Yahoo had to do this. They had been hanging onto the belief that the IRS wouldn't tax their Alibaba spin out, a belief that they and their tax accountants alone believed.
Most telling is that Yahoo was up after the markets closed on this news. Heck Bloomberg just sent me a note saying the sentiment of the news on Yahoo was very positive, even the machines like this news:)
Sadly this probably means 3 things are going to happen in the next 6 months:
1) The CEO leaves, and is replaced by an interm CEO from a PE firm who will negotiate the wind down of Yahoo.
2) There will be a lot of companies coming to look at Yahoo. If a deal can be done quickly then I don't think there will be layoffs right away. If no deal can be reached quickly then in 6 months I'll bet there is a very large round of layoffs as the company shutters what it can't sell to make the rest of Yahoo look more appetizing.
3) If Alibaba buys the holding portion of Yahoo( Alibaba and Yahoo Japan) then look for Alibaba to seek to acquire the rest of Yahoo Japan.
From teh article:
> Yahoo’s shift in strategy comes as Ms. Mayer and her husband, Zachary Bogue, are expecting the birth of twin daughters this month
I hope she takes a full year off, if not more. The past 4 years couldn't have been easy on her. It will be interesting to see what she does next.
It's clear she's great at product design and not so good at people skills. Unfortunately, that doesn't fit well with becoming a CEO again.
This is cleverer than people are giving them credit for. It delivers immediate value to shareholders; it delivers opportunities for long term growth to shareholders; it creates one valuable Asian property that can acquire other properties and continue to deliver shareholder value; it creates a US company that is easier to acquire than it used to be, without the Alibaba share, and thus could be bought by a big media company that values all the core assets and will keep the engineers.
Everyone wins here. Managers win, of course, but shareholders, who have been patient, get short-term returns and the potential for long-term ones as well. Employees will see their jobs stay, because of this repackaging.
Yes, Mayer will be gone in a year, replaced by someone with experience selling a company. But it's been a good run. She turned Yahoo from a place with mediocre engineers into a decent place to work; she resuscitated existing brands and gave them a place in the world; and now she did some reasonably clever financial engineering.
"Sadly this probably means 3 things are going to happen in the next 6 months"
(Genuine question, not snark). Why "sadly"? Companies, even technical companies, get obsolescent and die all the time. Maybe it is just Yahoo's time to go.
I mean, a Yahoo whose sole purpose is to be a tax-efficient vehicle for holding shares in Alibaba is not the endgame anyone envisioned, and let's be honest, doesn't really need a CEO either... Not that she ever has to work again.
This is not what article says. Previously they wanted to spin off Alibaba stack but because of tax issues now they will spin off other stuff. Either way, results would have been exactly same: Partition of company in to two. There is zero talks of selling of core business. In fact article clearly says that "activists" investors wanted that but didn't got it. Board says they are 100% behind Mayer and Mayer says she is deeply committed to running Yahoo. In fact she is taking only limited leave for maternity. I highly doubt you actually read article or may be you are just jumping to conclusions but without disclosure that this are your interpretation, not the actual content of the article.
Marissa Mayer is basically an ex-CEO walking at this point. As "bad" as it sounds, the only thing that has kept her around recently is her pregnancy. No board would want to step into the mess of letting a woman CEO go during pregnant or immediately following pregnancy and maternity, no matter horrible her performance. You are right, I give it about 6 months before there's an announcement of her departure for whatever reason, probably "spending time with the family".
As it has been put by others, Mayer will hold the title in corporate history as the most expensive CEO for a very long time.
Why is a wind down and/or sale of Yahoo more likely given a spin out of the core business vs a spin out of Alibaba?
Don't you end up with pretty much the same thing in both scenarios? One business that's an internet company and another that is a holding corp for Alibaba stock.
I'm not saying your wrong (a lot of people are saying this). I just don't personally understand the reasoning.
good design skills, not so good people skills. sounds like a few successful ceos we all know and adore. a ceo with less than ideal people skills needs a good operator to help balance him/her.
> > Yahoo’s shift in strategy comes as Ms. Mayer and her husband, Zachary Bogue, are expecting the birth of twin daughters this month
> I hope she takes a full year off, if not more. The past 4 years couldn't have been easy on her. It will be interesting to see what she does next.
Do you think other CEOs don't have children, or don't have hard jobs? Running a profitable growing company is as hard as failing to save a dying company.
Oh just give this poor old dog the old Yeller treatment already. I don't know what's more sad, the fact that Yahoo has fallen from where it once was, or that it's falling so slowly and that it's new CEO, once thought to be it's saving grace, is letting the bleeding continue for seemingly as long as she possibly can.
I can't imagine the morale issues in the trenches of Yahoo, it's gotta be just horrible in there.
