So now Yahoo stock is basically going to be a faux Ali Baba stock. This totally seems like a healthy thing and evidence that there is nothing at all wrong with our market system.
Yahoo to Spin Off Its Core Businesses
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Re: Yahoo to Spin Off Its Core Businesses
#12Honest question: what has been Yahoo's core business for the last 15 years?
Re: Yahoo to Spin Off Its Core Businesses
#13Can someone explain why do business like to create new company? What are the benefits for the financial return other than having a book reporting individual revenue? In the end, aren't they going to be under the same parent company, which, if one wishes, can actually challenge and even overrule the child company CEO's decision behind the scene? HP, Google, now Yahoo.
Sometimes companies have one business that's doing quite well and another that's a real stinker. Shareholders may want to own the good business separately and let the market value that without the drag and risk of having the stinker weighing down on it. In the end the stinker is either dismantled, taken into bankruptcy or sold off.
In Yahoo's case it's a bit unique in that the only thing they really have that the market likes is their holdings in other companies. Essentially Yahoo is like a mutual fund that made some good investments but the fund managers are blowing it by running a poorly performing lemonade stand on the side. A lot of the investors just want the holdings and then are happy to let the stinker, Yahoo's original business, just go away. At the moment the market assigns the core business a negative valuation so it's beyond a stinker, it's an anti-company offsetting the value of investment holdings elsewhere under the corporation. It's a real mess.
Re: Yahoo to Spin Off Its Core Businesses
#14https://en.wikipedia.org/wiki/List_of_Yahoo!-owned_sites_and...
What a graveyard.
Re: Yahoo to Spin Off Its Core Businesses
#15Honest question: what has been Yahoo's core business for the last 15 years?
Their answer is "media" but I'm not sure what that means and apparently they aren't either.
Re: Yahoo to Spin Off Its Core Businesses
#16Can someone explain why do business like to create new company? What are the benefits for the financial return other than having a book reporting individual revenue? In the end, aren't they going to be under the same parent company, which, if one wishes, can actually challenge and even overrule the child company CEO's decision behind the scene? HP, Google, now Yahoo.
It makes things easier for investors. Imagine a company with two divisions. One is a solid boring industry with a long history of stable growth and of turning small but consistent profits. The other is in a smaller niche industry, showing impressive growth numbers, but yet to make a profit. As in investor it is hard to value such a company. Will the large old slow growing part hold back the new fast growing part? Will the losses in the smaller division lower the potential dividends of the solid part of the company? By splitting out the parts you can appeal both to investors who like low volatility and reliable dividend payments and to investors whom are willing to accept huge risk in exchange for the chance of 10x returns.
Re: Yahoo to Spin Off Its Core Businesses
#17Yahoo had to do this. They had been hanging onto the belief that the IRS wouldn't tax their Alibaba spin out, a belief that they and their tax accountants alone believed.
Most telling is that Yahoo was up after the markets closed on this news. Heck Bloomberg just sent me a note saying the sentiment of the news on Yahoo was very positive, even the machines like this news:)
Sadly this probably means 3 things are going to happen in the next 6 months:
1) The CEO leaves, and is replaced by an interm CEO from a PE firm who will negotiate the wind down of Yahoo.
2) There will be a lot of companies coming to look at Yahoo. If a deal can be done quickly then I don't think there will be layoffs right away. If no deal can be reached quickly then in 6 months I'll bet there is a very large round of layoffs as the company shutters what it can't sell to make the rest of Yahoo look more appetizing.
3) If Alibaba buys the holding portion of Yahoo( Alibaba and Yahoo Japan) then look for Alibaba to seek to acquire the rest of Yahoo Japan.
From teh article:
> Yahoo’s shift in strategy comes as Ms. Mayer and her husband, Zachary Bogue, are expecting the birth of twin daughters this month
I hope she takes a full year off, if not more. The past 4 years couldn't have been easy on her. It will be interesting to see what she does next.
It's clear she's great at product design and not so good at people skills. Unfortunately, that doesn't fit well with becoming a CEO again.
Re: Yahoo to Spin Off Its Core Businesses
#18I never understood farming out their search engine to Bing in the first place. Google literally prints money with their adwords search business. Seems instead of attempting to innovate they just threw in the towel and gave up? I just find it hard to believe that Google is the only way you can run a successful search engine.
Google's search engine runs at a loss to support their advertising business, and haven't had any serious competition in that sector since they bought Doubleclick (which looks a bit antitrusty in my eyes but what do I know). Yahoo doesn't have much of an ad business so there's not a lot of value in running their own search. They're good at their core business of being a portal, with some parts implemented themselves and some parts external (or semi-external e.g. Flickr) integrations.
Re: Yahoo to Spin Off Its Core Businesses
#19Yahoo had to do this. They had been hanging onto the belief that the IRS wouldn't tax their Alibaba spin out, a belief that they and their tax accountants alone believed. Most telling is that Yahoo was up after the markets closed on this news. Heck Bloomberg just sent me a note saying the sentiment of the news on Yahoo was very positive, even the machines like this news:) Sadly this probably means 3 things are going…
"Sadly this probably means 3 things are going to happen in the next 6 months"
(Genuine question, not snark). Why "sadly"? Companies, even technical companies, get obsolescent and die all the time. Maybe it is just Yahoo's time to go.
Re: Yahoo to Spin Off Its Core Businesses
#20It's almost as if Yahoo doesn't know what their core businesses are anymore. It will be interesting to see if they come out of this with better understanding of their identity.
It seems clear to me. They're an investment business that owns shares in successful companies.
Like Yahoo Maps, Yahoo Green, and Tumblr...?