Yahoo to spin-off Alibaba shares as earnings slide

Marissa Mayer in front of Yahoo logo Image copyright Getty Images
Image caption The spinoff will allow Yahoo's chief executive Marissa Mayer to focus on the firm's core operations

Yahoo has announced a plan to spin-off its 15% stake in China's Alibaba Group and hand the business to its shareholders.

In creating a separate company that is made up of its stake in Alibaba, Yahoo will avoid a large tax bill.

Yahoo also reported fourth-quarter earnings of $166m (£109m), a 52% decrease from a year earlier.

The company said revenue from display advertising fell by 4% to $532m from a year earlier.

However, investors were cheered by the company's decision to spin-off its Alibaba stake.

Shares in Yahoo increased by more than 6% in trading after US markets closed.

According to a release, Yahoo's remaining 384 million shares of Alibaba - worth about $40bn - will be owned by a newly registered company called SpinCo.

SpinCo shares will then be given to existing Yahoo shareholders.

Renewed focus

By spinning-off the Alibaba shares into a separate company, Yahoo's chief executive Marissa Mayer will please investors - but also put renewed focus on her efforts to turn around the company.

Since taking over in 2012, Ms Mayer has led a string of high-profile acquisitions - most notably that of blogging platform Tumblr - but the company has still struggled to find other streams of revenue as its primacy as a search destination declines.

"I'm pleased to report that our performance in Q4 and in 2014 continues to show stability in our core business," she said in a statement.

"Our mobile strategy and focus has transformed Yahoo and yielded significant results," she added, noting that the company's mobile ad revenue was $1.26bn in 2014.

Fighting fakes

Separately, on Wednesday, a Chinese regulator accused Alibaba of not paying enough attention to illegal businesses conducted on its e-commerce websites and failing to take measures to eliminate issues such as the sale of fake goods.

The report was based on a meeting between Alibaba and government regulators in July before the company's record breaking share flotation in September.

Last month, Alibaba reported that it spent more than $160m (£103m) fighting fake goods on its websites between the beginning of 2013 and November 2014.

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