>Oh just give this poor old dog the old Yeller treatment already. I don't know what's more sad, the fact that Yahoo has fallen from where it once was, or that it's falling so slowly and that it's new CEO, once thought to be it's saving grace, is letting the bleeding continue for seemingly as long as she possibly can.
And why not?
In what kind of reasoning, if you could continue to make money and employee thousands of people for 10+ years of slowly declining revenue and relevance, would you refuse it?
A "hot" CEO or employee might want to jump ship ofcourse for greener pastures. But there's absolutely no sense in closing the company and leaving all the money it could make (even if declining) on the table.
If it wasn't profitable, that would be another story. But it is.
I thought I read somewhere that this is a slow bleed, to allow investors more direct access to alibaba, at the expense of the rest of Yahoo!'s businesses?
As a sidebar, I've always kinda felt the name gets in the way.
Yahoo!
I feel silly saying it. I feel silly asking someone if they Yahoo!? It feels silly seeing it on stock tickers. Do I want to invest in a silly business? Work for a silly business?
The answers are yes and yes in an objective world, if the company is producing interesting products that are selling. But when it comes to marketing to users, investors and future employees alike, I'm not so sure it isn't a small hurdle in the way of that conversation.
So I don't understand one simple thing: The stock is up 120% since Mayer took over. Even adjusting for compounding interest over 3.43 years, this is like 25+% yearly growth. So the core business is crapping out? So what? Why is everyone dumping on Mayer? I don't even think I could fix the core Yahoo business. They have to pay a 50% premium for developers just because it's Yahoo and their core audience is the technically illiterate; a group that is fairly difficult to monetize.
All of that is because of $BABA. If you add up the current value of $BABA and Yahoo Japan shares that Yahoo holds, it's more than the market cap of Yahoo; which means, the $4B/year revenue business that is rest of Yahoo is valued negatively by the market. SMH....
They could have literally fired everyone and left it as a shell holding company of the Alibaba stock and it would be worth more than it is now (the current value of Yahoo is less than it's stock holdings of Alibaba).
She didn't appear to add any value to Yahoo at all. I agree that I'm not sure anyone could have, but that doesn't change the fact that she didn't accomplish the job she was hired to do.
Corporate governance is a lot about perceptions. Even if you set aside the fact that most of that growth comes from Yahoo's stake in Alibaba, you still have the question about Yahoo's future and vision. If there is a perception that their future is shaky, that matters more than if things are likely to turn out badly. Should add, IANAL aka, I am no analyst
What's the beta on that stock? Look at it in comparison to other tech stocks. Most of Yahoo's recent rise is explained by the rise in all tech stocks over the last few years.
The stock is up because overall, Yahoo as an overall business is doing great. The problem is that the best financial parts of Yahoo are its investments. If Yahoo was solely an investment company, it would have a great record. Yahoo, however, has the core business which is what most people interact with on a daily basis that loses money. I joked with my friend at the beginning of 2015 that Yahoo performs betters as a VC than as an internet company.
Paul Graham's What happened to Yahoo[0] is probably just as relevent now as when he wrote it in 2010.
> One of the weirdest things about Yahoo when I went to work there was the way they insisted on calling themselves a "media company.
That was a bad decision then, but at the time content and media were newer on the internet and had value. They don't anymore. Yahoo finance and fantasy sports are nice things to provide, but they aren't a google killer for sure.
Yahoo's core business is media not technology. If the NYT and Wall Street Journal are any indication, media is a bad business to be in.
Wish I could find the article I read this in (googling around has failed me), but I believe around 2010 they also started bringing in execs and business people from Hollywood/MSM and there was a big clash of cultures.
To come in as an outsider and try to save an ailing web giant nearly everyone had already written off is no easy feat. Wall St. is valuing things like Tumblr at zero and so now she has to do a 180 and unwind this company, maximally and efficiently, while pregnant with twins. Naturally we're inclined to armchair QB, but I think the hand she took over when she sat down at the table was bad. While she never went "all in" on a moonshot, that would have been a literal gamble, and she played smart. Wall Street can be inefficient. Core Yahoo is worth more than nothing.
She's a Silicon Valley darling; in what way was she an outsider?
>I think the hand she took over when she sat down at the table was bad.
I agree with this.
>she played smart
But not this. During her tenure the company treaded water for a few years, lost nearly all value, and now might be looking to break itself up. Is this the standard we should be holding high-profile, high-priced executives to?
When Yahoo finally dies, my main concern is what happens to the @yahoo.com email address I've had for a couple of decades, and which now lives next to my name in countless address books. Does it perpetually forward to an address I choose? Does Yahoo try to charge for this? Do Russian identity thieves buy the domain and make my life hell?
Yahoo mail probably makes a pretty good penny. Yahoo isn't going to die, IMHO, its just going to be separated off, with the unprofitable bits discarded. It'll probably end up as, Yahoo Mail, Yahoo Sports and Yahoo Finance.
