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Jim Cramer Recommends to Buy Yahoo! Inc. (YHOO) Being a Profitable Company

Yahoo! Inc. (NASDAQ:YHOO) has made a smart investment in Chinese e-commerce giant, Alibaba Group Holding Ltd (NYSE:BABA), few years back, which is giving them the luxury of huge Cash. Yahoo! Inc. (NASDAQ:YHOO) announced earlier today that they got approval to do cash buybacks worth $2 billion. This came in as great news for investors, due to which the stock went up by around 1.5% as it started trading on Friday. Meanwhile, CNBC’s David Faber and Jim Cramer talked on CNBC about Yahoo! Inc. (NASDAQ:YHOO) stock, Marissa Mayer and the buyback announcement.

Alibaba Group Holdings Ltd (NYSE:BABA)

Faber said that Yahoo! Inc. (NASDAQ:YHOO) is going to use the Alibaba Group Holding Ltd (NYSE:BABA) IPO proceedings to boost the share buyback program by $2 billion. Faber pointed out that Yahoo! Inc. (NASDAQ:YHOO)’s CEO Marissa Mayer had announced earlier this year about spinning off its remaining stake in Alibaba, by selling 384 million shares, which was worth around $40 billion at that time. Faber feels that it might happen sometime in this year.

Cramer said that this is a phenomenal situation that Marissa Mayer has put Yahoo! Inc. (NASDAQ:YHOO) in. He feels that the masterstroke from Mayer was to renegotiate the deal with Alibaba just before its IPO. Yahoo! Inc. (NASDAQ:YHOO) did sell only 140 million shares during IPO and retained 15% of the stake in the company post IPO. Cramer thinks that this was a great move from Marissa Mayer. Cramer thinks that Yahoo! Inc. (NASDAQ:YHOO) stock should be bought.

“[…] This is a phenomenal situation that Marissa Mayer, who has been an amazing […] Who renegotiated the Alibaba Deal, probably the most important thing you do. I am actually watching Tumblr. I like what she is doing with Tumblr. […] This company is a profitable company. I think the stock should be bought,” Cramer said.

Cramer said that he likes Yahoo! Inc. (NASDAQ:YHOO) stock more than Alibaba stock. He mentioned that Mayer has done everything right with the company. Faber pointed out that the investors wanted Mayer to trim expenses for Yahoo! Inc. (NASDAQ:YHOO) and not make any acquisitions. Cramer said that Mayer is probably going that way.

Disclosure: None

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