It was revealed on Monday that Yahoo (NASDAQ: YHOO) has reached a deal with China's Alibaba to sell back its 40% stake back to the Hangzhou-based internet company for $7.1 billion.

Yahoo will be delighted to see some hard cash in its accounts after suffering through a particularly difficult few months and has lost 65% of its value since its 2006 peak.

While other web-based companies like Google (NASDAQ: GOOG), Amazon (NASDAQ: AMZN) and Facebook (NASDAQ: FB) have largely succeeded by expanding their businesses into new areas and innovating, Yahoo has struggled doe to an apparent inability to do the same thing. The company has remained static, and many people don't know what they do anymore, besides own a search engine and email platform that is inferior to Google in just about every way.

Whichever way you look at it though, the Alibaba deal was a good bit of business for YHOO, who paid $1 billion for the 40% stake back in 2005. The two companies may not have always agreed about everything, occasionally airing their dirty laundry in public, but a $6.1 billion return on that investment has got to be something to smile about.

The two companies fundamentally disagreed about Airplay, which used to be Alibaba's online payments business until Ma spun it out two years ago, a move that angered Yahoo. That scuffle went on for months before a settlement was reached in July. Now, with this new deal, the fights should be ended, at least for now.

YHOO interim CEO Ross Levinsohn said of the agreement that, "Today's agreement provides clarity for our shareholders on a substantial component of Yahoo!'s value and reaffirms the significance of our relationship with Alibaba."

Meanwhile, Alibaba CEO Jack Ma poured fuel on the rumors that his company might be interested in buying Yahoo in the future. "This transaction opens a new chapter in our relationship with Yahoo."

The deal will see Yahoo get $6.3 billion in cash and up to $800 million in newly issues Alibaba preferred stock. That is still a great return for Yahoo, whose shareholders will surely be a lot happier at the start of this week.

"We look forward to delivering the proceeds of the near-term transaction to our shareholders, and to the further enhancement of value and the additional monetization in the future that this agreement enables," said Yahoo CFO Timothy R. Morse.

Follow me @BCallwood.

Related Articles
  1. Stock Analysis

    How to Find Quality Stocks Amid the Wreckage

    Finding companies with good earnings and hitting on all cylinders in this environment, although possible, is not easy.
  2. Investing News

    What You Can Learn from Carl Icahn's Mistakes

    Carl Icahn has been a stellar performer in the investment world for decades, but following his lead these days could be dangerous.
  3. Stock Analysis

    Analyzing Altria's Return on Equity (ROE) (MO)

    Learn about Altria Group's return on equity (ROE) and analyze net profit margin, asset turnover and financial leverage to determine what is causing its high ROE.
  4. Investing News

    Icahn's Bet on Cheniere Energy: Should You Follow?

    Investing legend Carl Icahn continues to lose money on Cheniere Energy, but he's increasing his stake. Should you follow his lead?
  5. Stock Analysis

    Analyzing Google's Return on Equity (ROE) (GOOGL)

    Learn about Alphabet's return on equity. How has its ROE changed over time, how does it compare to its peers and what factors are driving ROE for the company?
  6. Investing News

    Is Buffett's Bet on Oil Right for You? (XOM, PSX)

    Oil stocks are getting trounced, but Warren Buffett still likes one of them. Should you follow the leader?
  7. Investing News

    Chipotle Served with Criminal Probe

    Chipotle's beat muted expectations and got a clear bill from the CDC, but it now appears that an investigation into its E.coli breakout has expanded.
  8. Stock Analysis

    Analyzing Sprint Corp's Return on Equity (ROE) (S)

    Learn about Sprint's return on equity. Find out why its ROE is negative and how asset turnover and financial leverage impact ROE relative to Sprint's peers.
  9. Stock Analysis

    Why Alphabet is the Best of the 'FANGs' for 2016

    Alphabet just impressed the street, but is it the best FANG stock?
  10. Budgeting

    Plated Review, Is It Worth It?

    Take a closer look at the ready-to-cook meal service, Plated, and learn how the company can help you take the hassle out of home cooking.
  1. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  2. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  3. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  4. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
  5. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>
  6. What is the difference between issued share capital and subscribed share capital?

    The difference between subscribed share capital and issued share capital is the former relates to the amount of stock for ... Read Full Answer >>
Trading Center