Yahoo shares sink on Alibaba spin-off tax question

Yahoo shares slid on Tuesday after the Internal Revenue Service refused to promise that the Internet pioneer's plan for spinning off its Alibaba holdings would sidestep US taxes. 

PHOTO: BLOOMBERG

SEP 9, 20157:08 AM

[SAN FRANCISCO] Yahoo shares slid on Tuesday after the Internal Revenue Service refused to promise that the Internet pioneer's plan for spinning off its Alibaba holdings would sidestep US taxes.

Yahoo shares sank nearly three per cent to US$30.03 in after-market trades that followed release of word that the IRS declined a request for a preliminary ruling that the way the spin-off is structured satisfies requirements for avoiding taxes on the multi-billion-dollar stake in Alibaba.

"The IRS notified Yahoo's counsel that it had determined, in the exercise of its discretion, not to grant the requested ruling," Yahoo said in a Securities and Exchange Commission filing on Tuesday.

"At the same time, the IRS indicated that it had not concluded that the proposed spin-off transaction was taxable and therefore was not ruling adversely on the request." Yahoo in July formally notified US regulators that it is spinning off its stake in Chinese e-commerce giant Alibaba to an independent new company called Aabaco Holdings.

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Aabaco will wind up owning approximately 384 million shares of Alibaba Group, representing an interest of about 15 per cent, according to an SEC filing.

The move was designed to sidestep taxes and appease investors eager to tap into Yahoo's rich stake in Alibaba. The IRS decision to remain mum about the deal for now raised worry by investors that a big tax bill may be in store.

Under the spinoff plan, which was announced early this year, all outstanding shares of Aabaco will be distributed to Yahoo stock holders.

Yahoo will also transfer to Aabaco services for small businesses that it hosts in its Internet cloud.

Yahoo bought a 40 per cent stake in the Chinese company in 2005 for US$1 billion.

AFP

      

China: Stocks rise in early trading, extending Tuesday's gains

PHOTO: REUTERS

SEP 9, 20159:57 AM

[SHANGHAI] China major stock indexes rose in early trading on Wednesday., extending Tuesday's near 3 per cent gain, suggesting that Beijing's efforts to stabilise the market is beginning to pay off.

The CSI300 index rose 0.8 per cent to 3,359.98 points at 0138 GMT, while the Shanghai Composite Index gained 0.8 per cent to 3,194.83 points.

China CSI300 stock index futures for September rose 1.7 per cent, to 3,328.2, 31.78 points below the current value of the underlying index.

The Hang Seng index in Hong Kong was up 1.8 per cent, to 21,630.75 points.

REUTERS

Update: Asia: Stocks catch a lift from Wall St, Europe

PHOTO: BLOOMBERG

SEP 9, 201511:05 AM

[TOKYO] Asian shares caught a tailwind on Wednesday after upbeat German economic data powered gains in US and European markets, while the safe-haven yen skidded as investors' mood turned positive.

MSCI's broadest index of Asia-Pacific shares outside Japan was up 2.5 per cent by 0250 GMT, with gains across all the major indices that were open.

Japan's Nikkei soared 5.7 per cent, on track for its biggest one-day rise since March 2011. In the previous session, it lost 2.4 per cent and wiped out its year-to-date gain.

Major Wall Street indices all logged gains of more than 2 per cent overnight.

European stocks also had a banner day on news Germany's imports and exports hit record highs in value terms in July.

Chinese shares rose late on Tuesday after digesting a bigger-than-expected drop in imports. The trade data raised fears that China's slowdown could be sharper than many had expected, which in turn raised hopes that Beijing would muster more easing steps to prevent a hard landing.

The Shanghai Composite index climbed 1.7 per cent on Wednesday. Hong Kong's Hang Seng index added 2.7 per cent. "With many markets having been sold off heavily over recent weeks, today's rally, like the US last night, represents a speculative bounce," said Angus Gluskie, managing director of White Funds Management in Sydney. "The market will remain susceptible to a return of negativity until we see signs of some improvement in the original causes of weakness, which were predominantly Chinese growth concerns," he said.

The dollar put in a mixed performance, slipping slightly against a basket of six rival currencies to 95.945, and against the euro to US$1.1191.

But the greenback firmed about 0.5 per cent against the yen to 120.25 as the improved market mood sapped some of the appeal of the perceived safe-haven Japanese currency.

The euro also gained on the yen, rising 0.3 per cent to 134.56.

Crude oil futures remained steady but at low levels on lingering concerns about a global supply glut.

US crude rose 0.2 per cent to US$46.15 ahead of weekly crude inventories data due from industry group American Petroleum Institute later in the session.

Brent crude rose 0.4 per cent to US$49.74, after jumping 4 percent the previous session following upbeat German economic data.

REUTERS

     

Instagram steps up advertising effort, adds 30 markets

Instagram unveiled plans on Wednesday to expand its offerings to advertisers, opening up possibilities for global marketing efforts on the Facebook-owned photo-sharing network. 

PHOTO: AFP

SEP 9, 201512:48 PM

[SAN FRANCISCO] Instagram unveiled plans on Wednesday to expand its offerings to advertisers, opening up possibilities for global marketing efforts on the Facebook-owned photo-sharing network.

"Starting this month Instagram is open for business and available to advertisers large and small," Instagram said in a statement.

The expansion will allow advertisers to launch global campaigns in a variety of formats including video ads of up to 30 seconds.

Instagram, which was acquired by Facebook in 2012, has had only limited advertising opportunities up to now. In 2013, it began with a small number of "sponsored" posts by well-known brands such as Michael Kors and Adidas.

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The new system could help Instagram generate considerably more revenue.

"Over the past few months, we've been working to make ads on Instagram available to more types of businesses on a self-serve basis," the statement said.

"We're excited to announce that starting this month, advertisers both large and small can run campaigns on Instagram. In addition, ads are now available in more than 30 new countries - including Italy, Spain, Mexico, India and South Korea - and will be launching in markets around the world on September 30."

Instagram is also launching a service called Marquee, a "premium" advertising product aimed at driving mass awareness in a short time-frame for events like movie premieres and new product launches.

Instagram has more than 300 million users around the world and is seen as a potential growth segment for Facebook, which has nearly 1.5 billion users.

The research firm eMarketer projects that Instagram can generate 14 per cent of mobile ad revenue for Facebook by 2017, and generate some US$2.8 billion for the group.

Last month, Instagram broke its square mold with an update that adds portrait and landscape formats to the image-sharing smartphone application, which also opened up new possibilities for advertisers.

"With the addition of new formats, we're starting to see marketers achieve a range of objectives, from web site clicks to mobile app installs," the Instagram statement said.

AFP