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Warren Buffett and Dan Gilbert Unite in Bid to Acquire Yahoo

nytimes.com

41–50 of 135 posts

Re: Warren Buffett and Dan Gilbert Unite in Bid to Acquire Yahoo

#41

Buffett is no fool. Berkshire is providing the financing to Dan Gilbert's group and will receive guaranteed interest as well as an option to convert to equity. I'm sure that financing is jammed packed with warrants and covenants. Buffett has basically parlayed the prestige of his name into sweetheart deals with provisions that no other company could get (eg. his investment in Goldman Sachs).

But who cares about yahoo? (Serious question) yahoo should just die. Please tell me why it shouldn't

As a consumer, it might make sense to say this.

From a business perspective (he says having no business experience or expertise), Yahoo is a collection of assets: Code, people, branding, community. They aren't in first place, and they aren't profitable at the moment, but I think the case that they have zero or negative value is a bit simplistic.

Put it another way: Would you rather throw a pile of money at trying to build a collection of code, talent, business contracts, and users from scratch, or would you rather buy an EXISTING collection, on the cheap, and work instead to flip it into a profitable business? Both are risky ventures, but everything I've seen says it's harder to build from scratch than it is to keep existing users.

Perhaps your answer is that you'd prefer to build it from scratch, but do you see why - if the answer takes some thought to determine - that someone else might come to a different conclusion?

Heck, even if you want to completely toss the business model - even if you want to toss everything they've done and what they are trying to do - I'd imagine the servers, in-house expertise, and collected code and utilities, not to mention any purchased or licensed software, would make Yahoo worth considering as an acquisition.

Re: Warren Buffett and Dan Gilbert Unite in Bid to Acquire Yahoo

#42
post #22

This is the emotional Dan Gilbert who enjoys Comic Sans http://deadspin.com/the-cavaliers-finally-took-down-dan-gilb...

I'm an ex-Quicken Loans employee, and my best guess is that Dan enjoys Comic Sans so much because of the reaction it gets. The billionaire equivalent of trolling.

To that end, while working on the web team we added a Konami code to the QL website that would change the entire site to Comic Sans. I just checked and sadly that Easter Egg got lost in a redesign.

Re: Warren Buffett and Dan Gilbert Unite in Bid to Acquire Yahoo

#43
post #16
post #14

Earlier quoted context omitted.

> In fact many analysts say that if you strip out the valuable asian assets, the value implied by the market for Yahoo's US business is about zero or even negative. If the value implied by the stock price is zero or negative, then even buying the company and selling off the office furniture nets you a tidy profit. More realistically, it's very likely that if a company has negative value -- ie, that someone would pay…

I don't think that's true. Even badly performing companies like Yahoo! aren't only priced as a sum of their physical assets, but also intangible ones, e.g. the skills of their employees, their market position etc.

Someone actually did a calculation of this just recently, like about a month ago max. Adding up the Alibaba stake, the Yahoo Japan stake, the office and associated infrastructure, that summing those up totalled far less than the current share price. Somewhere around -8 billion IIRC.

Re: Warren Buffett and Dan Gilbert Unite in Bid to Acquire Yahoo

#44

Earlier quoted context omitted.

But who cares about yahoo? (Serious question) yahoo should just die. Please tell me why it shouldn't

As a consumer, it might make sense to say this. From a business perspective (he says having no business experience or expertise), Yahoo is a collection of assets: Code, people, branding, community. They aren't in first place, and they aren't profitable at the moment, but I think the case that they have zero or negative value is a bit simplistic. Put it another way: Would you rather throw a pile of money at trying to…

[deleted]

Re: Warren Buffett and Dan Gilbert Unite in Bid to Acquire Yahoo

#45

Earlier quoted context omitted.

But who cares about yahoo? (Serious question) yahoo should just die. Please tell me why it shouldn't

As a consumer, it might make sense to say this. From a business perspective (he says having no business experience or expertise), Yahoo is a collection of assets: Code, people, branding, community. They aren't in first place, and they aren't profitable at the moment, but I think the case that they have zero or negative value is a bit simplistic. Put it another way: Would you rather throw a pile of money at trying to…

Big misconception: Yahoo is profitable, it's just not growing.

Re: Warren Buffett and Dan Gilbert Unite in Bid to Acquire Yahoo

#46

Buffett is no fool. Berkshire is providing the financing to Dan Gilbert's group and will receive guaranteed interest as well as an option to convert to equity. I'm sure that financing is jammed packed with warrants and covenants. Buffett has basically parlayed the prestige of his name into sweetheart deals with provisions that no other company could get (eg. his investment in Goldman Sachs).

Yeah - this is likely a place for Buffett to park some cash with sensible returns/risk for Berkshire. It is not likely to be Buffett jumping into the tech business.

My guess is that Buffett's team looked generally at the risks within Yahoo and hedged them with generous covenants on the financing.

I am surprised that Gilbert didn't get Wall St financing. I would think that analysts at the big banks could structure a deal more carefully aligned with the underlying risks.

Re: Warren Buffett and Dan Gilbert Unite in Bid to Acquire Yahoo

#48

Buffett is no fool. Berkshire is providing the financing to Dan Gilbert's group and will receive guaranteed interest as well as an option to convert to equity. I'm sure that financing is jammed packed with warrants and covenants. Buffett has basically parlayed the prestige of his name into sweetheart deals with provisions that no other company could get (eg. his investment in Goldman Sachs).

But who cares about yahoo? (Serious question) yahoo should just die. Please tell me why it shouldn't

A lot of non-technical older users still use Yahoo properties. My mom still uses Yahoo Mail, and Yahoo.com is her homepage (by choice).

I don't know how to quantify what that's worth, but I can't imagine it's nothing.

Re: Warren Buffett and Dan Gilbert Unite in Bid to Acquire Yahoo

#49
post #45

Earlier quoted context omitted.

As a consumer, it might make sense to say this. From a business perspective (he says having no business experience or expertise), Yahoo is a collection of assets: Code, people, branding, community. They aren't in first place, and they aren't profitable at the moment, but I think the case that they have zero or negative value is a bit simplistic. Put it another way: Would you rather throw a pile of money at trying to…

Big misconception: Yahoo is profitable, it's just not growing.

Check. https://www.theguardian.com/technology/2016/apr/19/yahoo-qua...

Yahoo announced falling revenues and a quarterly loss of $99.2m on Tuesday - from April 19, 2016

Re: Warren Buffett and Dan Gilbert Unite in Bid to Acquire Yahoo

#50

Earlier quoted context omitted.

But who cares about yahoo? (Serious question) yahoo should just die. Please tell me why it shouldn't

As a consumer, it might make sense to say this. From a business perspective (he says having no business experience or expertise), Yahoo is a collection of assets: Code, people, branding, community. They aren't in first place, and they aren't profitable at the moment, but I think the case that they have zero or negative value is a bit simplistic. Put it another way: Would you rather throw a pile of money at trying to…

Yes, of course it has some teardown value. Billions in Ali Baba stock if nothing else.

But that's not what you're suggesting - doubling down by doing more of what they've been doing. This assumes that what they're doing has some useful foundation you can find and build on.

There are essentially zero Yahoo users, especially of any service that's remotely monetizable. People who use Yahoo are people whose ISP set it as their default homepage ten years ago.

You can hear the fail in their words. They're talking about retaining users, not offering value. They still want to be a portal (ie the base of every action you take), something users didn't want when it was new.

That's the business legacy you'd have to reverse before you stop producing negative-value, let alone actually produce something that may actually be valuable.

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