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How Much Is Yahoo Worth Part II: Alibaba And The Rest Of Yahoo's Assets
- Alibaba is conservatively worth $118 billion, making Yahoo's stake quite valuable.
- With its cash, Yahoo Japan stake and Alibaba stake, Yahoo is worth more than its current market value.
- When accounting for its profitable core business, Yahoo is trading far below fair market value, especially if Alibaba is worth more.
- Yahoo! has several valuable properties, but none as valuable as Alibaba.
- Alibaba's valuation is currently unknown, but we can make conservative estimates.
- Yahoo!'s stake in Alibaba could be worth more than the entire company is currently valued.
- Yahoo!'s early China strategy reveals impressive growth in a new and challenging business environment.
- Yahoo!'s stake in Chinese e-commerce giant Alibaba could pay off soon in a variety of ways, including making Yahoo! more attractive to a potential buyer.
- While Yahoo's Q2 results disappointed from several angles, the new influx of cash from selling its Alibaba stake could allow the company more power and flexibility to grow in Q3.
- We suggest shareholders hold positions through the IPO, as the future could be bright for the nimble firm.
- A slightly disappointing Q2 does not detract from the long-term prospects of Yahoo's core business.
- CEO Marissa Mayer has been aggressively trying to bolster Yahoo's core business.
- Yahoo is also building shareholder value and confidence leading up to Alibaba's IPO.
- Yahoo's core display business struggles to grow.
- Yahoo thinks that it can stimulate growth through an ad-exchange, which is referred to as programmatic advertising.
- Programmatic advertising has benefited advertisers in the early stages, but as fewer publishers compete in the marketplace, I think the dynamics of pricing will no longer favor advertisers.
- Assuming Yahoo can generate both volume and higher pricing on a CPM basis, the business may recover, but it's too premature to determine that.
- The Alibaba IPO date nears ever closer.
- Yahoo's revenue was down year-over-year, and down from when Marrisa Mayer took over the CEO position.
- $2 billion in acquisitions and yet still no revenue growth.
- Alibaba sale could raise $5 billion - $6 billion, but not all of that will be returned to shareholders.
- Instead of building up its cash hoard, Yahoo should institute a dividend or buyback more shares.
- 2014 has not been the best for YHOO - critical search revenue dipped at least 8 percent, and price per ad has dropped ~24% since last year.
- YHOO will likely see increased flexibility for improvement with a much-needed cash influx from the upcoming Alibaba IPO.
- YHOO has promised to return at least half of the after-tax Alibaba IPO proceeds to shareholders.
- We are positive in the near-term on YHOO, particularly with a payout in sight for shareholders.
- Alibaba IPO will be in mid September.
- YHOO holds a large amount of Alibaba pre-IPO stock. More than half the value of YHOO is due to Alibaba. It is trading as a proxy for Alibaba.
- YHOO call options are the best way to profit from the Alibaba IPO.
- Yahoo missed earnings and guided lower, partially due to weakening online ad sales.
- Yahoo recently launched a finance contributor network, possibly in order to monetize Tumblr, and because it views contributor content as a cheaper way to generate pageviews and ad sales.
- At Seeking Alpha, we don't view "cheap" as the key advantage of a contributor network. We believe that crowdsourcing will revolutionize equity research, and that contributors should be rewarded fairly.
- YHOO recently announced that it is acquiring Flurry, the mobile advertisement exchange.
- Flurry has become the largest mobile advertising company in operation, monitoring more mobile phones than Facebook or Google.
- Part of a series of acquisitions on the part of CEO Ms. Mayer, Flurry should help poise Yahoo! to be a mobile-first company, going into 2014-2015.
- With an influx of over $20 billion on the horizon from YHOO’s Alibaba investment, the company is poised for growth, and investors should consider buying in.
Why I Believe An Alibaba Deal To Buy Yahoo Is Becoming More Likely
- YHOO shares moved higher following a recent article which suggested that Alibaba or SoftBank should acquire YHOO.
- YHOO's recent announcement that it will be selling less of its Alibaba stake is an indication that a deal is becoming more likely.
- YHOO's weak earnings report and lack of long-term growth strategy make it an easy takeover target.
- YHOO's weak stock price means that Alibaba could offer a significant premium over the current price to close a deal.
Yahoo Beefs Up Its Mobile Business With Flurry's Acquisition
- Yahoo is going through a change in order to get back to the front line of tech giants.
- Yahoo acquires Flurry to expand its revenue streams.
- Flurry's acquisition will allow Yahoo to monetize its mobile services and penetrate the mobile ads market.
- Yahoo is not making significant progress in advertising, as its recent results suggest.
- Yahoo is facing intense competition from Facebook and Google, which are speeding ahead in display ads.
- Yahoo's bottom line is expected to grow at a slower rate in the next five years, indicating that it isn't a good investment.
Yahoo: Disappointing Q2 Results Suggest Turnaround Is Significantly Behind Schedule
- Yahoo's turnaround is significantly behind schedule, as Yahoo struggles to turn increased traffic and users into meaningful revenue streams.
