Altaba Inc. (NASDAQ:AABA) Q4 2014 Earnings Conference Call - Final Transcript

Jan 27, 2015 • 05:00 pm ET

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Altaba Inc. (NASDAQ:AABA) Q4 2014 Earnings Conference Call - Final Transcript

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Presentation
Operator
operator

Good afternoon and welcome to Yahoo!'s Fourth Quarter and Full year 2014 Earnings Video Webcast. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. As a reminder this conference call is being recorded. The webcast today will be moderated by our business reporter from Yahoo! Finance, Mike Santoli.

(Forward-looking Cautionary Statements) We encourage you to review the complete slide presentation on our Investor Relations website at investor.yahoo.com under Earnings.

And with that, let me turn the program over to Mike.

Executive
Michael Santoli

Welcome to Yahoo!'s fourth quarter and full year 2014 earnings video webcast. I'm Mike Santoli and I'll be moderating today's earnings event. Here with me are Marissa Mayer, Yahoo!'s Chief Executive Officer; and Ken Goldman, Yahoo!'s Chief Financial Officer. Today we bring you prepared remarks from both Marissa and Ken around Yahoo!'s fourth's quarter and full year performance. Later they will be answering your questions.

I'd like to now turn it over to Marissa.

Executive
Marissa Mayer

Thank you for joining us on our live earnings webcast covering our Q4 and 2014 results. Before I go into our quarterly and annual financials I'd like to dedicate the first portion of the call to the announcement we sent out earlier today regarding our Alibaba holdings. As our shareholders are aware Yahoo! owns a total of 384 million shares of Alibaba, which comprises 15.4% of Alibaba and is worth nearly $40 billion, using Monday's closing Alibaba share price. Following the Alibaba IPO these shares are subject to a one year lock-up agreement that runs until September 21, 2015. If sold or transferred through ordinary means the proceeds will be taxable at approximately 40%. Given the low basis this will give rise to a tax liability of approximately $16 billion or roughly $16 per share of Yahoo!

For over two years we have worked with leading tax, accounting, legal and financial advisors to identify and design an optimal transaction that could maximize the value of our Alibaba stake in a tax efficient manner. Today I am happy and proud to announce that management has recommended and the Yahoo! Board has authorized a plan to pursue a tax free spin off of 100% of the company's remaining holdings in Alibaba. We expect to effectuate the spin off in Q4 of 2015. This will result in two independent publicly traded companies.

The spin-off company, which we referred to as SpinCo will be a newly formed independently registered investment company that will hold 384 million shares of Alibaba and a legacy ancillary business that we will separate from Yahoo!'s core. The transaction will be subject to closing conditions including regulatory review as appropriate for a deal of this type. After an exhaustive review we are pursuing this transaction as we believe it maximizes value for our shareholders and optimizes transaction efficiency and certainty.

This is the structure that we can pursue and affect independently capturing value exclusively for our shareholders and we made the conscious