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Yahoo to Say It's Exploring Strategic Alternatives

bloomberg.com

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Re: Yahoo to Say It's Exploring Strategic Alternatives

#31

Post by WalterBright »

dfar1 wrote: post #3

Dear Yahoo, Remove the fake ads from your home page. Remove the misleading ads from your home page. Sponsored How To Pay Off Your Mortgage Homeowners are surprised and furious. If you owe less than $625,000 on your home, you better read this. Remove the ads from your already terrible email service. Remove the gossip columns that you call news and burry them deep where no one can find it. Stop trying to be good at eve…

Yahoo's finance page is very good, better than anyone else's. With one click URL I can get quotes on all the stocks I'm interested in, with a thumbnail graph, and links to charts, news, etc.

Nobody else is even close.

Re: Yahoo to Say It's Exploring Strategic Alternatives

#32

Post by charlesdm »

alttab wrote: post #17

"We admit we have no vision for this company, or its purpose, outside of maximizing shareholder value. Literally, we have no reason to exist other than preserving capital."

They should probably be returning capital at this point, instead of preserving. Yahoo is way past its expiration date.

Re: Yahoo to Say It's Exploring Strategic Alternatives

#33

Post by PhilWright »

pnathan wrote: post #18
dfar1 wrote: post #3

Dear Yahoo, Remove the fake ads from your home page. Remove the misleading ads from your home page. Sponsored How To Pay Off Your Mortgage Homeowners are surprised and furious. If you owe less than $625,000 on your home, you better read this. Remove the ads from your already terrible email service. Remove the gossip columns that you call news and burry them deep where no one can find it. Stop trying to be good at eve…

Drucker had this idea of a "Business X Ray". Yahoo needs to apply that concept to the business: the most profitable 20% lines of business today and tomorrow need to survive: the other need to be axed; the money flowing into those 80% can be now redirected towards the profitable few. What Yahoo has is breadth of platform: leveraging that can be done, but it will involve pay-to-play for consumers of the platform, somet…

Ah, the classic 80/20 rule. 80% of the revenue comes from just 20% of your products. So your tempted to kill the 80% and become much more efficient. But the problem is that you can now apply the same rule to the remaining business. Do you keep reapplying until you only have a single product left?

Re: Yahoo to Say It's Exploring Strategic Alternatives

#34

Post by henrikschroder »

Riod wrote: post #19
henrikschroder wrote: post #14

It's interesting that the Alibaba holdings are more of a liability than an asset in this situation. YHOO is essentially a proxy for BABA, nothing Yahoo does affects the stock price in any meaningful way, and the value of the core business is effectively negative, if you subtract the post-tax value of Alibaba, Yahoo Japan, and cash on hand. But the value of a declining business with billions in revenue each year must…

Why the assumption that BABA keeps declining in value? Shareholders probably have more faith in BABA than Yahoo core. Would make sense to sell core yahoo and keep Yahoo Japan and BABA under the Yahoo ticker. Reason being the tax from selling the latter two affects your PV more if you believe they will keep growing.

If BABA keeps declining in value, you'll reach a point where in hindsight it'll be obvious that Yahoo should have just sold the holdings, taken the tax hit, and distributed the money to shareholders. And that's a crap situation to be in, because you'll have armchair pundits calling out the company for not doing it.

If BABA stays in value or goes up, then selling off the core is the best option, except it's hard, it has all sorts of complications, it takes a lot more time than someone just buying the entire company, which makes it harder to find buyers, and you might not get as good as price as you could if you sold the entire thing.

Either way, you are making a huge bet on the future value of BABA, and you're damned if you do and damned if you don't.

Re: Yahoo to Say It's Exploring Strategic Alternatives

#35

Post by gnaritas »

sharkweek wrote: post #25
henrikschroder wrote: post #14

It's interesting that the Alibaba holdings are more of a liability than an asset in this situation. YHOO is essentially a proxy for BABA, nothing Yahoo does affects the stock price in any meaningful way, and the value of the core business is effectively negative, if you subtract the post-tax value of Alibaba, Yahoo Japan, and cash on hand. But the value of a declining business with billions in revenue each year must…

You know how I know I'll never be a CEO of a huge company like this? Because I read what you just wrote and thought, "this doesn't sound like something that 1) I could ever solve 2) it just doesn't sound remotely fun to try and figure all this stuff out"

Would a 35million dollar salary change your mind?

Re: Yahoo to Say It's Exploring Strategic Alternatives

#36

Post by sharkweek »

gnaritas wrote: post #35
sharkweek wrote: post #25

Earlier quoted context omitted.