I think Yahoo makes a great case study on how optimizing for revenue per user can kill your brand.
Entirely dependent on who decides to buy Y! Mail. Safe to assume it'll be around for a while though, since straight killing Y! Mail doesn't make much business sense.
I've got a list of maybe 50 accounts including a couple of relatively important ones that still use my Yahoo address. It's been on my todo list for months to get them updated. I guess it's time to bump up the priority on that item.
There's a bunch of smart TV's out there that are tied to Yahoo services (Vizio at least, probably others) for basic things like app installation. I hope they at least transition smoothly...
Mayer seems completely bored by the whole thing and keeps passing stuff off to Webb as "board level consideration". Doesn't make me excited for Yahoo whatsoever.
the funny part is, if you mixed messenger, mail and flickr (let's not forget geocities, delicious and 60% of all online stores before 2006) they could have what facebook is still trying out to be and then some.
Yahoo used to have awesome technology. Their developer tools were unmatched and have yet to be matched. Yahoo pipes alone was basically IFFT and AWS Lambda combined way before any of those two existed. They just squandered away all the talent.
I never understood farming out their search engine to Bing in the first place. Google literally prints money with their adwords search business. Seems instead of attempting to innovate they just threw in the towel and gave up? I just find it hard to believe that Google is the only way you can run a successful search engine.
Exactly. Yahoo had the largest Hadoop cluster in 2009. They used it for their search engine. They were the driving force and sponsor of Apache projects like Lucene and Hadoop. Then suddenly they outsourced their search engine business to Microsoft Bing. Last time I checked meta search engines like DuckDuckGo rely on Yahoo's BOSS API to access Bing's search engine.
You seem to imply that because they used Bing they couldn't still make money from ad revenue with searching. The truth is they most certainly could and probably do (they display Google ads on their result pages). Outsourcing to Bing allowed them to, supposedly, focus on more core business related functions. Whether that was a mistake or not (or ultimately didn't matter) I don't know if we have the data to show.
Google's search engine runs at a loss to support their advertising business, and haven't had any serious competition in that sector since they bought Doubleclick (which looks a bit antitrusty in my eyes but what do I know). Yahoo doesn't have much of an ad business so there's not a lot of value in running their own search. They're good at their core business of being a portal, with some parts implemented themselves and some parts external (or semi-external e.g. Flickr) integrations.
This can be answered by the question "Is Flickr profitable by itself?" If so, someone will certainly buy it. If not, who knows.
My guess, someone will buy it and it'll languish for a year or two as the product strategy is developed and migration of technology occurs, then the new vision by new owners will be executed.
I would say "portal" which is to connect content creators with content consumers (and charging for space on the portal). Unfortunately for yahoo, this model lost out to social networks. People seem to prefer seeing content from friends over content curated from yahoo. Or they prefer going to sources directly.
Again I ask, where should I take ~30GB of photos that I have on Flickr? Yes, I have other backups but I need offsite storage. Guess I'll have to budget for it now. Backblaze B2 isn't quite ready yet.
It depends if you want backup or sharing in the flickr vein. If the latter, Smugmug is probably the closest equivalent. It's not free but neither was a flickr pro account.
Google Drive, Microsoft One Drive, Amazon Cloud Drive, etc. They're all very reasonably priced in my opinion (Amazon's says they give you unlimited). But if you want something more sharing oriented like flikr then that's a different beast. You can kinda do that with Google Drive and Google Plus but no one uses that.
As much as I shudder saying it, Google+ has been pretty good at keeping all of my photos. Though I have them backed up from my Android device. Not sure how well it works when actively using it for photo storage.
Ms.Mayer took a very difficult job. There is no sense in feeling for her, she knew what she was getting into and she was paid highly as if she already accomplished a turn around. Every thing said and done, Ms.Mayer will have $400 Million, even if Yahoo as we know is Kaput. It is a demonstration that C-level execs do not have skin in the game any more, they are paid like they already accomplished the task they have set to.
The article puts Yahoo's Alibaba stake at 31bn. Google finance is reporting Yahoo's market cap as 32.75bn. Does this mean that Yahoo's non-Alibaba value is a rounding error?
You're forgetting Yahoo Japan, a separate company that Yahoo owns a stake in. According to the numbers, Yahoo's core Internet businesses have been worth less than zero.
"Yahoo's ... share price ... values the whole company at $33 billion. Now, Yahoo has a 15 percent shareholding in the Alibaba Group, worth around $34 billion, a shareholding in Yahoo Japan worth about $8 billion, plus almost $6 billion in cash. In other words, Yahoo has around $48 billion of obvious value, which is $15 billion more than the whole thing is worth."
http://www.zdnet.com/article/now-is-the-time-to-break-up-yah...
It's almost as if Yahoo doesn't know what their core businesses are anymore. It will be interesting to see if they come out of this with better understanding of their identity.
