09 billion in revenue. That's well above analyst expectations of 33 cents and $1.04 billion in revenue. Yahoo CEO Marissa Mayer attributed the strong results to growth in its mobile, social, and video offerings.
Yahoo's stock traded over 6.5% higher, to nearly $43 a share, the morning of Oct. 22 in response to its strong Q3 results. The company's share price had not been this high since the run-up to Alibaba's IPO. Investors who wanted exposure to Alibaba before the Sept. 19 IPO invested in Yahoo because of its stake in the Chinese company.
Yahoo! Inc.: NASDAQ:YHOO quotes & news - Google Finance
Yahoo said it earned $200 million in mobile revenue in the quarter, the first time mobile revenue has ever been "material" for the company. Yahoo now expects total mobile revenue to top $1.2 billion by the end of 2014.
Tumblr, which Yahoo acquired for $1.1 billion in May 2013, is on track to generate more than $100 million in revenue in 2015. Since acquisition, Tumblr has grown 40% to 420 million users with over 200 tumblrs.
Yahoo also revealed Oct. 21 that it earned a pre-tax total of $9.4 billion for having sold 140 million Alibaba shares upon the company's IPO in September. (Yahoo invested $1 billion in Alibaba in 2005.) The company will pay $3.3 billion in related taxes in Q1 2015.
Activist investor group Starboard urged Yahoo in a Sept. 26 letter to explore "the synergies that we believe Yahoo could unlock in a combination with AOL." The firm, which claims to have a significant stake in Yahoo, says the $1.3 billion spent by Yahoo on acquisitions hasn't delivered value to its shareholders.
Starboard Delivers Letter to CEO and Board of Directors of Yahoo! Inc. - MarketWatch