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Yahoo misses profit expectations in what could be its last-ever earnings report

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Re: Yahoo misses profit expectations in what could be its last-ever earnings report

#91

Post by jonathankoren »

tuna-piano wrote: post #51
xxbondsxx wrote: post #24

Earlier quoted context omitted.

> Wouldn't the prudent thing to do be to sell at least enough stock to pay the tax? It's not liquid yet, that's the issue. That's what is nice about most RSU plans -- they immediately sell to cover, so you don't receive a ton of stock with an attached tax bill. But illiquid options are different; the capital gains tax is for the paper-wealth you just received. That same paper wealth can evaporate, but the tax bill re…

So you have an asset that is considered worth a price, but you cannot buy it or sell it at that price? Seems to me an unfortunate tax policy.

It's the exercise and hold that gets you. If you do a same day sell, you have the money to cover the taxes immediately, since you sold. If you exercise and hold, you pay the money to exercise, and now owe taxes on the asset at fair market value of the assets when exercised, which you might not have because your bank account is actually decreasing. In the future, if the asset loses value, even if you sold all of it, you may still be left with a tax bill you can literally never repay.

Re: Yahoo misses profit expectations in what could be its last-ever earnings report

#93

Post by jonathankoren »

trimbo wrote: post #41
elgabogringo wrote: post #29

Earlier quoted context omitted.

I mostly know that him through reading about his daughter on TMZ

Haha! Terry Semel is where the "Yahoo is a media company" thing began. http://www.zdnet.com/article/can-terry-semel-yahoo/ http://www.wired.com/2007/02/yahoo-3/ I'm still puzzled by Yahoo's hiring Semel, more than any other executive mentioned in this thread. (e.g. hiring Fiorina for HP made sense at the time).

Yahoo was always trying to position itself as a media company rather than a tech company. It was a strategic decision to fend off Microsoft -- who was a very very real threat in late 90s. Also, keep in mind that AOL was huge and actually bought Time Warner in an attempt at vertical integration (cable modems, Internet, and content). These decision made lots of sense at the time.

Portals were a big deal. Providing content and being a destination were considered important. They're still important, but apparently being a site that sells classified ads on URL redirects turns out to be a better deal.

Re: Yahoo misses profit expectations in what could be its last-ever earnings report

#94

Post by lostlogin »

demonshalo wrote: post #83
tuna-piano wrote: post #51

Earlier quoted context omitted.

So you have an asset that is considered worth a price, but you cannot buy it or sell it at that price? Seems to me an unfortunate tax policy.

almost all tax policies are unfortunate.

.. Although it is handy to have had an education, healthcare, police service, fire service, roads, libraries etc. But other than that stuff, it's very unfortunate.

Re: Yahoo misses profit expectations in what could be its last-ever earnings report

#95

Post by douche »

awad wrote: post #89
kalleboo wrote: post #65

Earlier quoted context omitted.

I would have used Microsoft as an example of a former software company that has started banking on hardware (Xbox, Surface, Nokia)

This list of billion dollar lines of business at Microsoft was generated in 2013 but let's go with the safe assumption that from 2013 they doubled down on the software components (which they did) and kind of lukewarm accepted the other parts of the business: Windows (which also, up until now, included Surface, which contributed $853 million to the total in fiscal 2013) Windows Server Windows Azure Office (client) Xbo…

Azure and Office 365 have to be an even bigger portion of this now than then. The number of companies moving to Office 365 for their Exchange and Office usage is enormous. Millions and millions of seats, at $5-10 per month per seat (or more), adds up quickly.

Re: Yahoo misses profit expectations in what could be its last-ever earnings report

#96

Post by hueving »

theli0nheart wrote: post #22
throwaway76543 wrote: post #12

Earlier quoted context omitted.

Generally this occurs when you exercise an option to purchase stock, then hold the stock while it significantly depreciates in value. Fairly common scenario during the dot-com bubble. 1) Option at $1 2) Exercise at $100, spending $1 to buy. Tax on $99 short term capital gains owed, or ~$35. 3) Stock falls to $10 and sold for a $9 profit. You still owe $35 capital gains and spent $1. Net loss of $25 per share.

> 2) Exercise at $100 [1], spending $1 to buy. Tax on $99 short term capital gains owed, or ~$35. This makes no sense. Simply exercising an option is not a taxable event--you're just trading a contract for shares of a stock. There's no money going into your bank account. Furthermore, you aren't taxed short-term capital gains when you haven't realized a profit. You'd need to exercise AND sell at $100 / share for those…

Sorry, but you are spreading dangerous misinformation. https://blog.wealthfront.com/exercise-stock-options-taxes/

Re: Yahoo misses profit expectations in what could be its last-ever earnings report

#97

Post by ghaff »

tuna-piano wrote: post #15
throwaway76543 wrote: post #12

Earlier quoted context omitted.

Generally this occurs when you exercise an option to purchase stock, then hold the stock while it significantly depreciates in value. Fairly common scenario during the dot-com bubble. 1) Option at $1 2) Exercise at $100, spending $1 to buy. Tax on $99 short term capital gains owed, or ~$35. 3) Stock falls to $10 and sold for a $9 profit. You still owe $35 capital gains and spent $1. Net loss of $25 per share.

Wouldn't the prudent thing to do be to sell at least enough stock to pay the tax? If not allowed to sell at that point- just short stock to have the equivalent effect (minus fees)? Something else I've never understood to be rational - If you wouldn't buy $10 in yahoo stock- why would you hold it because you have it? My uninformed but seems logical answer would be sell the stock you got, pay the tax and buy and index…

You're right but remember that this was happening during a period when it was really hard to not get sucked into the "irrational exuberance" with Yahoo being as much of a poster child as anyone.

I got burned in this way with my company's options but fortunately only a modest amount that I exercised and held. I had a fair number of total shared but fortunately they recovered somewhat over time and have been a good source of capital gains offsets in any case :-)

Re: Yahoo misses profit expectations in what could be its last-ever earnings report

#98

Post by retube »

shams93 wrote: post #6

Its taken them a while, all their peers except for Amazon have essential gone to the dust. If Geocities had been bought by say Google instead of Yahoo I could have easily flipped my options into my own startup. However dot bomb hit so hard instead of wealth I was left holding a huge capital gains tax bill that forced me into 10 solid years of hardcore poverty as most of my income was confiscated to pay off the debt.…

oh man the US tax code is so f*cked

Re: Yahoo misses profit expectations in what could be its last-ever earnings report

#100

Post by option_greek »

hkmurakami wrote: post #55
a_small_island wrote: post #19

Earlier quoted context omitted.

Have you written more about this? I would love to read more details.

One person who avoided this was Mark Cuban, who bought a bunch of Yahoo! put options when broadcast.com was acquired, hedging himself against the stock crash.

Nice strategy. I wonder why others didn't do it.
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