Certainly the end of the beginning. Yahoo!, one of perhaps a handful of companies, was the first "Internet"[1]. Those companies blazed an interesting trail and brought the mainstream population of the US into the "online" world. That they emerged across the chasm that was the dot.com crash, was a testament to the amount of momentum they carried with them.
I have a tremendous amount of respect for them, but even with Marissa at the helm the biggest challenge they have not seemed able to overcome, was to tranform into something more 'web 3.0' ish.
I would not be surprised in the slightest if Microsoft spun out Bing as a subsidiary, and absorbed the assets and IP of Yahoo! into their own search centered business with a portal attached.
By resizing that combined business to be profitable based on the search and ad revenue I expect the case could be made for that as a long lived entity that remains when Google implodes. And having an already separate (or separable) would allow Microsoft to step away to avoid anti-trust concerns while keeping a partial interest to capture the value appreciation.
[1] the 0th Internet was what emerged right after HTTP started propagating, GNN, bookmarks etc.
MicroSoft made a major bid for Yahoo several years ago, but Yang want more money. MicroSoft hoped there would be synergy between combining MSN and Yahoo.
What's the difference aside from the tax liability? Either way you wind up with two companies. One with the Alibaba shares, and the other with everything else.
The symbolism is pretty visceral. People knew intellectually that the AliBaba shares were worth much more than the core yahoo business, but this really pounds it home.
Any reason I shouldn't see this as a complicated tax dodge? Simply more multinational pilfering from public coffers? Why shouldn't the Alibaba capital gains be taxed?
I assume your question was intended as rhetorical, but there's an actual answer to it: because when the owner of the Yahoo stock (or a hypothetical Yahoo holding company for Alibaba stock) sells his shares, he will pay tax on his gain from that holding.
To turn the question on its head: why should some capital gains be taxed twice and others once (or in rare cases, three times or not at all)?
I thought Yahoo's stock price would rise on this news (because it removes the uncertainty that was overshadowing the original Aabaco spin-off plan) but, despite a brief opening spike, the stock is down on yesterday's close.
On the conference call this morning, the management team sounded really downbeat. I expected them to sound positive and optimistic, talking about unlocking shareholder value and focusing on Yahoo Core but they sounded like somebody had died.
As of this moment, the market value of Yahoo's stakes in Alibaba and Yahoo Japan are $32.5bn and $8.67bn respectively, while Yahoo itself has a market cap of $32.37bn.
To quote Matt Levine, "the whole point of Yahoo as a company right now is to not pay taxes on Alibaba. [...] If there was a way to avoid paying taxes on the Alibaba shares that involved burning all of Yahoo's actual businesses to the ground, Yahoo should do that all day long, and then do it again the next day. It would still add shareholder value."
"And the market, right now, is valuing Yahoo as though it will fail in that mission, which is its only mission."
It is odd that Yahoo's stake of the fantasy sports market constantly goes unmentioned while daily fantasy startups like Draft Kings is currently bathing in VC cash and media coverage.
Is this a harbinger for darker times to come? Or is it simply Yahoo's time finally? I think there is still value in Yahoo it's just expectations vs market reality to me are at odds. I don't know what I'll set my grandma's homepage to now.
I don't like this expression, but weren't the "optics" of that just terrible? She looked and sounded really really tired. The Chairman is not telegenic AT ALL. And they were sitting about as far apart from each other as possible while being at the same desk.
So now Yahoo stock is basically going to be a faux Ali Baba stock. This totally seems like a healthy thing and evidence that there is nothing at all wrong with our market system.
This seems like an unprecedented situation. They much set $25,000,000,000 on fire at the same time that they made $29,000,000,000 on a great investment.
A company makes an amazing, generation defining large bet on a startup in a fantastic market. Which pays off as one of the best investments in history.
That same company then proceeds to do _nothing_ with its actual business. It purchases a series of tiny startups that go _absolutely nowhere_, the acquired talent of which create _zero value_.
And, simultaneously, new, younger competitors start eating their lunch in every one of their established markets.
If that's not unprecedented, I'd love to hear the other example. That situation would have to be just as fascinating.
Do you guys think our emails on Yahoo mail are safe after this? I will backup mine as soon as I find the time to do so.
Yahoo has a terrible track record regarding emails. I already lost one due to inactivity. They gave it to somebody else. That somebody probably has access to several of my accounts now. On websites where I used my Yahoo address and then just forgot about it.
In the case of delicious, in all fairness, the whole tagging/folksonomies thing ended up being pretty much a passing fad. (Though I do use pinboard myself and find it useful.)
Wait, so since they can't spin off the Alibaba stake tax free, they're going to spin off Yahoo (and pay taxes on that lesser-valued spin off)? Shareholders would then own 'YHOO' which are basically BABA pass-through stocks, and whatever other company Yahoo becomes?
