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Alibaba IPO poses key test for Yahoo CEO Marissa Mayer

SAN FRANCISCO — Yahoo chief executive Marissa Mayer will face a $10 billion decision in a few months.

She already has made many changes since taking over nearly two years ago, but all the internal reshuffling and deal-making has merely been a prelude to her biggest test.

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The pivotal moment in Mayer’s tenure will come after Ali-baba Group, China’s e-commerce leader, completes one of the biggest initial public offerings of stock in US history. The IPO triggers a provision requiring Yahoo Inc. to sell about 40 percent of its stake in Alibaba. The sale is expected to generate a major windfall that will intensify the pressure on Mayer to revive Yahoo’s revenue growth after years of lethargy.

‘‘This is Marissa’s moment of reckoning,’’ said Moshe Cohen, a Columbia University business professor who has been tracking Yahoo’s ties with Alibaba.

Mayer acknowledged as much Wednesday.

‘‘We know this is of critical importance to our investors,’’ she said. She declined to add much more, citing securities regulations that restrict the public comments of executives involved in pending IPOs.

While the sale of Alibaba stock will be a short-term boon for Yahoo, it will also remove some of the financial scaffolding lifting Yahoo’s stock as the company’s revenue continues to slip. Most analysts say the Alibaba stake is the main reason that Yahoo’s stock has more than doubled under Mayer, because investors latched on to Yahoo shares as a way to get a piece of Alibaba’s IPO.

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With much of the Alibaba support going away, ‘‘it’s time to rev up revenue growth,’’ said BGC Financial analyst Colin Gillis. ‘‘They will need to move the needle now.’’

One of the quickest ways Mayer could boost revenue would be to buy another company, something she will be in a better position to do after Ali-baba’s IPO is completed.

Although Alibaba probably will not set an IPO price for its stock until this summer, analysts estimate the Chinese company’s market value at $150 billion to $200 billion. At that level, the 208 million shares Yahoo is required to sell will bring in at least $10 billion.

With that much money coming in, Mayer could afford to make a big splash by buying a hot startup such as rising social media star Pinterest or the ephemeral messaging service Snapchat. But those startups are not generating much revenue, an issue that would probably rattle investors if Yahoo dared to buy them.

A more logical takeover candidate for Yahoo would be AOL Inc., another once-imposing Internet company that was outwitted by innovators such as Google and Facebook. While he thinks an AOL acquisition could work for Yahoo, Cohen said he believes many investors are unnerved by the prospect of Mayer financing a shopping spree with the windfall.

Through last year, Yahoo had purchased a total of 28 companies for a combined $1.4 billion since Mayer became chief executive. Most of the deals consisted of startups staffed by engineers Mayer wanted to hire for their expertise in mobile applications. The one exception: a $1.1 billion purchase of Tumblr.

‘‘She has been making acquisitions that haven’t been producing revenue,’’ Cohen said. ‘‘If she goes for even bigger acquisitions, the stakes will be even higher and the market’s confidence in her is not that strong right now. The market is worried the value from Alibaba could be destroyed.’’

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