Say Goodbye To Your Margins: What Google Fi Means For Verizon
Cameron Graham • 73 Comments
Cameron Graham • 73 Comments
Wed, Oct. 19, 10:46 AM
- Yahoo (NASDAQ:YHOO) is up 2.5% today, just 4.8% below last month's 52-week high, after it posted profits that beat expectations in Q3 and analysts mostly looked past them to a pending buyout by Verizon (NYSE:VZ).
- Considering the lack of comment from Yahoo management, the results are likely to be overshadowed by Verizon's commentary when it delivers earnings tomorrow, analysts agree.
- Nomura raised its price target to $45, from $39, to reflect appreciation of the company's stake in Alibaba. Analyst Anthony Di Clemente believes Verizon would be hard pressed to show material adversity for the deal, based on similar past events, and the Yahoo results aren't likely to add any pressure there.
- An implied discount on Yahoo's Alibaba stake has increased since Verizon commented on Yahoo's breach, says SunTrust Robinson Humphrey's Bob Peck, who has a Hold rating and $42 price target. But the key question tied to the Verizon deal is whether Yahoo could even open up the process again to new bidders, he says.
- Morgan Stanley (Equal-Weight, $42 price target) and Oppenheimer (Outperform, $53) agree that any risk to the deal is overshadowed by the fact that Yahoo's basically a trading vehicle for the Alibaba stake, so BABA bullishness can outweigh any M&A concerns.
- Yahoo yesterday guided to Q4 revenue (ex-TAC) of $880M-$920M, below estimates for $938M, and to adjusted EBITDA of $260M-$300M (above a consensus for $245M).
Tue, Oct. 18, 10:34 AM
- Needham has cut Yahoo (NASDAQ:YHOO) to Hold with talk in the air of Verizon (VZ -0.4%) potentially walking away from its deal to buy the Internet business, or getting a lower deal price.
- But valuation also plays a part as the firm reduces its rating to Hold from Buy, as does Yahoo's cancellation of its Q3 earnings call, which "also troubles us." Yahoo's up 1.5% today to $42.40, above Needham's $40 price target.
- Last week, Verizon's general counsel was quoted as saying there was a "reasonable basis" to think that the massive 500M-account data breach at Yahoo would prove material to Verizon's $4.83B deal to acquire it.
- Yesterday, Credit Suisse set a price target of $52 on Yahoo shares (implying 23% upside), and MKM Partners boosted its price target to $51 from $44.
- Yahoo reports after the bell today, but won't hold a conference call because, it says, of the pending acquisition.
Thu, Oct. 13, 2:52 PM
- Verizon (NYSE:VZ) General Counsel Craig Stillman has raised alarm bells over the company's $4.83B deal to buy the Internet business at Yahoo (NASDAQ:YHOO) in saying that a "reasonable basis" exists to believe a massive user data breach at Yahoo is material to the takeover deal.
- Late last month, Yahoo confirmed a breach that happened two years ago that it believe affected 500M user accounts. And earlier this month a Reuters report said the company built a secret program to scan incoming user mail at the behest of the U.S. intelligence community.
- The breach could trigger a clause allowing for Verizon to get out of the deal, Stillman says.
- "I think we have a reasonable basis to believe right now that the impact is material and we're looking to Yahoo to demonstrate to us the full impact," he said. "If they believe that it's not, then they'll need to show us that."
- Right now: VZ +0.04%; YHOO -1.5%.
Thu, Oct. 13, 2:34 PM
- The general counsel at Verizon (NYSE:VZ) is now saying there's a "reasonable basis" to believe that a massive data breach at Yahoo (NASDAQ:YHOO) had a material impact on Verizon's $4.83B takeover agreement, Reuters reports.
- Yahoo shares are headed down, now -1.8%. VZ is flat on the day.
- The comment adds some fuel to speculation that Verizon could look to change up the existing deal, or even get out of it.