- Revenue Ex-TAM was down 3% YoY; Adjusted EBITDA was down 7.8%; EPS was up 5% (driven mostly by share buybacks). These results are even weaker on closer examination.
- Alibaba has been driving most of the stock appreciation for Yahoo; most of the benefits are already priced in.
- Recommend current shareholders of Yahoo sell ahead of the Alibaba IPO.
Wed, Jul. 23, 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
Mon, Jul. 21, 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.
Mon, Jul. 21, 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.
Mon, Jul. 14, 4:25 PM
- Tim Armstrong would "dearly love" to merge AOL (AOL +2.1%) with Yahoo (YHOO +0.8%), and has (in "sideways ways") brought it up to Marissa Mayer and others, sources tell Kara Swisher.
- However, while many at both companies see value in a deal, given content, video, and ad synergies, Mayer reportedly considers it "small, unexciting, uninspiring and backward-looking."
- Mayer would, however, like to buy the Huffington Post. But Armstrong is said to be uninterested in selling the site by itself.
- The report follows a Sun Valley talk between Mayer and Armstrong that fueled speculation the CEOs were talking about a deal.
- Yahoo's Q2 report arrives tomorrow. The Street is hoping some clarity will be given on Yahoo's plans for its Alibaba IPO windfall.
Fri, Jul. 11, 4:29 PM
- "Yahoo (YHOO) is focused on growing video users and monthly streams ... This deal demonstrates our dedication to accelerating our video strategy and boosting our underlying technology infrastructure in the space," says Yahoo exec P.P.S. Narayan, explaining the RayV purchase.
- No acquisition price is given. Most of RayV's team will join Yahoo's Tel Aviv R&D center.
- The WSJ reported in May Yahoo is looking to buy RayV, which offers a cloud-based platform for encoding, streaming, and monetizing video. The startup asserts its solution is differentiated by congestion-management tech that can adapt to network conditions.
- The purchase follows reports plans to launch a YouTube rival (focused on premium content providers) as part of its efforts to grow video ad inventory, and has bid for leading YouTube network Fullscreen.
Fri, Jul. 11, 11:57 AM
- Yahoo's (YHOO +0.4%) Marissa Mayer and AOL's (AOL -0.1%) Tim Armstrong "talked over drinks into the wee hours Thursday night" at the Sun Valley media conference, the WSJ reports.
- The paper doesn't have details on what the CEOs discussed. The talk is noteworthy in light of widespread speculation Yahoo will bid for AOL using a part of the giant windfall it stands to receive from selling a portion of its 22.6% Alibaba stake at IPO time.
- AOL has a slew of online media and ad network/tech assets that could appeal to Yahoo, and currently trades at just 1.3x 2014E sales. With the notable exception of Tumblr, Yahoo's acquisitions during the Mayer era have generally been smaller purchases meant to reel in technology and/or engineering talent.
- Yesterday: Alibaba's IPO process could start at month's end
Fri, Jun. 27, 1:45 AM
- Yahoo (YHOO) is looking to buy YouTube content provider Fullscreen, and has put in a bid for $250M, Sky News reports. Fullscreen has 380M subscribers and draws over 3B monthly video views on YouTube.
- Fullscreen is backed by Peter Chernin, who is said to have the right to purchase the company at a previously negotiated price, unless another bidder offers over $300M. Fullsceen generated $50-70M in revenue last year.
- YHOO +0.1% AH
Wed, Jun. 11, 2:39 PM
- Acquisition-hungry Alibaba (ABABA) is buying the 1/3 of top Chinese mobile browser vendor UCWeb it doesn't yet own for a mixture of cash and stock. The price hasn't been disclosed, but Alibaba claims the deal is the biggest Chinese Web merger in history, exceeding Baidu's (BIDU +0.4%) $1.9B purchase of app store provider 91 Wireless.
- UCWeb has a 50%+ share of the Chinese mobile browser market, and also has 35% of the Indian market. The company claims 500M total browser users, as well as 50M users for its Android app store, which competes against Baidu and Qihoo's (QIHU +3.8%) popular stores.
- More importantly for Baidu (and also relevant for Qihoo), UCWeb claims a 20%+ share of the Chinese mobile search market on the back of 100M active users. A mobile search JV was launched with Alibaba in April.
- Meanwhile, CNBC reports Alibaba will likely file a new F-1 early next week that includes its Q1 results. Odds are Yahoo (YHOO +0.6%), which has been reporting Alibaba's results a quarter in arrears, will move on the numbers.
- CNBC adds Alibaba is still expected to go public in the first week of August. Bloomberg previously reported Alibaba is eying an Aug. 8 IPO.
Tue, May. 20, 5:26 PM
- RayV offers a cloud-based platform for encoding, delivering, and monetizing professional-grade Web/mobile video. The company asserts its proprietary congestion control tech (adapts to network conditions) allows it to outperform YouTube and Netflix.
