Tallahassee Journal

Yahoo shares jump; company to spin off Alibaba stake

Yahoo shares jump; company to spin off Alibaba stake

Yahoo shares rallied 7% late Tuesday after the company said it would spin off its remaining $40 billion stake in Alibaba into a separate entity.vStock in the new investment company created by the tax-free move, SpinCo, will be distributed to Yahoo shareholders at the end of the year. The maneuver is good news for investors, who saw declining revenues and earnings from Yahoo’s most recent quarterly results.Yahoo! Sunnyvale headquarters.  October 28, 2001 (Y! Photo / Brian McGuiness)

Yahoo shares rallied 7% late Tuesday after the company said it would spin off its remaining $40 billion stake in Alibaba into a separate entity. Stock in the new investment company created by the tax-free move, SpinCo, will be distributed to Yahoo shareholders at the end of the year. The maneuver is good news for investors, who saw declining revenues and earnings from Yahoo’s most recent quarterly results.

Results for the most recent quarter slightly topped estimates. Operating earnings were 30 cents a share, a penny over forecasts from analysts polled by Thomson Reuters. Sales also beat revenue estimates of $1.19 billion. The company, still the No. 2 most visited Web property after Google, has been battling declining advertising sales as high-profile CEO Mayer is in the midst of a multiyear comeback attempt. Yahoo’s share of the $146 billion worldwide digital advertising market fell in 2014 to 2.36%, from 2.83% in 2013, says eMarketer. Google and Facebook dominate with 31.1% and 7.75% in 2014.

And its share of search continues to fall, despite a new deal with Firefox as the default search engine for the browser. Google dominates with 71.6%, to Bing’s 9.2% and Yahoo’s 5.7%, down from 6.1% in 2013. It is growing in mobile advertising, however. In the U.S., Yahoo reaped 3.2% of the $18.75 billion mobile ad market in 2014, and, according to eMarketer, “is expected to see the largest share increase among the top U.S. mobile ad selling companies between now and 2016.”