Why Yahoo! Isn’t Worth Anything To Management and Investors

Why is Yahoo!’s (YHOO) management falling apart?

Well, for one, the board and its most senior leadership are inept and borderline white-collar criminals.

But more importantly (since in Western capitalist cultures few seem to mind working with borderline and actual criminals) Yahoo!’s mishandling of Microsoft’s (MSFT) offer made one thing clear:

Yahoo! - the stock - is not worth a warm bucket of spit… and for its executives, this means YHOO is worthless.

A stock price is the reflection of a company’s current income-generating ability plus the growth potential.  In Yahoo!’s case, growth has been stagnant and its income somewhat abysmal considering how many users and market share it has.

Basically, if you are to plunk money in a stock, there is better places to do so.

I owned YHOO shares but Jerry Yang made me sell everything between $28-30 recently.  I feel sorry for anyone holding YHOO stock because Yang makes the criminals at Enron, Worldcom and Arthur Andersen seem like shareholder activists.

But back to management: why are they leaving?

Like many stocks: Yahoo! had embedded in its stock price a takeover premium.  Given YHOO’s high valuation ($25B to $45B in the past 6 months) there were only two options:

• private equity
• MSFT

In today’s credit climate, private equity is a non-starter… the only option then was MSFT.

And how did that fare?  Not well.  Tack to that YHOO’s disgraceful capitulation in search to Google (GOOG) and any self-respecting YHOO executive will see no reason to stick around.

YHOO down the road will most probably be worth less than YHOO today, no matter how much revenue it generates because the takeover premium had left the building.

Comments

[Sign Seller]

I my opinion yahoo faltered when they came out with Panama, the new ppc bidding system. They took overtures perfectly good system and screwed it up. This was mainly out of greed since the new panama system basically doubled our cost per click. Of course that doesn't really matter since we cut our yahoo ppc advertising about 98% since panama came out.

[yankini]

Majority of the guys left/leaving were good for nothing. If you criticize every move that yahoo makes, to turn itself around, you are simply writing to create a anti-yahoo sentiment. Fortunately, those heady days are gone where a few writers/newspapers influenced shareholders (remember the year 2000). Soon blog writers will also bite the dust because they simply write their opinions not informed analysis. most bloggers like the one above have never even talked to any company execs or read SEC filings.....

[nukldrager]

If yahoo is losing it's brains, doesn't that make it ripe for a take over with respect to the value of it's online footprint?

[StrictNon-Conformist]

Wow, Ashkan,

What a way to stick your neck out legally by accusing public people of being criminals of a high order of dubious achievement! You do realize just how much crap you've jumped into, by stating that? You don't even couch it in "I believe they are..." but rather come right out and state "They are" and there has been no legal investigation or ruling to say that they have, and yet, because you don't like what they've done, you assume it must be criminal action they've been committing!

There's a bit of leeway top executives have in carrying out their directives, and they have far more knowledge of what the situation is than you do, and you clearly can't look past your short-term stock price gains/losses, especially since you don't have the inside poop of what's planned long-term.

There's a line between what might reasonably be called journalism, and what is called libel: you can call anyone you want a criminal when it has been proven, and if you believe they're guilty of crimes, you can state you believe they're guilty, but when you come out and state it like you have, that's libel! You, unkind sir, are the real criminal in this story!

[tyneham]

Ashkan Karbasfrooshan assessment is right when he said Yahoo "makes the criminals at Enron, Worldcom and Arthur Andersen seem like shareholder activists". I will second it hereby, and challenge Yahoo to waste money on litigation in the UK courts all the way to judicial reviews and appeals. That may also apply to a number of other US outfits, including Google's scams related to Internet click fraud which is underestimated by web-traffic auditors. The fraud is deceptively downplayed by major financial beneficiaries and their small time accomplices or affiliates. Big or not, no online advertiser is immune from growing the fraud. There is mounting unease and concerns over the fraud on all websites that have affiliate programs. These serious, legal issues are not being addressed by the law makers in most countries.

By some logical estimates, click fraud could be over sixty percent. However, even one percent of $90 billion of global 2008-2009 Internet ad spend is too high, mainly because advertisers, big or small, are still deceived, overcharged by millions and thus defrauded every day.

Read how, for example, "Yahoo protects online fraudsters, locks out legal ethical experts," web links here tyneham.wordpress.com , del.icio.us/tyneham?se... where some cases are cited, www.networkworld.com/c... , tyneham.blogspot.com , tyneham.newsvine.com