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Yahoo! Inc. (YHOO)

  • Sep. 8, 2014, 3:54 PM
    • In what may be the first coverage of Alibaba (Pending:BABA), Atlantic Equities' James Cordwell - expecting the company to continue to gobble up share - rates the stock Overweight with $100 price target (current IPO price range is $60-$66).
    • The biggest risk to the outlook, he says, is Alibaba not owning fulfillment centers. It's an approach that has worked well so far, says Cordwell, "but that could become a weakness as competitors extend their in-house capabilities.”
    • As for Yahoo (YHOO +5.4%), Cantor's Youssef Squali says the company should end up with about $8.8B in gross proceeds and $5.7B net (though tax treatment could increase this amount) after selling 140M shares of its 523.6M share stake in Alibaba. He's got a Buy rating and $39 price target on Yahoo, but thinks the Alibaba IPO could boost the stock to $49.
  • Sep. 5, 2014, 7:04 PM
    • Yahoo (NASDAQ:YHOO) is adding to its Friday gains in response to Alibaba's setting of an $60-$66 IPO price range that spells a $147.9B-$162.7B valuation range, which in turn gives Yahoo's 523.6M-share stake a $33B pre-tax valuation at the midpoint.
    • Of interest: While Yahoo can be required to sell 140M shares at IPO time (down from a prior 208M, thanks to a recent deal amendment), Alibaba's prospectus only states Yahoo is selling 121.7M through the offering, thereby leaving it with a 16.3% post-IPO stake.
    • If 140M shares are sold, Yahoo stands to reap pre-tax proceeds of $8.8B at the midpoint; if 121.7M are sold, proceeds total $7.7B. Yahoo has already promised to return at least half the post-tax proceeds to shareholders.
    • Given huge investor interest, there's a healthy chance Alibaba will hike its price range before the IPO, which will reportedly arrive on Sep. 19.
  • Sep. 5, 2014, 4:05 PM
    • Alibaba (Pending:BABA) has set a $60-$66 IPO price range. That spells a valuation range of $147.9B-$162.7B. The company is looking to offer 320.1M shares - 123.1M new shares, and 197M on behalf of existing holders. At the midpoint of the range, proceeds from the new shares would total $7.7B. (prospectus)
    • Yahoo (YHOO +1%) is obligated to sell up to 140M Alibaba shares at IPO time. At the midpoint, that would spell proceeds of $8.8B. Its total stake would be valued at $33B pre-tax, and SoftBank's (OTCPK:SFTBF, OTCPK:SFTBY) at $50.2B. Yahoo has moved higher on the news.
    • Earlier: Alibaba to reportedly start trading on Sep. 19
  • Sep. 5, 2014, 11:57 AM
    • CNBC reports Alibaba (Pending:BABA) will price its IPO on Thursday, Sep. 18, and begin trading the next day. That fits with recent reports from the WSJ and NYT.
    • The NYT reports today Alibaba's roadshow will start in NYC on Monday. No word yet on the price/valuation range sought by the Chinese e-commerce giant - plenty of analysts have assigned valuations above $150B.
    • Yahoo (YHOO +1%) has ticked higher following the report.
    • Related tickers: OTCPK:SFTBF, OTCPK:SFTBY
  • Aug. 27, 2014, 1:12 PM
    • With its Q2 results disclosed, Alibaba (Pending:BABA) is expected to provide an IPO price range "as soon as Tuesday," the NYT reports.
    • After setting a price range, Alibaba will reportedly kick off a 2-week roadshow (covering both Asia and the U.S.) ahead of an IPO the company hopes will take place during the week of Sep. 15.
    • Sources caution the Chinese e-commerce giant's plans could still change. The NYT previously reported Alibaba was planning an IPO "sometime after Labor Day." At one point, the company was rumored to be eying an early-August IPO.
    • Yahoo (YHOO +0.7%) continues to trade modestly higher.
  • Aug. 27, 2014, 9:52 AM
    • In a revised F-1, Alibaba (Pending:BABA) discloses it had calendar Q2 revenue of $2.54B (+46% Y/Y), and net income of $1.99B (boosted by $1.1B in interest/investment income). Op. income was $1.1B (+27% Y/Y). Revenue growth accelerated from Q1's 39% clip, a figure that had disappointed some investors.
    • Q2 free cash flow was $1.71B. Sales/marketing spend +70% Y/Y to $195M; R&D +68% to $315M.
    • GMV was RMB501B ($81.6B), +17% Q/Q and +45% Y/Y (46% growth was seen in Q1). Mobile accounted for 32.8% of GMV (up from Q1's 27.4%), and mobile revenue more than doubled Q/Q to $400M.
    • Annual orders +14% Q/Q to 14.5B; annual active buyers +9% to 279M; annual active sellers +11% to 8.5M; mobile monthly active users (MAUs) +15% to 188M.
