Yahoo! is to spin out its 15pc stake in Chinese e-commerce giant Alibaba into a separate entity SpinCo. Last night Yahoo! reported US$1.2bn in revenues, which includes US$254m in mobile ad revenue.
The tax-free spin-off of its stake in Alibaba will be distributed among shareholders. One of the reasons for the spinoff could be the high tax bill that Yahoo! had to pay after a US$3.3bn gain from the sale of Alibaba Group Holding shares boosted the company’s third quarter profits to an obscene US$6.7bn.
Following the spin-off, Yahoo will continue to operate its core business and hold its 35.5pc interest in Yahoo Japan.
SpinCo will own all of Yahoo's remaining 384 million shares of Alibaba, valued at US$40bn based on the closing price on January 26, 2015, as well as a legacy, ancillary Yahoo business.
Yahoo!'s mobile strategy is working
For the fourth quarter Yahoo! reported a more modest US$166m profit on revenues of US$1.25bn.
“I'm pleased to report that our performance in Q4 and in 2014 continues to show stability in our core business,” said Marissa Mayer, CEO of Yahoo!
“Our mobile strategy and focus has transformed Yahoo and yielded significant results. In Q4, we saw $254 million in mobile revenue, up 23pc quarter-over-quarter. Across all of 2014, we saw gross mobile revenue of US$1.26 billion and GAAP mobile revenue of $768 million.
“Our investment businesses – mobile, video, native, and social – collectively delivered more than $1.1 billion in GAAP revenue, up 95pc year-over-year. These growth drivers have really focused our investments and energy on the future of digital advertising,” Mayer said.
Yahoo! mobile image via Shutterstock