- A New York Post report last week suggested that Verizon would seek up to a $1B discount on the purchase price, with sources saying Verizon's Tim Armstrong was getting some "cold feet."
Thu, Oct. 6, 7:05 PM
- Following a server rack full of bad news for Yahoo (NASDAQ:YHOO), Verizon (NYSE:VZ) will be seeking a $1B discount on its $4.83B deal to acquire the company's core business, the New York Post reports.
- Yahoo recently revealed a 2014 data breach that affected 500M user accounts, and Reuters reported that the company built a secret program to allow government intelligence to scan all incoming e-mail.
- “In the last day we’ve heard that Tim [Armstrong, AOL chief who would run Yahoo for Verizon] is getting cold feet," an unnamed source told the Post. "He’s pretty upset about the lack of disclosure and he’s saying can we get out of this or can we reduce the price?”
- Armstrong reportedly flew to the West Coast in the past few days to talk about a reduction: “Tim was out there this week laying the law down and Marissa [Mayer] is trying to protect shareholders,” a source said.
- Former Yahoo chief Ross Levinsohn said yesterday that Verizon should be bucking for a reduction. "If I were them, just from a business standpoint, I'd probably reserve a bunch of money against the deal or go back to Yahoo and ask for a discount."
- After hours trading: YHOO -0.6%; VZ flat.
Wed, Oct. 5, 7:20 PM
- Verizon (VZ -0.8%) is finally close to selling its data center business -- and Equinix (EQIX +0.1%) is likely the buyer, Cowen says.
- "We believe a transaction involving Verizon's co-location assets is imminent and that Equinix is the most likely acquirer," writes analyst Colby Synesael. That deal would come around $3.5B, he says.
- Verizon moved on news last fall that it would seek to sell enterprise assets and likely undo its 2011 $1.4B purchase of Terremark, though CFO Fran Shammo tried to tamp down those reports as "speculative."
- After a sales process reportedly launched in February, by summer the price tag had been reported as up to $3B, a price that weeds out several strategic buyers and left observers speculating about private-equity purchasers.
- "Based on our channel checks, we believe the portfolio includes 14 facilities which primarily include those Verizon inherited when it bought Terremark in 2011," Synesael says. "We estimate EQIX could pay 13 to 13.5 times EBITDA, or $3.5 billion, and believe such a transaction would be viewed as positive for Equinix and neutral to Verizon."
Wed, Oct. 5, 4:44 PM
- Yahoo's (YHOO +1.2%) former CEO, Ross Levinsohn, says it's not only likely that the company knew about both a massive data breach and the government monitoring its customers' mail -- but also that it told presumptive acquirer Verizon (VZ -0.8%) about neither of them.
- Yahoo craziness this year has risen to the level of "the Kardashian effect for Internet companies," Levinsohn says.
- Levinsohn acted as interim CEO prior to the hiring of Marissa Mayer as the company's permanent CEO in 2012.
- As for Verizon, which struck a $4.8B deal to acquire Yahoo's core business in July: "If I were them, just from a business standpoint, I'd probably reserve a bunch of money against the deal or go back to Yahoo and ask for a discount."
Thu, Sep. 22, 10:05 AM
- Verizon (VZ +0.6%) is in advanced talks to buy Vessel, the mobile video startup founded by former Hulu chief Jason Kilar, Recode reports.
- Vessel originally wanted to become a hub between YouTube stars and fans, but is reportedly pivoting to more of a "Snapchat-like" product that includes image filters among other features.
- The company has raised more than $130M from backers and has been on the block for months. Meanwhile, Verizon's still interested in video and may be retooling its Go90 mobile video service, which hasn't worked out to date.
Mon, Sep. 12, 6:21 PM
- "Job changes" are ahead for Yahoo (YHOO +1.3%) as it heads for a merger with AOL (VZ +1.5%), says AOL chief Tim Armstrong, but that doesn't necessarily mean cuts.
