Yukking It Up On Yahoo: Clownish Trade Of The Day

May.21.12 | About: Yahoo! Inc. (YHOO)

Clownishness, much like beauty, stands in the eye of the beholder. So let's gather together to behold a clownish trade. Granted: playing Monday Morning quarterback to lame stock trades is a bit selective, even venal. But in the end, you learn from analyzing mistakes. Plus, what's more fun than making fun of missteps and pratfalls? With all that said, welcome to the next installment of The Clownish Trade of the Day …

And so Yahoo (NASDAQ:YHOO) is up because they did what everyone knew they were eventually going to do but were too incompetent and disorganized for too long to pull off?

Cool your jets, Clown.

Here's the deal on the long-anticipated deal:

Yahoo will sell half its 40 percent stake in Alibaba Group (OTC:ALBCF), the holding company of a China-based e-commerce site for roughly $7 billion, with the rest coming in portions (or whole, it's a bit open-ended) after an Alibaba IPO.

Got all that? Good, because they've been working on this deal since the Internet was a mere gleam in Al Gore's eyes.

Moreover, after a the standard short period of relief, during which traders will marvel that Yahoo actually got something-anything!-done, the company is still faced with a challenging future, while rudderless. After the Carol Bartz era proved more train wreck than salvation, Scott Thompson turned his resume into a work of fiction, writing the latest chapter in the search-firm's sordid modern history.

Now Yahoo is without a permanent CEO, a discernible plan or a certain footing in a competitive field. Google (NASDAQ:GOOG), Microsoft (NASDAQ:MSFT) and even Facebook (NASDAQ:FB) are eating their search and Internet advertising lunch.

Look, Clown: the Alibaba deal is no longer languishing in mergers and acquisition's purgatory, neither here nor there, where every week brought rumor and distraction. And that's not a bad thing. But Yahoo's systemic problems linger. Their leadership issue is still an open-sore. And competition swirls.

Acting like this deal makes it all better for Yahoo is no joke.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.