Yahoo has just added $US2 billion to its share buyback program, an SEC filling revealed on Thursday.
Today’s announcement will be an extension of the $US5 billion share buyback program Yahoo started in 2013.
Share buybacks are a common tactic large companies employ to boost their share price. The company buys back shares sold on the market, reducing the total number of shares available, thus boosting each outstanding share’s price.
A big part of Yahoo’s value has been tied up to its ownership in Alibaba shares, the giant Chinese e-commerce site that had the largest IPO in the US last year. Following the IPO, Yahoo sold $US9.4 billion worth of Alibaba stock, retaining 15% of the Chinese company’s overall shares.
But in January, Yahoo announced plans to spin off that remaining 15%. That means that Yahoo will soon be valued only on its core business, which has been flat or down for years.
The new buyback program, which will add some value to its shares, could be a good way to temporarily mitigate any type of concerns the shareholders might have.
In the filing, Yahoo stated:
The Board of Directors of Yahoo! Inc. (the “Company”) approved an additional share repurchase program of $US2.0 billion (the “New Repurchase Program”) which will expire on March 31, 2018. The amount of shares of common stock authorised to be repurchased under the New Repurchase Program is in addition to the amount remaining under the Company’s existing stock repurchase program (the “Existing Repurchase Program”) announced in November 2013, which expires in December 2016.”