- Speaking at TechCrunch Disrupt, Armstrong said the deal's "not about job cuts" but synergies would inevitably lead to changes.
- "Google is search, Facebook is social, we're going to be brand," Armstrong said in outlining a strategy that builds its media brands to leverage ads across all its platforms.
- On Friday, Yahoo posted the lengthy sale proxy for its $4.83B acquisition by Verizon and AOL.
Mon, Sep. 12, 2:05 PM
- Verizon (VZ +1.5%) has agreed to acquire privately held Sensity Systems, a move into adding "smart city" solutions using the Internet of Things.
- Terms weren't disclosed, though the deal is expected to close in Q4.
- Sensity -- which uses the transformation to LED lighting as the basis for its IoT efforts -- has a "strong ecosystem" of partners, says Verizon's Mike Lanman, and the deal will "accelerate the deployment of large-scale implementations that will drive the digital transformation of cities, universities and venues."
- Verizon's Smart Communities organization is part of the company's IoT business, using ThingSpace, the company's platform.
Fri, Sep. 9, 7:29 PM
- In a lengthy acquisition proxy filed tonight, tied to its eventual $4.83B deal to be acquired by Verizon (VZ -3.3%), Yahoo (YHOO -3.3%) revealed that as many as 51 parties expressed initial interest in buying the company after Feb. 19, a number that whittled down to 32 signing confidentiality agreements, then 19 in early April and 14 by April 18.
- The filing also provides voluminous details of discussions around an (unconsummated) deal between Yahoo, Yahoo Japan and Alibaba.
- As forecast, what's left after the Verizon sale ("RemainCo") will be only cash and marketable securities, shares in Alibaba, shares in Yahoo Japan, other minority equity investments, and IP assets held in Excalibur. It will be an investment company with a new ticker.
- Yahoo would owe a $144.8M termination fee if it bolts for a "superior proposal."
- Along with authorizing the sale to Verizon, shareholders will be asked to consider a nonbinding advisory proposal to approve compensation payable to Yahoo execs -- and "certain directors and executive officers of Yahoo have interests in the Sale Transaction that may be different from or in addition to the interests of Yahoo stockholders generally."
- In particular, Yahoo restricted stock units held by those employees who would be heading to Verizon would be replaced with cash-settled Verizon RSU awards. CEO Marissa Mayer has $86.4M in Yahoo stock options and RSU awards outstanding; CFO Ken Goldman has $27.1M; Chief Revenue Officer Lisa Utzschneider $21.8M; General Counsel Ronald Bell $16.2M. Co-founder and "Chief Yahoo" David Filo cashed out.
- Golden parachutes tied to the sale, for named execs: Mayer, $44M; Goldman, $12.2M; Utzschneider, $20.5M; Bell, $12.4M; Filo, $65,742.
- After hours: VZ -0.2% ; YHOO -0.4%.
Tue, Aug. 2, 2:39 PM
- Yahoo (YHOO -0.7%) has answered employee questions about its deal to be acquired by Verizon (VZ -1.3%) for $4.8B, and one loomed larger than others: The company says there won't be layoffs between now and the deal's completion, set for Q1.
- Yahoo has laid off at least 1,600 since initiating cuts in February. And while job losses may be off for now, analysts had predicted heavy workforce cuts in the eventuality that Yahoo were acquired by someone like Verizon.
- "At this time, Yahoo is not planning any layoffs in anticipation of the transaction closing," the company said in one of two sets of answers (SEC filing). "Prior to the transaction closing, we will continue to operate our business independently, focus on achieving our corporate goals and manage employee performance in the ordinary course of business." Will there be layoffs after the transaction closes? "That is a decision for Verizon."
- On CEO Marissa Mayer: "Marissa is committed to Yahoo, its employees and its stockholders and plans to see the company through the next phase of its transition to Verizon ... Post-closing Verizon will determine the leadership structure of the combined entity."