    • Alibaba's Taobao marketplace (focused on smaller merchants) had a Q2 GMV of RMB342B, +33% Y/Y. The Tmall marketplace (focused on larger merchants) had a GMV of RMB159B, +81%.
    • Yahoo (YHOO +0.3%) is up slightly following Alibaba's release, which might be the company's last earnings update before its IPO.
    • Related tickers: OTCPK:SFTBF, OTCPK:SFTBY
  • Aug. 12, 2014, 5:15 PM
    • In a new F-1, Alibaba (Pending:BABA) discloses it has restructured its agreement with Chinese online payments giant Alipay and its parent, Small and Micro Financial Services.
    • Most notably, Alibaba will receive a 37.5% stake in Small and Micro/Alipay in the event of an IPO featuring a $25B+ valuation and $2B+ in gross proceeds. The deal is contingent on Alibaba's stake in Small and Micro not having reached 33% at IPO time. Previously, Alibaba's Alipay IPO payout was capped at $6B.
    • In the meantime, Alibaba will receive 37.5% of Small and Micro's pre-tax income in exchange for IP licensing and "software technology services." Its profit payout will be reduced in proportion to the equity stake it obtains in Small and Micro.
    • Alibaba is also selling assets related to its loan business for small/mid-sized companies (SMEs) to to Small and Micro for $518M, and entering into "software system use and service agreements" related to the SME loan business in exchange for an annual fee. From 2015-2017, the fee will be 2.5% of the average daily book balance for micro loans.
    • Yahoo (NASDAQ:YHOO) is up 0.8% AH.
    • Related tickers: OTCPK:SFTBF, OTCPK:SFTBY
  • Aug. 9, 2014, 8:38 PM
    • "Many [online] advertisers now care more about who sees their ads than where they appear," writes the Columbia Journalism Review's Steven Waldman in a column about the threat posed to Web publishers by programmatic (automated) ad buying.
    • Whereas a drug developer might have previously bought ads on popular health sites to reach potential customers, it can now use programmatic campaigns to reach them across the Web, aided by cookies that track when a user has shown an interest in particular drugs (or something related to them).
    • The upshot? Advertisers are less likely to pay a big premium for inventory on high-profile sites. Waldman: "A marketer can now reach 'New York Times readers' without ever actually advertising in The New York Times, and for less money."
    • Publishers are responding in part by embracing native ad formats such as sponsored content. But as Waldman observes, a site's image can get hurt when users conflate sponsored and organic material. "Publishers have ended up trading the one thing they had left—their credibility with readers—for a few scraps of CPM."
    • Yahoo (NASDAQ:YHOO), increasingly using native ads to complement traditional display ads, saw a 24% Y/Y drop in display ad prices in Q2 to go with a 24% increase in ads sold. AOL, both a publisher and a programmatic ad tech provider, fared a little better in Q2.
    • eMarketer expects U.S. real-time bidding ad spend (a key part of the programmatic market) to rise to $9B in 2017 from $3.4B in 2013. At the same time, it observes many advertisers are treading cautiously for now.
    • Other Web publishers: IACI, DMD, TTGT, GKNT, WBMD
    • Ad tech firms with programmatic exposure: CRTO, FUEL, RUBI, MRIN, TRMR, YUME, TUBE
  • 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. 21, 2014, 5:01 PM
    • Yahoo (NASDAQ:YHOO) has confirmed its purchase of mobile analytics platform/ad network owner Flurry, but hasn't disclosed a price. Flurry has also issued a statement.
    • Yahoo: "Our combined scale will accelerate revenue growth for thousands of developers and publishers across the mobile ecosystem. Our combined offerings will enable more effective mobile advertising solutions for brands seeking to reach their audiences and gain unique insights across desktop and mobile."
    • The company also promises Flurry's offerings (i.e. its data and analytics tools) will help "make Yahoo mobile experiences better through products that are more personalized and more inspiring."
    • TechCrunch (citing sources) states the deal's price "could be anywhere between $300 million and $1 billion." One source suggests Flurry was looking for $700M-$800M. Re/code has only reported the price is in the "hundreds of millions."
    • 170K developers use Flurry Analytics, but for now, only 8K publishers "monetize" using Flurry's ad solutions, which face competition from Google, Twitter (MoPub), Millennial Media , and many others. The addition of Yahoo's own apps to Flurry's ad network would significantly increase its scale.
    • Millennial rallied (MM +2.7%) after reports of the deal broke, as investors hope it, too, will become an M&A target.
    • Earlier: Yahoo reportedly buying Flurry
    • Update: A source tells the WSJ Yahoo is paying more than $200M.
  • Jul. 21, 2014, 3:19 PM
    • Re/code reports Yahoo (YHOO -0.3%) is acquiring Flurry, a top provider of analytics and ad services for mobile advertisers and publishers. The purchase price is said to be in the "hundreds of millions."
    • Flurry claims access to data from 540K apps and 5.5B daily app sessions. Publishers use its analytics services to track user activity and app performance, and to create audience profiles that can improve user acquisition.
