Wed, May 27, 10:26 AM
- Evercore's Ken Sena: "With less than five percent of the SpinCo value comprised by Yahoo's (YHOO - unchanged) selected ATB (Yahoo Small Business), we suspect the hurdle for establishing a legitimate corporate business purpose will be higher. Moreover, since the Treasury began its rhetoric around inversion, which we believe provides us with some read, we count 10 transaction withdrawals out of 13 with only two new deals since announced."
- Sena, who has downgraded to Hold and cut his target by $7 to $48, adds the 3 transactions approved by the Treasury only produced a small tax benefit, and that the IRS' review of spinoff tax rules could affect Yahoo's ability to monetize both its Alibaba and Yahoo Japan stakes.
- He thinks altering the Alibaba spinoff proposal would "prolong the application process into next year and possibly beyond," possibly distracting management and affecting its enthusiasm for buybacks.
- Yahoo is near breakeven on an up day for equities. Shares plunged last week after news of the IRS review first emerged, but recovered a chunk of their losses the next day after Yahoo issued a response.
Wed, May 27, 2:47 AM
- Several other Internet giants reached out and held early discussions about buying Flipboard in recent weeks, including Yahoo (NASDAQ:YHOO) and Google (GOOG, GOOGL), although those talks involved ideas around how products would be integrated rather than centering around price, sources told WSJ.
- Talks with Twitter (NYSE:TWTR) went further, discussing a $1B+ all-stock deal, but those negotiations have largely stalled since April.
- Previously: Report: Twitter held talks to buy Flipboard for over $1B (May. 25 2015)
Thu, May 21, 9:17 AM
- New additions to Goldman's hedge fund hotels - 50 stocks which most frequently appear among the largest ten holdings of hedge funds: AerCap (NYSE:AER), Assured Guaranty (NYSE:AGO), Baker Hughes (NYSE:BHI), Citizens Financial (NYSE:CFG), Colony Capital (NYSE:CLNY), Dresser-Rand (NYSE:DRC), Family Dollar (NYSE:FDO), Hospira (NYSE:HSP), Netflix (NASDAQ:NFLX), NXP Semi (NASDAQ:NXPI), Pharmacyclics (NASDAQ:PCYC), Visa (NYSE:V), and Walgreens (NASDAQ:WBA).
- Since 2001, the basket has outperformed the S&P 500 in 66% of quarters by an average of 73 basis points. YTD, however, it has underperformed by nine bps. Goldman notes the current basket overweights Consumer Discretionary (22%) and underweights Consumer Staples (2%).
- Looking at the full list, Actavis (NYSE:ACT) leads the way, with 77 funds naming the stock as a top 10 holding. Next up is Apple (NASDAQ:AAPL) with 69, then Facebook (NASDAQ:FB) at 42. For the entire list of 50, the average is 26 funds making a stock a top 10 holding.
- The rest in order: Valeant (NYSE:VRX), Microsoft (NASDAQ:MSFT), DirecTV (NASDAQ:DTV), Citigroup (NYSE:C), Time Warner (NYSE:TWC), Delta (NYSE:DAL), Cheneire (NYSEMKT:LNG), Yahoo (NASDAQ:YHOO), Liberty Global (NASDAQ:LBTYK), AIG, SunEdison (NYSE:SUNE), Air Products (NYSE:APD), Amazon (NASDAQ:AMZN), GM, BofA (NYSE:BAC), JPMorgan (NYSE:JPM), Macquarie Infrastructure (NYSE:MIC), American Airlines (NASDAQ:AAL), Charter Communications (NASDAQ:CHTR), Google (GOOG, GOOGL), Ally Financial (NYSE:ALLY), NorthStar Realty (NYSE:NRF), Priceline (NASDAQ:PCLN), eBay (NASDAQ:EBAY), MasterCard (NYSE:MA), Alibaba (NYSE:BABA), Micron (NASDAQ:MU), Williams (NYSE:WMB), Gilead (NASDAQ:GILD), Berkshire Hathaway (BRK.A, BRK.B), Dolar General (NYSE:DG), NorthStar Asset (NYSE:NSAM), Brookdale Senior (NYSE:BKD), DISH Network (NASDAQ:DISH).
