Yahoo! Is Giving Itself Away
Chris DeMuth Jr. • 48 Comments
Chris DeMuth Jr. • 48 Comments
Yahoo Switcheroo, Goodbye Aabaco, Hello Core Spin: Revised Sum Of The Parts
Mike Winston • 33 Comments
Mike Winston • 33 Comments
Wed, Oct. 26, 2:00 PM
- Verizon's (VZ -0.4%) $4.83B deal to acquire the core of Yahoo (YHOO -1.3%) still makes sense even in light of Yahoo's massive security breach, says Verizon exec Marni Walden.
- That doesn't mean Verizon doesn't still need more information about the intrusion, says Walden, the president of Product and New Business Innovation, speaking at a WSJ conference.
- "The reason we wanted to get this asset is we wanted to increase the audience scale that we had at AOL," she says. "So it very much makes sense, but what we have to be careful about is what we don't know ... we're working closely with that team to try and better understand. And so I've got an obligation to make sure that we protect our shareholders and our investors ... so we're not gonna jump off a cliff blindly."
- "We're hoping that in the next 60 days or less that we can have an outcome," she adds, "but right now they're conducting the investigation and will be providing us information."
- Can she think of a scenario that would make Verizon walk away? "Why don't we move on to your next question?"
- Previously: Reuters: Yahoo mail-scanning government order unlikely to be publicized (Oct. 25 2016)
- Previously: Verizon call: Lawyers are talking over materiality of Yahoo breach (Oct. 20 2016)
- Verizon/Yahoo coverage
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, 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."
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.
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, 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)
Fri, Jul. 22, 12:44 PM
- Leaks that Verizon (VZ +1%) continues to be the front-runner to close a deal for core Yahoo (YHOO +1%) have the telecom spending about $5B on the deal, vs. an earlier $3.75B-$4B.
- While earlier Verizon interest excluded Yahoo's patent portfolio and real estate, the current talks do reportedly include the real estate.
- Yahoo had set aside about 3,000 patents into a subsidiary called Excalibur for separate auction by Black Stone IP, though other bidders like AT&T (T +1.5%) or a group with Quicken Loans' Dan Gilbert (still reportedly talking with Yahoo) or an aggressive TPG might yet want to buy the IP along with core assets.
- The deal would be a "great outcome," Piper Jaffray analyst Gene Munster says, with time of the essence since "the real value here is unlocking Yahoo Japan and Alibaba (BABA +0.1%) in a cash-free transaction. And they really need to get that done before the election."
- The $5B figure is still a bit low, Munster says, as he expects the deal to be around $6B. "If you look at the tax benefit for Yahoo Japan and Alibaba, that's about a $10B or $11B tax benefit, so a billion dollars here and there doesn't make much difference; there's still upside to Yahoo shares."
Fri, Jul. 22, 8:48 AM
Thu, Jul. 14, 5:32 PM
- Monday is the final date to enter a bid for Yahoo's (NASDAQ:YHOO) core online business.
- Search, email and advertising operations are all included in the sale.
- Board of directors to determine course of action shortly thereafter.
- Yahoo has been mulling a sale since February in an effort to consolidate its holdings and focus on the significant stakes it has in Alibaba and Yahoo Japan.
- Several bidders involved including Verizon, AT&T, numerous private equity companies and others.
- Yahoo will additionally release earnings on Monday with the speculation of this sale already factored into expectations.
Tue, Jun. 14, 2:21 PM
- Following second-round bids, AT&T (T +0.3%), Verizon (VZ +0.4%), P-E firm TPG, and a group led by Quicken Loans founder/Cleveland Cavaliers owner Dan Gilbert remain in the running to buy Yahoo's (YHOO +2.2%) core assets, a source tells Fortune's Dan Primack. A joint bid from P-E firms Bain and Vista Equity reportedly didn't make the cut.
- "Price talk" is said to be in the $4B-$5B range. "I think AT&T is just trying to drive the price up on Verizon," Primack also reports hearing from a source.
- Bloomberg reported last week AT&T and Gilbert each bid ~$5B for Yahoo's core business, patents, and real estate. Re/code reported Verizon bid ~$3B-$3.5B for just the core business.
- Yahoo is trading higher, but that's the result of Alibaba (up 3.1%) rallying after providing a strong sales forecast.