Yahoo Beats Q4 Views, Will Spin Off Alibaba Stake

Yahoo! Inc. YHOO gained in the extended session after it unveiled spin-off plans for its Alibaba Group Holding Ltd BABA stake and beat fourth-quarter expectations by a significant margin.

Yahoo changed hands recently at $51.61, up more than 7 percent.

Yahoo will spinoff its remaining stake in Alibaba tax free into a separately traded company with its stock distributed to Yahoo shareholders.

The 384 million shares of Alibaba held by Yahoo are worth $40 billion, based on their January 26 closing price.

Following the spinoff, Yahoo will continue to operate its core business and hold its 35.5 percent interest in Yahoo Japan.

The spinoff is expected to close in the fourth quarter, following expiration of a one-year lock-up agreement related to Alibaba's initial public offering.

Separately, Yahoo posted fourth-quarter results that beat expectations by a significant margin and said it will provide an outlook in a conference call slated for 5 p.m. EST.

Yahoo posted fourth-quarter net earnings of $166 million on EOPS of $0.30.

Wall Street expected fourth-quarter adjusted earnings of $0.29 a share.

Revenue in the recent period grew 1 percent to $1.27 billion, from $1.25 billion a year earlier.

Analysts had forecast fourth-quarter revenue of $1.19 billion.

For the March quarter, Wall Street expects earnings of $0.25 a share on revenue of $1.1 billion.