January 27, 2015 Last Updated 3:26 pm

Yahoo reports revenue and profits down slightly versus same quarter of 2013

Company to spin off Alibaba in effort to avoid paying taxes on sale of shares

The Internet portal Yahoo today reported earnings after the bell, saying revenue and profits were down slightly against the same quarter in 2014.

Revenue for the final quarter of 2014 came in at down 2 percent, with search revenue flat, but display down 5 percent. Adjusted EBITDA came in at $409 million, down 14 percent against Q4 of 2014. (Total revenue, minus traffic costs, came in at $1.18 billion.)

What investors really wanted to know is what Yahoo planned to do with its Alibaba windfall. The answer is take a tax-free spin-off of 100% of the company’s remaining stake. That will create a company called SpinCo (really), along with the existing Yahoo, which will retain its 35.5 percent equity interest in Yahoo Japan.

Investors will like the tax-free nature of the deal, but how this really builds Yahoo is another question. It feels like a windfall for Melissa Meyer, Yahoo officers, and investors as 100 percent of the shares of SpinCo then get distributed to current shareholders. Call it a bribe to shut up while the company continues to find a way to turn itself around.

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