Jul. 23, 2014, 9:40 PM
- After talking with an unnamed "large Yahoo shareholder that is preparing a presentation" featuring a similar thesis, fund manager Eric Jackson thinks there's a good chance Alibaba (Pending:BABA) or SoftBank (OTCPK:SFTBF) will acquire Yahoo (YHOO +3.3%).
- His reasoning: Whereas the value of Yahoo's stakes in Alibaba and Yahoo Japan (OTCPK:YAHOF) are currently discounted for future tax payments, the pre-tax valuations are what matter to Alibaba and SoftBank. The former would be buying back a 22.5% pre-IPO stake in itself, and the latter would be adding to its respective 34.3% and 43% stakes in Alibaba and YJ.
- Jackson estimates Yahoo's assets are worth $56/share to either acquirer - he values the post-IPO Alibaba stake at $33, the YJ stake at $9, and Yahoo's core business at $5, and adds $9 for cash (inc. IPO share sales).
- He speculates Alibaba (were it the buyer) could trade the YJ stake to SoftBank for part of its Alibaba stake (adding to the scope of its buyback), and notes new SoftBank Internet/media chief Nikesh Arora reportedly wanted to buy Yahoo while at Google.
- One caveat: Acquiring Yahoo would give SoftBank a 56.8% stake in Alibaba before factoring IPO dilution. The Chinese government likely wouldn't be pleased with that. Jackson suggests SoftBank could trade part of its Alibaba stake post-acquisition for "something of similar value," but doesn't say what.
- Previous: Alibaba reportedly planning September IPO
Jul. 17, 2014, 4:27 PM
- In tandem with its Q2 report, Google (NASDAQ:GOOG) announces long-time sales chief Nikesh Arora (well-respected in the industry) is leaving to become SoftBank's (OTCPK:SFTBF) vice chairman and Internet/Media chief.
- Google's paid clicks (boosted by mobile and product listing ads) rose 2% Q/Q and 25% Y/Y in Q2, after growing 25% Y/Y in Q1. Paid clicks on Google sites rose 6% Q/Q and 33% Y/Y, while those on ad networks were down 5% Q/Q and up 9% Y/Y.
- Cost per click (hurt by low smartphone ad prices) was flat Q/Q and down 6% Y/Y. The Y/Y drop was narrower than Q1's 9%. CPC was down 2% Q/Q and 7% Y/Y on Google sites, and up 3% Q/Q and down 13% Y/Y on ad networks.
- Google sites revenue (69% of total) +23% Y/Y vs. +21% in Q1. Network revenue (21% of total) +7% Y/Y vs. +4%. Other revenue (10% of total, includes hardware and Google Play) +53% vs. +48%.
- Traffic acquisition costs were 23% of revenue, even with Q1 and down from 25% a year ago. Opex was 35% of revenue, even with Q1 and up from 34% a year ago.
- Free cash flow was $2.98B, below net income of $4.18B. Capex was a hefty $2.65B.
- Google ended Q2 with $61.2B in cash, up $1.8B Q/Q.
- GOOG +2% AH. Q2 results, PR.
Jul. 17, 2014, 11:40 AM
- The NYT reports Alibaba (Pending:BABA) now plans to price its IPO "sometime after Labor Day."
- Though past reports stated Alibaba is aiming for an early-August offering, the company needs more time to take care of several issues, including wrapping up an SEC review, deciding on its IPO valuation range, and finalizing roadshow presentation plans.
- Yahoo (YHOO -1.4%) is adding to yesterday's post-earnings losses amid a broader tech selloff. The company is 2 days removed from disclosing it has lowered the number of Alibaba shares it's required to sell at IPO time by 33%, and plans to return at least half the proceeds to shareholders.
- Per Alibaba's latest F-1, Yahoo owns 22.5% of the Chinese e-commerce giant, and SoftBank (OTCPK:SFTBF) 34.3%.
Jul. 16, 2014, 12:35 AM
- VMware (NYSE:VMW) is forming a JV with SoftBank (OTCMKTS:SFTBF) to offer its vCloud Hybrid cloud infrastructure (IaaS) service in Japan. VMware will build and run the service, and SoftBank will provide the data centers and network it runs on. Both companies will offer the service through their sales channels.
- Over in China, VMware is partnering with China Telecom (NYSE:CHA) to offer vCloud Hybrid. In this case, China Telecom will operate the service, and VMware will simply provide the underlying software. The arrangement could appeal to Chinese firms hesitant to use a public cloud run by a U.S. company (say, Amazon) following the NSA uproar.
- Until now, vCloud Hybrid (launched in 2013) was only available at U.S. and U.K. sites. The service has won praise for the way it lets users jointly manage and quickly migrate public and private cloud workloads, but it continues facing tough competition from Amazon, Microsoft (the hybrid cloud leader), Google, IBM, and Rackspace, among others.