- As expected, what's left after the Internet assets and real estate go -- now called "RemainCo" -- will retain stakes in Alibaba Group and Yahoo Japan along with non-core IP, and be renamed as a registered investment company. Employee shareholders of Yahoo stock will continue to hold RemainCo stock after the closing.
Mon, Aug. 1, 11:36 AM
- Verizon's (VZ -0.8%) $2.4B deal for Fleetmatics (FLTX +38.7%) didn't come as a surprise to Citigroup analyst Kenneth Wong, who noted an "aggressive pace" of consolidation in the sector.
- Verizon had announced a deal in June to buy fleet-management software maker Telogis as well. The Fleetmatics deal is in line with recent transaction multiples of 6 to 9 time recurring revenue, Wong says.
- “There has been significant consolidation across the fleet management space from across the auto ecosystem (OEMs, telco, pure play FMS vendors (FLTX mainly), fuel card providers, etc.) so we believe the bidding process was competitive," he writes.
- RBC's Matthew Hedberg calls it a "healthy multiple," saying the deal reflects "6.1x FTM EV/S vs. 5.1x for software acquisitions."
- Despite today's jump, Fleetmatics at $59.60 isn't quite that stock's 52-week high: It hit $62.86 in December and had fallen 31.7% since then.
Mon, Aug. 1, 8:09 AM
- Verizon (NYSE:VZ) announces it will acquire Fleetmatics (NYSE:FLTX) for $60.00 per share in a deal valued at approximately $2.4B. Shareas of FLTX closed at $42.96 on Friday.
- “Verizon and Fleetmatics share a vision that the SaaS-based fleet management solution market is extraordinarily large, lightly penetrated, global and fragmented which can best be attacked together with a world class product offering and the largest distribution channel in the industry,” said Fleetmatics CEO Jim Travers.
- The acquisition is subject to customary regulatory approvals and closing conditions, including the approval of Fleetmatics’ shareholders and the sanction of the Irish scheme of arrangement by which Verizon will acquire Fleetmatics by the Irish High Court, and is expected to close in the fourth quarter of 2016.
- As a result of today’s announcement, Fleetmatics has cancelled its earnings call previously scheduled for August 9, 2016 and has withdrawn its most recent guidance with respect to 2016.
- Source: Press Release
Mon, Jul. 25, 7:22 AM
- The deal is expected to close in Q1, and while the sale includes Yahoo's (NASDAQ:YHOO) core Internet assets and real estate, it does not include Yahoo's stake in Alibaba and Yahoo Japan, or its cash. There assets will continue to be held by Yahoo, which will change its name upon the deal's closing, and continue to be a publicly traded company. Said cash is expected to be returned to shareholders.
- Yahoo will hold a dial-in conference call to discuss at 8:30 ET. Verizon (NYSE:VZ) will discuss when it holds its earnings call tomorrow at 8:30 ET.
- VZ +0.35% premarket; YHOO halted
- Previously: Reports: Verizon to announce $4.8B deal for Yahoo before open (July 24)
Sun, Jul. 24, 2:53 PM
- Verizon (NYSE:VZ) is set to pay $4.8B to acquire Yahoo (NASDAQ:YHOO) in a deal that is likely to be announced before the market opens Monday, according to Bloomberg.
- As reported in the past few days, the deal will include core Internet assets as well as Yahoo's real estate, though some intellectual property will be sold separately.
- After those sales, Yahoo would hold its stakes in Yahoo Japan and Alibaba Group (combined value of about $40B).
- Verizon's expected to keep its new purchase relatively intact in a bid to combine it with AOL and compete with Google and Facebook in digital ads "by tapping into users on sites like Yahoo Finance," Bloomberg notes.
- Previously: Verizon's Yahoo interest includes real estate, not IP; Munster: 'Great outcome' (Jul. 22 2016)
- Previously: Verizon reported to be close to landing Yahoo (Jul. 22 2016)