Always playing catch up in an industry that is lead or die. Good to great engineers with failed leadership trying to coast on past success then, when the stuff hits the fan, trying to effect a culture change on a bloated structure. Finally, the sell off.
"The decision not to sell the Alibaba stake, which was reported on Tuesday, was driven by “the market’s perception of tax risk” associated with the Alibaba plan"
It's unfortunate that the tax code is so complex that ambiguous "tax risk" is a thing.
Yahoo Core Business valuation is at this point low enough that any one of the Unicorns, e.g. Uber, Airbnb,... could easily afford it. Tumblr could have raised more money to become a bigger Unicorn and could have acquired Yahoo. Absurdity is reality.
Can someone explain why do business like to create new company? What are the benefits for the financial return other than having a book reporting individual revenue? In the end, aren't they going to be under the same parent company, which, if one wishes, can actually challenge and even overrule the child company CEO's decision behind the scene? HP, Google, now Yahoo.
Sometimes companies have one business that's doing quite well and another that's a real stinker. Shareholders may want to own the good business separately and let the market value that without the drag and risk of having the stinker weighing down on it. In the end the stinker is either dismantled, taken into bankruptcy or sold off.
In Yahoo's case it's a bit unique in that the only thing they really have that the market likes is their holdings in other companies. Essentially Yahoo is like a mutual fund that made some good investments but the fund managers are blowing it by running a poorly performing lemonade stand on the side. A lot of the investors just want the holdings and then are happy to let the stinker, Yahoo's original business, just go away. At the moment the market assigns the core business a negative valuation so it's beyond a stinker, it's an anti-company offsetting the value of investment holdings elsewhere under the corporation. It's a real mess.
By themselves, "businesses" don't like to create new companies. But businesses aren't sentient, so it's actually two different groups we're talking about:
1. Executives generally don't want to have separate companies. Having it all under their purview gives them more power and control.
2. Shareholders often want separate companies, especially when they perceive one division as being much more valuable than the rest. With separate companies, they can own the profitable division but not the others.
The balance of power between these two groups is why ends up dictating what happens. This is why Google was able to turn into Alphabet (a single company) instead of spinning off their non-core assets (as some shareholders desired). Unfortunately, Yahoo executives just don't have the clout to hold together any longer. The market thinks Yahoo's assets have negative value: the only thing propping up their stock is their investments, and shareholders want to hold those investments by themselves.
In the general case, a basket of options is worth more than an option on a basket, and an equity share can be understood as a volatile asset and an option.
Usually there would not be a parent company but two separate companies (Google is a special case).
Yahoo's case is again very different; it's about avoiding tax rather than anyone else. The Alibaba stock that Yahoo currently holds is worth about $20 more per-share to Alibaba than to anyone else (provided it can make it into Alibaba's hands without getting taxed along the way, because Alibaba can take the shares off the market, whereas anyone else would (ultimately, one way or the other) have to pay the $20 of tax liability that they come with). So the puzzle is to find a way to allow Alibaba to buy those shares without having to buy the rest of Yahoo (which it evidently doesn't want to) and without doing anything that will constitute a taxable event for those shares.
If they're fully spinning it out, it isn't just "under the same parent company". They can make two companies each with their own stock, initially distributed to shareholders of the initial company. After that, some stockholders might buy/sell shares of company A and some might buy/sell shares of company B, so that they're truly separate companies with different management and owners and such.
It's usually about "shareholder value". In other words, the two new companies will be worth more (on Wall Street) than the old company.
In HP's case, the idea was that the shares in the enterprise company were depressed by worries about the viability of the PC/printer company. In Yahoo's case, the problem is that Yahoo's core business has little or no value (ie it's not reflected in the price of the shares) compared with the value of its shareholdings in Alibaba and Yahoo Japan.
In Google's case, it's currently just re-arranging deckchairs. However, the underlying problem is that Google's share price reflects Google Search, and does not reflect all the other businesses that now come under the Alphabet umbrella.
It makes things easier for investors. Imagine a company with two divisions. One is a solid boring industry with a long history of stable growth and of turning small but consistent profits. The other is in a smaller niche industry, showing impressive growth numbers, but yet to make a profit. As in investor it is hard to value such a company. Will the large old slow growing part hold back the new fast growing part? Will the losses in the smaller division lower the potential dividends of the solid part of the company? By splitting out the parts you can appeal both to investors who like low volatility and reliable dividend payments and to investors whom are willing to accept huge risk in exchange for the chance of 10x returns.
They may be going private equity then. PE often does more drastic reorganizations than public companies, not having the burden of shareholders and boards. The danger of PE is that sometimes they just use companies as a vehicle to create large debt and convert it into dividends. The remaining company is too broke to continue then.
Usually it is because of stock and stakeholders that a company splits, not because a CEO likes to split his or her company. Stakeholders might demand a split so problems with one company might not influence stock price of the second.
