Yahoo earnings: Alibaba and ads in focus

With Yahoo set to report second-quarter earnings after the markets close today, there’s a big question regarding its Alibaba spinoff, because taxes.

In an SEC filing Friday, Yahoo detailed plans for its spinoff, Aabaco Holdings, which will control Yahoo’s remaining $30 billion stake in Chinese Internet company Alibaba and Yahoo’s small-business unit. As the IRS considers changing its rules about tax exemptions for spinoffs, it’s now unclear whether Yahoo will be able to avoid paying taxes on the spinoff. And another analyst tells MarketWatch that other separate tax questions remain regarding the spinoff.

So yes, Alibaba continues to be a big part of the story of Yahoo’s life. But what about the Sunnyvale company’s main business?

Yahoo missed Wall Street’s expectations last quarter, but Matt O’Brien wrote in April that CEO Marissa Mayer pointed to promising growth in revenue from search and mobile ads despite a decline in mobile-ad revenue in the first quarter.

Analysts expect the company to post second-quarter profit of 18 cents a share on $1.032 billion in revenue, a decline from earnings of 37 cents a share on $1.04 billion in sales in the year-ago period.

Yahoo shares, which have had a tough past few months but a better July, are up less than 0.5 percent to $39.67.


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