- See also: Goldman updates list of hedge funds most-shorted stocks (May 21)
Wed, May 20, 9:21 AM
- A Yahoo (NASDAQ:YHOO) statement made via Tumblr: "Yahoo understands that the IRS’s statement is not specific to Yahoo’s planned Q4 2015 spin-off of its remaining stake in Alibaba Group (NYSE:BABA) and Yahoo Small Business, reflects no change in applicable law, and does not affect previously filed ruling requests. Yahoo filed its pending ruling request with the IRS in Q1 2015. Yahoo continues to work toward completing the planned spin-off in Q4 2015."
- Shares fell 7.6% just before the close yesterday after it was learned IRS senior technician reviewer Isaac Zimbalist had stated the IRS is reviewing rules on "spinoffs of trades or businesses that are small compared with a company’s other assets," and would hold in abeyance new spinoff ruling requests. He added existing applications would still be reviewed, while noting this was subject to change.
- Zimbalist: "The issue comes down to whether we’ve dropped a hot-dog stand or a lemonade stand into a business that is primarily publicly traded stocks, cash and other wonderful things that I call appreciated property." Yahoo has included its Small Business services unit with the Alibaba spinoff in an attempt to meet the IRS' Active Business requirement. BGC's Colin Gillis notes the IRS' review could also have implications for a potential Yahoo Japan spinoff.
- Yahoo has rebounded to $42.11 in premarket trading. Alibaba is nearly unchanged.
Tue, May 19, 4:28 PM
- Bloomberg reports the IRS is considering rule changes about "spinoffs of trades or businesses that are small compared with a company’s other assets." An IRS official states the agency will hold in abeyance new spinoff ruling requests while the issue is studied. Existing requests will continue to be reviewed, but that's subject to change.
- The report has sparked fears the IRS won't sign off on Yahoo's (NASDAQ:YHOO) plans to do a tax-free spinoff of its 384M-share Alibaba (NYSE:BABA) stake later this year.
- Yahoo closed down 7.6%. Alibaba rose 1.3% on hopes 384M more shares won't become available for sale.
- Earlier: Yahoo takes late-day tumble
Tue, May 19, 3:46 PM
Tue, May 12, 10:34 AM
- Though the Nasdaq is down 0.9%, Yahoo (YHOO +1%) is higher following news Verizon is acquiring AOL (i.e. the company Starboard Value dreamed about merging with Yahoo) for $4.4B. Demand-side/programmatic ad tech platform owner Rocket Fuel (FUEL +3.4%), which competes with AOL's ad tech ops, is also up.
- Citi's Mark May: "We view this deal as a positive for YHOO as it shows there are strategic buyers for this type of asset and because we view YHOO as a strong asset that is currently only valued at 1x our 2016 EBITDA estimate." With Yahoo spinning off its Alibaba stake later this year and exploring options for its Yahoo Japan stake, core Yahoo might soon be available by itself.
- Last week, Rocket Fuel received an unsolicited $350M buyout offer from rival Gravity4 (and jumped in response). However, questions remains about Gravity4's ability to finance the bid, which has been viewed by many as a publicity stunt.
Thu, May 7, 9:30 AM
- Alibaba (NYSE:BABA) has jumped to $89.05 after posting an FQ4 beat amid low expectations. Along with the results, the company has announced COO Daniel Zhang is its new CEO, effective May 10; current CEO Jonathan Lu will stay on board as vice chairman, joining Joseph Tsai in holding that title. Jack Ma remains executive chairman.
- Revenue growth accelerated to 45% Y/Y from FQ3's 40%. Chinese marketplaces GMV rose 40% to RMB600B ($96.6B), a slowdown from FQ3's 49%. Mobile accounted for 51% of GMV, up from 42% in FQ3 and 36% in FQ2. Annual active buyers +5% Q/Q and +37% Y/Y to 350M.