Undefined. Yahoo was one of the first big Internet companies in the late 1990s to make you shake your head and go "This must be a bubble." They had some ridiculous valuation at a time when they were losing money so P/E doesn't mean anything.
Yahoo's survival is a legacy of it's huge success in the late 1990s when it was the most successful company on the Internet. You are likely young and did not experience Yahoo's almost Google like dominance at the time.
First, while Yahoo's core "portal" business model was losing market share to search (i.e. Google) the overall market for online advertising was growing rapidly which masked it's weakness for many years.
Second, it invested it's huge early profits into the growing Internet both in the US and internationally. Most of these investments were failures but two were HUGE successes: Alibaba and Yahoo Japan.
Yes, Yahoo is a declining platform but still has millions of users for all of the things you list. Like it predecessor AOL there is a very long tail as people are creatures of habit and don't like to change email or start page, etc.
chollida1|10 years ago
Most telling is that Yahoo was up after the markets closed on this news. Heck Bloomberg just sent me a note saying the sentiment of the news on Yahoo was very positive, even the machines like this news:)
Sadly this probably means 3 things are going to happen in the next 6 months:
1) The CEO leaves, and is replaced by an interm CEO from a PE firm who will negotiate the wind down of Yahoo.
2) There will be a lot of companies coming to look at Yahoo. If a deal can be done quickly then I don't think there will be layoffs right away. If no deal can be reached quickly then in 6 months I'll bet there is a very large round of layoffs as the company shutters what it can't sell to make the rest of Yahoo look more appetizing.
3) If Alibaba buys the holding portion of Yahoo( Alibaba and Yahoo Japan) then look for Alibaba to seek to acquire the rest of Yahoo Japan.
From teh article:
> Yahoo’s shift in strategy comes as Ms. Mayer and her husband, Zachary Bogue, are expecting the birth of twin daughters this month
I hope she takes a full year off, if not more. The past 4 years couldn't have been easy on her. It will be interesting to see what she does next.
It's clear she's great at product design and not so good at people skills. Unfortunately, that doesn't fit well with becoming a CEO again.
kaizendad|10 years ago
Everyone wins here. Managers win, of course, but shareholders, who have been patient, get short-term returns and the potential for long-term ones as well. Employees will see their jobs stay, because of this repackaging.
Yes, Mayer will be gone in a year, replaced by someone with experience selling a company. But it's been a good run. She turned Yahoo from a place with mediocre engineers into a decent place to work; she resuscitated existing brands and gave them a place in the world; and now she did some reasonably clever financial engineering.
plinkplonk|10 years ago
(Genuine question, not snark). Why "sadly"? Companies, even technical companies, get obsolescent and die all the time. Maybe it is just Yahoo's time to go.
gaius|10 years ago
Isn't that why CEOs are paid the big bucks?
I mean, a Yahoo whose sole purpose is to be a tax-efficient vehicle for holding shares in Alibaba is not the endgame anyone envisioned, and let's be honest, doesn't really need a CEO either... Not that she ever has to work again.
morgante|10 years ago
Isn't Yahoo Japan being spun off from the Alibaba portion? Ie. all that remains of the current "Yahoo" company will be its Alibaba stake.
mahranch|10 years ago
Yahoo! Inc doesn't own the majority of Yahoo! Japan (believe it or not), Softbank does. Yahoo! is only a minor shareholder of Yahoo! Japan.
sytelus|10 years ago
wahsd|10 years ago
As it has been put by others, Mayer will hold the title in corporate history as the most expensive CEO for a very long time.
caycep|10 years ago
I do hope they find a good home for Flickr...I will miss it terribly if it is gone.
harryh|10 years ago
Don't you end up with pretty much the same thing in both scenarios? One business that's an internet company and another that is a holding corp for Alibaba stock.
I'm not saying your wrong (a lot of people are saying this). I just don't personally understand the reasoning.
Redoubts|10 years ago
That spike seems to have been very short lived
http://finance.yahoo.com/echarts?s=YHOO+Interactive#{"range"...
coolswan|10 years ago
pbreit|10 years ago
wooger|10 years ago
Can you remind me which great products she's designed?
perseusprime1|10 years ago
gohrt|10 years ago
> I hope she takes a full year off, if not more. The past 4 years couldn't have been easy on her. It will be interesting to see what she does next.
Do you think other CEOs don't have children, or don't have hard jobs? Running a profitable growing company is as hard as failing to save a dying company.
FussyZeus|10 years ago
I can't imagine the morale issues in the trenches of Yahoo, it's gotta be just horrible in there.
coldtea|10 years ago
And why not?
In what kind of reasoning, if you could continue to make money and employee thousands of people for 10+ years of slowly declining revenue and relevance, would you refuse it?
A "hot" CEO or employee might want to jump ship ofcourse for greener pastures. But there's absolutely no sense in closing the company and leaving all the money it could make (even if declining) on the table.