- The WSJ reports Yahoo (YHOO) is "close to finalizing" an acquisition of RayV, and notes its technology could bolster Yahoo's video-streaming infrastructure.
- Yahoo has struck multiple high-profile deals to expand its professional video inventory (a priority of Marissa Mayer's), and is also reportedly looking to poach top YouTube talent. At the same time, the company has been thwarted in its efforts to acquire Hulu and Dailymotion.
- The WSJ reported in March Yahoo was in preliminary talks to buy leading video syndication platform NDN.
Mon, May. 19, 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.
Mon, Mar. 31, 5:30 PM
- The WSJ reports Yahoo (YHOO) is in preliminary talks to buy NDN, an online video syndication platform that provides clips for 3rd-party publishers.
- Sources state Yahoo could pay $300M. However, an NDN spokeswoman says her company isn't in acquisition talks with Yahoo at this time.
- NDN claims to deliver 100K+ videos to 4.5K+ publishers each month. Clients include the AP, Bloomberg, the NY Post, the Los Angeles Times. comScore estimates NDN's videos reached 51.4M U.S. unique viewers in January (#5 overall, and above Yahoo's 45M video viewers).
- The WSJ's report follows one from re/code stating Yahoo is looking to poach leading YouTube content providers in an effort to grow its video content library and ad inventory.
Thu, Mar. 27, 5:05 AM
- Yahoo Japan (YAHOF) has agreed to acquire mobile and broadband provider eAccess from SoftBank (SFTBF) for ¥324B yen ($3.17B) in a deal that will expand the Internet portal's services for tablets and smartphones.
- SoftBank, which owns 42.5% in Yahoo Japan, will book a special gain of ¥55.7B for the fiscal year ending March 2015. Yahoo (YHOO) owns 35% in its Japanese namesake. (PR)
Mon, Feb. 24, 2:58 AM
- Alibaba (ABABA) is planning to buy Shanda Interactive and Shanda Games' (GAME) main business for at least $3.2B, according to a source inside Shanda.
- The acquisition may include Shanda literature, Shanda games and Ku6, which was acquired by Shanda Interactive in 2009.
- In January, Shanda Games received an offer to take the business private that valued it at $1.9B from its controlling shareholder Shanda Interactive Entertainment and an affiliate of Primavera Capital.
- Shanda Interactive was taken private by founder Chen Tianqiao and Chen's family in 2011.
- Source: BrightWire
Tue, Feb. 11, 1:29 PM
- Yahoo's (YHOO +1.7%) latest acquisition is Wander, maker of a diary app (known as Days) that revolves around creating/sharing a series of photos/GIFs. TechCrunch reports the price appears to be "north of $10 million."
- Unlike many other Yahoo acquisition targets, Wander won't be shuttering its product. However, its time will now also work on other projects as a part of Yahoo's Mobile and Emerging Products group.
- A list of past Yahoo acquisitions
Tue, Jan. 21, 7:08 PM
- Yahoo's (YHOO) latest acquisition is Sparq, developer of a mobile ad platform that embeds links to digital marketing content within apps.
- As has been the case with many other acquisitions, Sparq's service will shut down, and its team will join Yahoo. Yahoo has plenty of apps that could make use of Sparq's underlying ad technology.
- Meanwhile, scrutiny of Yahoo's product and content strategy has grown following last week's firing of COO Henrique de Castro (followed by the splitting up of de Castro's responsibilities among other execs), and the resignation of seasoned editor-in-chief Jai Singh.
- Pando Daily's Sarah Lacy observes Yahoo's media team might not be thrilled with Marissa Mayer's decision (following de Castro's firing) to put Yahoo's media and editorial functions under the control of marketing chief Kathy Savitt. She adds Mayer "may have taken the things that ailed Yahoo – a distracted, bloated focus across dozens of products and industries where it was good but not great – and made that problem worse."
- Also: Jeff Bercovici observes unique U.S. visitors to Tumblr's site (per comScore) have been roughly flat since last spring. It's worth noting comScore's data doesn't include traffic from Tumblr's mobile apps, which has continued to grow.
Dec. 17, 2013, 5:16 PM
- Yahoo (YHOO -0.6%) has acquired PeerCDN, developer of a content delivery network (CDN) platform that relies heavily on peer-to-peer (P2P) traffic between users to lower bandwidth costs.
- Yahoo might be interested in using PeerCDN's technology for its own video streaming efforts. The company recently bought live concert streaming platform Evntlive, and yesterday announced a Winter Olympics coverage partnership with NBC.
- Meanwhile, Citi's Mark May has hiked his Yahoo PT to $46 from $39, even as he cuts his 2014 adjusted EBITDA forecast to $1.32B from $1.5B. His reason, unsurprisingly, is Alibaba: May now grants the Chinese e-commerce giant a forward P/E of 29 (up from a prior 22), and notes Yahoo will still own a 14% stake (down from a current 24%) post-IPO.
- RBC gave Alibaba a $150B valuation last week, and assigned Yahoo's stake a $36B pre-tax valuation.
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