- A stabilizing monetization rate (revenue as a % of GMV) helped make the FQ4 beat possible: After falling 35 bps Y/Y in seasonally strong FQ3 to 2.7%, monetization rate fell just 1 bps Y/Y in FQ4 to 2.17%. Making this possible: Mobile monetization rate rose to 1.73% from 0.98% a year ago. Altogether, mobile revenue rose 352% Y/Y and was 40% of China retail marketplace revenue vs. 30% in FQ3 and 12% a year ago.
- Segment performance: China retail commerce revenue +39% Y/Y to $2.11B. China wholesale +42% to $136M. International wholesale +19% to $190M. International retail +53% to $70M. Cloud computing/Web infrastructure +82% to $63M. Everything else (boosted by acquisitions) +169% to $243M. Taobao GMV +29% to $61B; Tmall GMV +62% to $35B.
- Financials: Free cash flow +143% Y/Y to $914M; it trailed net income of $1.25B. R&D spend ($491M) was 17% of revenue vs. 10% a year ago; sales/marketing ($408M) was 15% of revenue vs. 11%; G&A ($400M) was 14% of revenue vs. 4%. Soaring stock compensation expenses (driven by the IPO) contributed to the spending growth. Alibaba had $19.7B in cash at the end of March.
- Yahoo (NASDAQ:YHOO) has risen to $44.95 thanks to Alibaba. SoftBank (OTCPK:SFTBF) has seen the value of 797.7M-share Alibaba stake grow by over $7B.
- Alibaba's FQ4 results, PR
Thu, May 7, 9:20 AM
Thu, Apr. 30, 2:20 AM
- Yahoo's (NASDAQ:YHOO) Marissa Mayer got a nice pay bump last year, with a total compensation valued at $42.1M, up from $24.9M in 2013.
- While her base salary remained at $1M, Mayer received $11.8M in stock awards, $28.2M in option awards and $1.1M of non-equity incentive-plan compensation.
- Yahoo noted that it delivered significant returns to shareholders in 2014 and said its focus on mobile growth "paid off."
Wed, Apr. 29, 1:50 PM
- Alibaba is down 3.4% following news Jack Ma recently told employees Alibaba won't add to its headcount this year, sparking concerns about the company's near-term performance ahead of its May 7 FQ4 report. Yahoo (YHOO -2.4%), whose 384M-share Alibaba stake (due to be spun off later this year) is currently worth $31.5B, has followed Alibaba lower amid a 0.7% drop for the Nasdaq.
- Separately, BI's Nicholas Carlson reports Yahoo is working on two new messaging apps as it belatedly tries to benefit from a mobile messaging boom. One app is said to be meant for group messaging, and the other for one-to-one communication.
- The Information previously reported Yahoo is working on a messaging app that "combines live and recorded video and text, blending aspects of live video apps like Meerkat, YouNow and Skype and the recorded video messages popularized by Snapchat." Yahoo was rumored to have been interested in participating in a recent Snapchat funding round, but there hasn't been any confirmation it did so.
Wed, Apr. 29, 10:25 AM
- At its upfront presentation for 2015, Hulu confirms it has acquired rights to the episode library of '90s hit Seinfeld, as well as signed an exclusive deal with AMC Networks (NASDAQ:AMCX) for The Walking Dead spinoff Fear the Walking Dead.
- Seinfeld will premiere in June on Hulu after the service outpaced competing bidders including Amazon.com and Yahoo (NASDAQ:YHOO), as well as Netflix, which bowed out early.
- That deal was widely watched as it's expected to cost as much as $180M -- Hulu's biggest ever. While Sony Pictures Television (NYSE:SNE) sold the distribution rights, much of that take will head to Time Warner (NYSE:TWX), which owns the show's producer, Castle Rock Entertainment, and will continue to hold rerun rights on TBS.
- The AMC deal also means content from IFC, Sundance TV, BBC America and We TV -- meaning IFC films will also be on Hulu.
- Hulu -- co-owned by NBCUniversal, Disney and Fox (CMCSA, DIS, FOXA) -- says it's consolidated its two brands and so will be phasing out "Hulu Plus."