If it wasn't profitable, that would be another story. But it is.
[edit] fixed typos.
ep103|10 years ago
mattlutze|10 years ago
Yahoo!
I feel silly saying it. I feel silly asking someone if they Yahoo!? It feels silly seeing it on stock tickers. Do I want to invest in a silly business? Work for a silly business?
The answers are yes and yes in an objective world, if the company is producing interesting products that are selling. But when it comes to marketing to users, investors and future employees alike, I'm not so sure it isn't a small hurdle in the way of that conversation.
3pt14159|10 years ago
1024core|10 years ago
All of that is because of $BABA. If you add up the current value of $BABA and Yahoo Japan shares that Yahoo holds, it's more than the market cap of Yahoo; which means, the $4B/year revenue business that is rest of Yahoo is valued negatively by the market. SMH....
hueving|10 years ago
She didn't appear to add any value to Yahoo at all. I agree that I'm not sure anyone could have, but that doesn't change the fact that she didn't accomplish the job she was hired to do.
shas3|10 years ago
skylan_q|10 years ago
MadManE|10 years ago
Yes, it's a good financial call, but it puts all of the control in someone else's hands.
joeblau|10 years ago
vonklaus|10 years ago
> One of the weirdest things about Yahoo when I went to work there was the way they insisted on calling themselves a "media company.
That was a bad decision then, but at the time content and media were newer on the internet and had value. They don't anymore. Yahoo finance and fantasy sports are nice things to provide, but they aren't a google killer for sure.
Yahoo's core business is media not technology. If the NYT and Wall Street Journal are any indication, media is a bad business to be in.
[0]http://www.paulgraham.com/yahoo.html
Quinner|10 years ago
http://www.nytimes.com/2015/10/30/business/media/new-york-ti...
strictnein|10 years ago
cronjobber|10 years ago
trimbo|10 years ago
draw_down|10 years ago
spinchange|10 years ago
forgetsusername|10 years ago
She's a Silicon Valley darling; in what way was she an outsider?
>I think the hand she took over when she sat down at the table was bad.
I agree with this.
>she played smart
But not this. During her tenure the company treaded water for a few years, lost nearly all value, and now might be looking to break itself up. Is this the standard we should be holding high-profile, high-priced executives to?
briandear|10 years ago
username223|10 years ago
jboy55|10 years ago
I think Yahoo makes a great case study on how optimizing for revenue per user can kill your brand.
drgath|10 years ago
brewdad|10 years ago
Karunamon|10 years ago
lmm|10 years ago
jonknee|10 years ago
Part 1: https://amp.twimg.com/v/76b8a5e2-9a6c-40c3-9c1b-e2c8bcf91159 Part 2: https://amp.twimg.com/v/ce42d263-7b9c-4716-8d06-b320ed243606
Mayer seems completely bored by the whole thing and keeps passing stuff off to Webb as "board level consideration". Doesn't make me excited for Yahoo whatsoever.
profeta|10 years ago
crudbug|10 years ago
1. Messenger
2. Mail
3. Flickr
4. Tumblr
dingaling|10 years ago
profeta|10 years ago
dkarapetyan|10 years ago
benmorris|10 years ago
castell|10 years ago
BinaryIdiot|10 years ago
unknown|10 years ago
[deleted]
lmm|10 years ago
pmlnr|10 years ago
The rest had been obsolete for a while anyway.
drgath|10 years ago
My guess, someone will buy it and it'll languish for a year or two as the product strategy is developed and migration of technology occurs, then the new vision by new owners will be executed.
jscheel|10 years ago
peteretep|10 years ago
wiremine|10 years ago
carrier_lost|10 years ago
robotcookies|10 years ago
jrcii|10 years ago
jayvanguard|10 years ago
unknown|10 years ago
[deleted]
AznHisoka|10 years ago
aswanson|10 years ago
mkagenius|10 years ago
voltagex_|10 years ago
declan|10 years ago
I'd like it to have more advanced options, but it's probably the best choice and well integrated with Google Drive and Google+ (if you use it).
ghaff|10 years ago
BinaryIdiot|10 years ago
1024core|10 years ago
And free 2-day shipping (if you're in the US).
atYevP|10 years ago
EA|10 years ago
pmlnr|10 years ago
vonklaus|10 years ago
I don't think cloud storage or image hosting are unsolved problems.
sremani|10 years ago
netcan|10 years ago
The article puts Yahoo's Alibaba stake at 31bn. Google finance is reporting Yahoo's market cap as 32.75bn. Does this mean that Yahoo's non-Alibaba value is a rounding error?
tptacek|10 years ago
http://www.bloombergview.com/articles/2014-04-17/how-can-yah...
scholia|10 years ago
cmdkeen|10 years ago
zingplex|10 years ago
petercooper|10 years ago
ChuckMcM|10 years ago
I have a tremendous amount of respect for them, but even with Marissa at the helm the biggest challenge they have not seemed able to overcome, was to tranform into something more 'web 3.0' ish.
