In the quarterly earnings report, Yahoo announced the long-awaited spin off from Alibaba to replenish share price.
Investors were hoping that Yahoo would separate their share in Alibaba, China’s record-breaking 2014 IPO, from the core business. Their wishes were answered as the tax-free transaction will split Yahoo in two, with one company containing Yahoo’s remaining 15% stake in Alibaba and a legacy operating business, and the other owning Yahoo’s operating business and its stake in Yahoo Japan, according to Financial Times. Though Yahoo’s core business is mainly stagnant, the spin-off is engaging investors with the company again, especially with commercial acquisition revenue in place such as digital advertising through Brightroll video advertising platform and Mozilla making Yahoo their default search experience on Firefox.
Fourth-quarter revenue was also slightly higher than expected, at $1.3bn compared with the forecast of $1.2bn in the last quarter ending in December and $4.6bn for the full year, above the $4.4bn average analyst estimate.
"We are proud of our accomplishments to date on capital allocation and the returns they have produced for our shareholders," said Ken Goldman, CFO of Yahoo. "Since the beginning of Q2 2012, our significant buyback activity has seen us repurchase 354 million shares, totaling $9.7 billion to date and representing about a 29% gross reduction in our initial share base. At an average price of $27.44, this has been highly accretive for our shareholders. Following the planned tax-free spin-off of the remaining stake in Alibaba, which we also announced today, we will have returned a total of nearly $50 billion in value to our shareholders to date."
Marissa Mayer, Yahoo chief executive, confirmed, “Through share repurchases to date, we have returned approximately $9.7bn of proceeds from Alibaba. Post-spin . . . we will have returned nearly $50bn of value to our shareholders.”
Shares rose nearly 5% at opening of trade on Wednesday, taking Yahoo up to highs of 50.09, since reverting to 48.85, a price relative to pre-announcement levels.
MT4 chart: YAHOO
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