Sell the 40% stake in Alibaba down to 15%, sell Yahoo Japan to Softbank, make it all tax-free by using third parties and come out with $14/share plus a company with cash of $2/share on a stock selling at $16.08?
That great deal?
If you bought Yahoo shares any time since Carol Bartz' September 7 firing as CEO expecting a pop, sell now.
This is all you're going to get.
Yeah, a gain of just $3 and change per share, over three months, sounds like chump change to a big player like you, but if you don't sell into this latest rally you're the chump.
Here's why. This is an insider's deal. The hope is some fancy legal maneuvers will make the whole thing tax free – we put the shares here, they create something there, we trade the two in the middle of the night and the tax man is never the wiser.
Even if the deal gets a green light, it's going to take time to finish. A lot of time. And what happens to the rest of the assets in the meantime?
Nothing, that's what.
Even if you figure, as some do, that Yahoo's $2/share cash pile means you're getting the basic service for nothing, it's because that's what it is worth – nothing.
Who wants it? Google is doing the search, Microsoft is doing the ad sales. What you have left is a content farm without direction, the corporate equivalent of a 404 error.
It's a shame. Yahoo lost the plot in the 1990s, when the aptly-named Tim Koogle did what Wall Street sharpies told him to do, becoming a “portal” instead of concentrating on search, making people like Mark Cuban rich on stock (which was sold back) instead of focusing on the core business.
The lesson here is that Wall Street knows nothing about tech. Never has, never will. If you want to know about tech ask someone who works there.
Now there is no core business. Alibaba has a core business. Softbank has a core business. The only reason for owning Yahoo over the last several years has been to get a taste of those core businesses. And once they're gone there is nothing left.
So sell now. Sell while you have the chance. Don't be a Koogle.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.