    • In addition, Flurry has launched a mobile ad network that (with the help of its user data and audience profiles) allows brands/agencies to buy ad inventory provided by developer partners.
    • The company was on a $100M net revenue run-rate as of last September. CEO Simon Khalaf suggested an IPO was only a matter of time.
    • Acquiring Flurry would provide Yahoo with mountains of mobile app/user data, and bolster its efforts to offset weak PC display ad sales with mobile growth. Marissa Mayer stated last week Yahoo's mobile search and display ad sales both more than doubled in Q2, but didn't give specific numbers.
    • Last year, Facebook bought Onavo, another prominent mobile analytics startup.
    • Update: Yahoo has confirmed the acquisition, but hasn't given a price.
  • 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, 6:40 PM
    • "It's remarkable how bad" Yahoo's (YHOO -5.1%) Q2 ad sales figures were, says Pivotal Research's Brian Wieser. "Such are the problems when there is no head of ad sales." Marissa Mayer effectively took over the job after COO Henrique de Castro was fired (following a tumultuous stint) in January.
    • The 24% Y/Y drop in Yahoo's display ad prices (much worse than Q1's 5%) is getting a lot of attention. Soft demand for banner ads relative to other formats (search, video, native ads) is seen as a culprit, as are delays in rolling out Yahoo's Ad Manager Plus ad-buying platform.
    • Marissa Mayer mentioned on the CC (transcript) Yahoo "took extra time to ensure [Ad Manager Plus] was delivering for our advertisers," during which time activity on the older Genome platform slowed. She added Yahoo saw a "lower-than-expected contribution from premium advertising, resulting in an unfavorable mix shift."
    • On the bright side, Mayer stated both mobile search and display ad sales more than doubled Y/Y. Yahoo's new Gemini platform (integrated mobile search and native ad purchases) now accounts for half of its U.S. mobile display revenue.
    • Sell-side bulls argue Yahoo's business challenges are priced in, and that investors should keep their focus on Alibaba. MKM estimates Yahoo's Alibaba stake is worth $29/share, and expects Alibaba's IPO roadshow to boost investor enthusiasm.
    • CFO Ken Goldman says Yahoo expects its Alibaba IPO share sale (now just 140M shares) to be "fully taxed," but is still exploring "tax-efficient structures" for the rest of its stake.
  • Jul. 15, 2014, 6:32 PM
    • After growing 2% Y/Y in Q1 (its first quarter of positive growth in some time), Yahoo's display ad revenue (ex-TAC) fell 7% in Q2 to $394M. A 24% drop in ad prices (hurt by mobile?) more than offset a 24% increase in ads sold.
    • The display weakness comes as eMarketer forecasts Yahoo's share of global digital ad spend will fall to 2.52% in 2014 from 2.86% in 2013 and 3.36% in 2012.
    • Search revenue (ex-TAC) was healthier: It rose 6% to $428M after growing 9% in Q1. Search click revenue (excludes Microsoft payments) rose 19%, with ad clicks growing 3% and ad prices 15%.
    • Americas revenue (75% of total) -2%, EMEA +2%, Asia-Pac -8%. Opex +7% Y/Y to $1.002B, thanks in large part to rising R&D spend.
    • Ahead of the Alibaba windfall, Yahoo ended Q2 with $4.3B in cash/marketable securities.
    • YHOO now -2.1% AH. Prior coverage.
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  • Jul. 15, 2014, 4:33 PM
    • Yahoo (NASDAQ:YHOO) has further amended its IPO share sale agreement with Alibaba (Pending:BABA): The company is now only required to sell 140M Alibaba shares at IPO time, down from a prior 208M.
    • Yahoo also promises to return "at least half of the after-tax [Alibaba] IPO proceeds to shareholders." That could translate into several billion worth of buybacks and/or a big special dividend.
    • The company guides in its Q2 earnings slides (.pdf) for Q3 revenue (ex-TAC) of $1.02B-$1.06B, below a $1.1B consensus. Adjusted EBITDA is expected to fall to $220M-$260M from $331M a year earlier, and op. income is expected to total $70M-$110M.
    • Alibaba had Q1 revenue of $1.97B (+42% Y/Y), gross profit of $1.4B (+37%), and net income of $906M (+36%). The company already provided many Q1 details in a June F-1 filing. Yahoo Japan (OTCMKTS:YAHOF) had Q1 revenue of $1.06B (-6%), and net income of $311M (-10%).
    • $719M was spent on buybacks in Q2, up from $450M in Q1.
    • YHOO +1% AH. Q1 results, PR.
  • Jul. 15, 2014, 4:06 PM
    • Yahoo (NASDAQ:YHOO): Q2 EPS of $0.37 misses by $0.01.
    • Revenue of $1.04B (-2.8% Y/Y) misses by $50M.
    • Shares -1.95% AH.
    • Press Release
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Company Description
Yahoo! Inc is a technology company. It offers search, content and communication on mobile phone, tablet or desktop.