- Separately, parent EMC's RSA unit has bought technology assets from Symplified, a provider of cloud identity management services that enable single sign-on and automatic user provisioning for a variety of cloud apps/services. Symplified is shutting down its operations.
- EMC/RSA says it will add Symplified's IP to its Identity solutions portfolio. The purchase follows RSA's 2013 acquisition of Aveksa, a provider of tools for managing access to corporate apps and data.
- VMware reports on July 22, and EMC the following morning.
Jul. 15, 2014, 2:13 PM
- Sprint (S -3.7%) and T-Mobile (TMUS -3.1%) plan to form a JV that will raise $10B to spend on next year's giant low-frequency spectrum auction, the WSJ reports.
- The funds are said to be part of the $45B financing package (previous) SoftBank (OTCMKTS:SFTBF) is lining up to enable a Sprint/T-Mobile merger (regulators permitting). T-Mobile will oversee the JV.
- Two months ago, the FCC set rules limiting how much spectrum Verizon and AT&T can buy through the auction. That opens the door for Sprint and T-Mobile to grab a large chunk of the airwaves. Each has a relative dearth of low-frequency spectrum (superior for rural and in-building coverage).
- Sprint currently has $26.6B in net debt, and T-Mobile roughly $9B. Shares of both companies have fallen on the report.
Jul. 11, 2014, 1:32 PM
- The Nikkei reports SoftBank (SFTBF) is close to a deal for a Sprint (S +4.4%)/T-Mobile (TMUS +1.9%) merger. Shares of both companies have moved higher.
- Reuters reported 3 weeks ago Sprint and T-Mobile were looking to announce a deal around August, and that the former had lined up a $40B+ debt package. Prior reports mentioned a ~$40/share T-Mobile acquisition price and a $2B breakup fee.
- T-Mobile is still below $34, as doubts about regulatory support for a deal remain high.
- Prior Sprint/T-Mobile coverage
Jul. 10, 2014, 6:18 PM
- Alibaba (BABA) could launch its IPO process (roadshow included) at the end of July, sources tell the WSJ. With the process typically taking 2 weeks from start to finish, an IPO could happen around mid-August.
- Bloomberg reported in June Alibaba was eying an Aug. 8 IPO. The Chinese e-commerce Chinese is believed to be mulling a $20B+ offering.
- Yahoo (YHOO), whose Q2 results arrive on July 15, is required to sell a decent chunk of its 22.6% stake at IPO time. Many on the Street are hoping details will be given on the Q2 CC about Yahoo's plans for the windfall. Topeka estimates post-tax proceeds from Yahoo's IPO share sale of $9B.
Jun. 19, 2014, 6:06 PM
- Sprint (S) has "lined up eight banks" to finance a T-Mobile (TMUS) acquisition, Reuters reports. The companies will reportedly "seek to finalize details of the financing in the coming month so they could announce a merger around August."
- The financing includes a $40B+ debt package featuring a ~$20B bridge loan from Sprint parent SoftBank (SFTBF), and a $20B refinancing of T-Mobile's present debt. Sprint currently has $26.6B in net debt, and T-Mobile roughly $9B.
- Bloomberg reported on June 4 Sprint and T-Mobile were near a deal valuing the latter at ~$40/share. CNBC reported last Friday the companies had agreed on a $2B breakup fee, and to have the post-merger company (should regulators allow it to exist) go under the T-Mobile name.
- S +0.5% AH. TMUS +0.9%.
Jun. 13, 2014, 10:28 AM
- CNBC's reported breakup fee figure is higher than the $1B+ previously reported by the WSJ, but still well below the $4B T-Mobile (TMUS +0.2%) was paid by AT&T.
- The TV network also reports Sprint (S +1.8%) and T-Mobile have agreed the post-merger company will be called T-Mobile. Though the carriers are roughly equal in size, T-Mobile has been performing much better as of late, and keeping its name would please parent Deutsche Telekom (DTEGY), which uses the T-Mobile brand in other markets.
- Past reports have noted brash T-Mobile CEO John Legere will likely be the head of the combined company.
- Sprint is trading higher. With skepticism about regulatory approval still running high, a reports about a relatively low breakup fee might be going over well with the Street.
- Previous: Sprint, T-Mobile reportedly near agreement on ~$40/share deal
Jun. 4, 2014, 5:56 PM
- Bloomberg reports Sprint (S) and T-Mobile USA (TMUS) are near an agreement for a deal that would value T-Mobile at ~$40/share. The WSJ is also reporting a ~$40/share price.
- S +3.7% AH. TMUS +3.2% to $36.02 - a price that points to ongoing regulatory worries.
- Sprint's offer will reportedly feature a 50-50 cash/stock split, and leave Deutsche Telekom (DTEGY), which currently owns 67% of T-Mobile, with a 15% stake in the combined company. Bloomberg's sources state an announcement could happen by July.
