By Jonathan Davies

Yahoo has announced plans to spin-off its 15% stake in Chinese internet giant Alibaba and pass the business onto its shareholders.

It means Yahoo will create a new, separate company made up of its Alibaba stake. Why? Because it will help Yahoo to avoid a big tax bill.

The announcement came as the tech firm reported a 52% decline in fourth-quarter earnings, down to $166m (£109m). Advertising revenue was down 4% to $532m in the quarter, compared with last year.

"I'm pleased to report that our performance in Q4 and in 2014 continues to show stability in our core business," Yahoo chief executive Marissa Mayer said in a statement.

"Our mobile strategy and focus has transformed Yahoo and yielded significant results."

Ordinarily, those sort of figures would cause share prices to fall. But investors were buoyed by the decision to spin-off the Alibaba stake, sending shares rise 6%.

SpinCo

The new company will be called SpinCo. It will own all of Yahoo's 384 million shares in Alibaba, which are worth around $40bn. Shares in SpinCo will then be given to existing Yahoo shareholders.

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