- Previously: A Jerry big deal: 'Seinfeld' near streaming agreement (Mar. 14 2015)
Sat, Apr. 25, 2:47 PM
- "We already own enough of it, thank you very much," says SoftBank (OTCPK:SFTBF) Internet/media chief Nikesh Arora about Yahoo Japan (OTCPK:YAHOY). Yahoo's (NASDAQ:YHOO) recently-disclosed efforts to explore options for its 35.5% YJ stake had fueled speculation SoftBank (owns 43% of YJ) would try to buy the stake.
- At the same time, Arora, formerly Google's sales chief, states SoftBank (has a portfolio of 1,300+ investments) is up for making new investments in growth companies ... at the right price. With valuations for private U.S. tech companies having soared, India, which has relatively low Web, smartphone, and e-commerce penetration rates and a new government widely seen as more business-friendly than its predecessor, has been an area of interest.
- SoftBank led a $627M funding round in Indian e-commerce marketplace Snapdeal last year, and has been rumored to be weighing a major investment in low-end Indian Android OEM Micromax. It has also led a $600M round for Chinese ride-sharing platform Kuaidi Dache (recently merged with top rival Didi Dache), and invested $250M in top Southeast Asian ride-sharing platform GrabTaxi.
- The Japanese conglomerate's 797.7M-share Alibaba stake (current pre-tax value of $67.5B) leaves it with plenty of fresh powder for further dealmaking.
Tue, Apr. 21, 5:43 PM
- Marissa Mayer states on Yahoo's (NASDAQ:YHOO) Q1 CC her company has hired advisors to explore options for its 35.5% Yahoo Japan (OTCPK:YAHOY) stake, and expects to announce a plan on a future CC.
- Based on today's Tokyo close, the Yahoo Japan stake (not part of the Alibaba stake spinoff) is worth $8.8B (equal to 21% of Yahoo's market cap). SoftBank (owns 43% of Yahoo Japan) is a potential buyer of the asset.
- After initially trading lower in response to Yahoo's Q1 miss and Q2 guidance, shares have risen to $45.14.
Tue, Apr. 21, 5:05 PM
- Yahoo (NASDAQ:YHOO) has guided in its Q1 earnings slides (.pdf) for Q2 revenue (ex-TAC) of $1.01B-$1.05B vs. a $1.04B consensus. Op. income is expected to fall to $90M-$110M from $194M in Q2 2014.
- With share loss and a shift to native ad formats still weighing, Yahoo's display ad revenue (ex-TAC) fell 7% Y/Y in Q1 to $381M, a bigger drop than Q4's 5%. Ads sold +29%, price per ad -17%.
- Search revenue (ex-TAC) fell 3% to $432M after coming in flat in Q4, in spite of the boost provided by the U.S. Firefox deal. A 21% increase in paid clicks was offset by lower Microsoft payments and a 3% drop in price per ad click. Yahoo's restructured Microsoft deal (increases Yahoo's gross revenue cut to 93% from 88%) could improve matters.
- GAAP mobile revenue (doesn't back out traffic acquisition costs) rose 73% Y/Y to $234M. GAAP PC revenue fell 2% to $873M. Non-traffic driven revenue (e.g. royalties, license fees) rose 18% to $119M. GAAP "Mavens revenue," which covers mobile, video, native, and Tumblr ads, rose 58% to $363M.
- CFO Ken Goldman, perhaps looking to appease Starboard Value: "We are tightly managing our overall cost structure as EBITDA remains a key measurement for the Company." With job cuts limiting spending growth, operating expenses (non-GAAP) rose 3% Y/Y to $963M. Ex-TAC, Americas revenue (78% of total revenue) fell 2%, EMEA fell 16%, and Asia-Pac fell 9%.
- $204M was spent on buybacks, much less than Q4's $980M. Yahoo "satisfied" its $3.3B tax liability related to Alibaba IPO proceeds during Q1, leaving its quarter-ending cash balance at $6.9B.
- YHOO -1.2% AH to $43.95.
- Q1 results, PR
Tue, Apr. 21, 4:07 PM
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