You know how I know I'll never be a CEO of a huge company like this? Because I read what you just wrote and thought, "this doesn't sound like something that 1) I could ever solve 2) it just doesn't sound remotely fun to try and figure all this stuff out"

Would a 35million dollar salary change your mind?

Ha - yes, I would take one year of 35M and then likely be fired.

Re: Yahoo to Say It's Exploring Strategic Alternatives

#37

Post by henrikschroder »

charlesdm wrote: post #29
henrikschroder wrote: post #14

It's interesting that the Alibaba holdings are more of a liability than an asset in this situation. YHOO is essentially a proxy for BABA, nothing Yahoo does affects the stock price in any meaningful way, and the value of the core business is effectively negative, if you subtract the post-tax value of Alibaba, Yahoo Japan, and cash on hand. But the value of a declining business with billions in revenue each year must…

> If Alibaba keeps going down in value, selling it now gives you more money than selling it tax-free in the future. You can't possibly predict that, and thus, a tax free spin off is the only sane option. Also, you can't just dump 15% of BABA stock and expect to get the current market share price. Its value would probably decline by 30-40%. If they succeed and Alibaba buys back that 15% stake (even at a discount) they…

> Sure, it is - it's worth a few billion.

Yahoo market cap: $27.5bn

Alibaba post-tax: $17.5bn

Y! Japan post-tax: $6bn

Net cash: $5bn

Market value of core Yahoo: -$1bn. Ouch!

If Yahoo didn't have those assets, the market cap would fairly reflect the value of a slowly declining multi-billion-dollar business, and it would be perfectly positioned for a takeover by private equity, who would proceed to milk the company dry, delivering tremendous shareholder value for everyone...

But since the uncertainty around the stakes are so high, you get the above weird valuation of the core, which makes selling off the core very difficult. The market doesn't "know" what a fair price for it is.

Re: Yahoo to Say It's Exploring Strategic Alternatives

#38

Post by lesdeuxmagots »

charlesdm wrote: post #30
sharkweek wrote: post #25

Earlier quoted context omitted.

You know how I know I'll never be a CEO of a huge company like this? Because I read what you just wrote and thought, "this doesn't sound like something that 1) I could ever solve 2) it just doesn't sound remotely fun to try and figure all this stuff out"

I can see how that could be fun if you like big picture thinking.

It's only fun in theory. What's not fun is when you have to answer to investors, which give no shits about you or your employees, and only dollars, or what they perceive will increase their returns. Often, this is aligned with what management wants to do and what the employees want to do, but in a situation like this, the incentives can be heavily misaligned.

Re: Yahoo to Say It's Exploring Strategic Alternatives

#39

Post by TheOtherHobbes »

henrikschroder wrote: post #37
charlesdm wrote: post #29

Earlier quoted context omitted.

> If Alibaba keeps going down in value, selling it now gives you more money than selling it tax-free in the future. You can't possibly predict that, and thus, a tax free spin off is the only sane option. Also, you can't just dump 15% of BABA stock and expect to get the current market share price. Its value would probably decline by 30-40%. If they succeed and Alibaba buys back that 15% stake (even at a discount) they…

> Sure, it is - it's worth a few billion. Yahoo market cap: $27.5bn Alibaba post-tax: $17.5bn Y! Japan post-tax: $6bn Net cash: $5bn Market value of core Yahoo: -$1bn. Ouch! If Yahoo didn't have those assets, the market cap would fairly reflect the value of a slowly declining multi-billion-dollar business, and it would be perfectly positioned for a takeover by private equity, who would proceed to milk the company dry…

I don't think that's the true core value - more a statement about the way that Yahoo's current business model (if you can call it that) has a big net negative value.

Currently Y! is literally less than the sum of its parts.

There are a lot of reasons for that, but the absence of a "Where is this company going to be five years from now?" plan has to be a big element.

Investors barely have confidence in the present, never mind the future - mostly because Mayer has completely failed to reassure them.

Re: Yahoo to Say It's Exploring Strategic Alternatives

#40

Post by funkyy »

muglug wrote: post #7
dfar1 wrote: post #3

Dear Yahoo, Remove the fake ads from your home page. Remove the misleading ads from your home page. Sponsored How To Pay Off Your Mortgage Homeowners are surprised and furious. If you owe less than $625,000 on your home, you better read this. Remove the ads from your already terrible email service. Remove the gossip columns that you call news and burry them deep where no one can find it. Stop trying to be good at eve…

Ok, but you've destroyed their business model. How do they generate revenue from webmail now? Millions rely on the yahoo webmail interface, and every request that server fields subtracts from the company's bottom line.

They can advertise, but ad just above the first message drives miss-clicks. Its tricky way to drive CTR up.
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