- In addition, the carriers are reportedly close to agreeing on a breakup fee - Sprint and parent SoftBank (SFTBF) have reportedly been pushing for a smaller breakup fee for a deal that's bound to face tough DOJ/FCC scrutiny; T-Mobile and Deutsche Telekom have wanted a bigger one.
- More on Sprint/T-Mobile
May. 29, 2014, 9:12 AM
- Japan's Kyodo news agency reports Deutsche Telekom (DTEGY) has signed off on a SoftBank (SFTBF)/Sprint (S) bid to acquire its 67% stake in T-Mobile USA (TMUS).
- DT has previously suggested it's open to a deal as SoftBank/Sprint worked to line up financing - in addition to T-Mobile's equity, a deal has to account for $8.7B in net debt.
- But all signs suggest regulators remain wary of a tie-up lowering the number of nationwide U.S. mobile carriers to three, in spite of Masayoshi Son's relentless PR efforts.
- TMUS +1.6% premarket. S +2.5%.
May. 19, 2014, 4:05 PM
- Citing sources, CNBC reports Alibaba (ABABA) "could look to make its stock market debut the first week of August."
- The company reportedly expects to receive feedback from the SEC about its F-1 filing (published two weeks ago) as soon as June 7, and then "spend a few weeks correcting or clarifying any issues raised." Presumably, Alibaba would then launch its IPO roadshow.
- Yahoo (YHOO +1.4%) followed Internet peers higher today. The company sold off after Alibaba filed its F-1, but rallied in April after posting Alibaba's Q4 numbers.
- The Q4 figures led some of the sell-side to argue a $200B+ post-IPO valuation is possible. The recent selloff in Chinese Internet stocks might temper Alibaba's multiples a bit.
- Related tickers: SFTBF, SFTBY
May. 19, 2014, 11:59 AM
- Yahoo Japan (YAHOF) has abandoned its plan to acquire Japanese mobile/broadband services firm eAccess from SoftBank (SFTBF) for $3.2B (previous). Instead, the company will launch a low-cost mobile broadband service using eAccess' network.
- The eAccess deal was part of an effort by SoftBank, which owns 42.6% of Yahoo Japan, to restructure its assets and raise funds for M&A (including a possible Sprint/T-Mobile merger). But the company is already raising ¥300B in debt, and stands to reap a post-IPO windfall from its 34.4% stake in Alibaba.
- Yahoo (YHOO +0.6%) owns 35% of Yahoo Japan, whose shares fell 2.8% in Tokyo overnight. At current levels, Yahoo's stake is worth $8.1B. Yahoo Japan's sales fell 14% Y/Y in Q4 to $1.03B, and its net income 11% to $304M.
May. 11, 2014, 2:09 AM
- Deutsche Telekom (DTEGF) wants Sprint (S) to agree to a breakup fee of over $1B in the event that regulators block the latter's possible acquisition of T-Mobile US (TMUS), the WSJ reports.
- The German carrier also wants Sprint to pledge to keep the T-Mobile brand and some of its management.
- Deutsche Telekom's demands come after regulators implied they would view any Sprint/T-Mobile tie-up skeptically. Three years ago, Deutsche received $3B when authorities blocked the sale of T-Mobile to AT&T.
- The sides are working on forging a deal in the near term, but could wait until after a government auction of wireless airwaves - which is expected in 2015 - or under a different White House administration.
- The operators might have a bit more clarity next week, when the FCC is due to decide on how much spectrum carriers can hold and the rules for the spectrum auction.
May. 7, 2014, 8:04 AM
- Bloomberg reports Alibaba (ABABA) is looking to sell a 12% stake through its IPO. At a $150B valuation, that would imply raising $18B; at a $200B valuation, $24B.
- A big selloff in momentum stocks (inc. Chinese Internet companies) might lead to some downward pressure on Alibaba's multiples. At $200B, the company would be worth 92x 2013 adjusted net income of $2.16B - forward multiples might be considerably lower.
- Meanwhile, though Yahoo (YHOO) is required to sell a chunk of its 22.6% stake at IPO time, SoftBank (SFTBF) says it won't sell any part of its 34.4% stake, in spite of its big investments in Sprint and $3.2B deal to buy Japanese broadband provider eAccess. Shares fell 5.1% overnight in Tokyo.
- There's some disappointment over the fact Alibaba didn't break out details for its Taobao and Tmall sites. Would-be investors are also keen to learn more about how Alibaba plans to grow its international sales (8.8% of 2013 revenue), an effort bound to put the company on a collision course with Amazon and eBay.
- Yesterday: Alibaba files for IPO, shows off big numbers
- Alibaba's prospectus
May. 7, 2014, 7:39 AM
- Among the leading decliners was SoftBank (SFTBF), -5.1% as investors sold the news on the Alibaba offering. Exporters tanked as well, with a 2.9% fall in Honda and 3.4% decline in Panasonic pacing those slides.
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