Yahoo! shares jump 7% after results and reports of Alibaba spinoff plan

Technology giant Yahoo! rose as much as 6% in after-hour trading, after the company said it would sell its remaining stake in Alibaba.

The group’s stake in the Chinese e-commerce provider accounts for the majority of Yahoo’s $46bn market capitalisation and the Yahoo! has revealed plans for a tax-free spinoff.

After the deal, the group will continue to operate its core business and hold its 35.5% interest in Yahoo! Japan.

The new firm will own all of Yahoo!'s remaining shares of Alibaba, which are valued at $40bn, without assuming any debt in the deal, as Yahoo will retain its cash.

Meanwhile, the group’s fourth quarter revenue fell to $1.25bn from $1.27bn in the corresponding period a year ago, while revenue excluding traffic acquisition costs – a critical cost of revenue for internet search firms – fell to $1.18bn from $1.2bn.

The company reported its adjusted earnings per share rose to 30 cents a share, slightly above a consensus reading of 29 cents.