I would not be surprised in the slightest if Microsoft spun out Bing as a subsidiary, and absorbed the assets and IP of Yahoo! into their own search centered business with a portal attached.
By resizing that combined business to be profitable based on the search and ad revenue I expect the case could be made for that as a long lived entity that remains when Google implodes. And having an already separate (or separable) would allow Microsoft to step away to avoid anti-trust concerns while keeping a partial interest to capture the value appreciation.
[1] the 0th Internet was what emerged right after HTTP started propagating, GNN, bookmarks etc.
finnh|10 years ago
peter303|10 years ago
ddlatham|10 years ago
jackgavigan|10 years ago
Matt Levine wrote a good piece on this a week ago: http://www.bloombergview.com/articles/2015-12-02/yahoo-is-lo...
lmm|10 years ago
barretts|10 years ago
fredkbloggs|10 years ago
To turn the question on its head: why should some capital gains be taxed twice and others once (or in rare cases, three times or not at all)?
jackgavigan|10 years ago
On the conference call this morning, the management team sounded really downbeat. I expected them to sound positive and optimistic, talking about unlocking shareholder value and focusing on Yahoo Core but they sounded like somebody had died.
As of this moment, the market value of Yahoo's stakes in Alibaba and Yahoo Japan are $32.5bn and $8.67bn respectively, while Yahoo itself has a market cap of $32.37bn.
To quote Matt Levine, "the whole point of Yahoo as a company right now is to not pay taxes on Alibaba. [...] If there was a way to avoid paying taxes on the Alibaba shares that involved burning all of Yahoo's actual businesses to the ground, Yahoo should do that all day long, and then do it again the next day. It would still add shareholder value."
"And the market, right now, is valuing Yahoo as though it will fail in that mission, which is its only mission."
Source: http://www.bloombergview.com/articles/2015-12-02/yahoo-is-lo...
kzhahou|10 years ago
epmatsw|10 years ago
rchaud|10 years ago
craigasketch|10 years ago
aswanson|10 years ago
thomasjudge|10 years ago
panglott|10 years ago
ebbv|10 years ago
colinplamondon|10 years ago
A company makes an amazing, generation defining large bet on a startup in a fantastic market. Which pays off as one of the best investments in history.
That same company then proceeds to do _nothing_ with its actual business. It purchases a series of tiny startups that go _absolutely nowhere_, the acquired talent of which create _zero value_.
And, simultaneously, new, younger competitors start eating their lunch in every one of their established markets.
If that's not unprecedented, I'd love to hear the other example. That situation would have to be just as fascinating.
sjg007|10 years ago
joefarish|10 years ago
dothis|10 years ago
Yahoo has a terrible track record regarding emails. I already lost one due to inactivity. They gave it to somebody else. That somebody probably has access to several of my accounts now. On websites where I used my Yahoo address and then just forgot about it.
ArtDev|10 years ago
Yahoo bought delicious.com, said they were going to kill it, but later sold it. Most of the users that left never came back.
Has Yahoo done anything worthwhile in the last 15 years besides disrupt innovation in a bad way?
ghaff|10 years ago
sirkneeland|10 years ago
mmanfrin|10 years ago
clavalle|10 years ago
Always playing catch up in an industry that is lead or die. Good to great engineers with failed leadership trying to coast on past success then, when the stuff hits the fan, trying to effect a culture change on a bloated structure. Finally, the sell off.
sirkneeland|10 years ago
unknown|10 years ago
[deleted]
ShardPhoenix|10 years ago
It's unfortunate that the tax code is so complex that ambiguous "tax risk" is a thing.
poofyleek|10 years ago
intrasight|10 years ago
profeta|10 years ago
yeukhon|10 years ago
swingbridge|10 years ago
In Yahoo's case it's a bit unique in that the only thing they really have that the market likes is their holdings in other companies. Essentially Yahoo is like a mutual fund that made some good investments but the fund managers are blowing it by running a poorly performing lemonade stand on the side. A lot of the investors just want the holdings and then are happy to let the stinker, Yahoo's original business, just go away. At the moment the market assigns the core business a negative valuation so it's beyond a stinker, it's an anti-company offsetting the value of investment holdings elsewhere under the corporation. It's a real mess.
morgante|10 years ago
1. Executives generally don't want to have separate companies. Having it all under their purview gives them more power and control.
2. Shareholders often want separate companies, especially when they perceive one division as being much more valuable than the rest. With separate companies, they can own the profitable division but not the others.
The balance of power between these two groups is why ends up dictating what happens. This is why Google was able to turn into Alphabet (a single company) instead of spinning off their non-core assets (as some shareholders desired). Unfortunately, Yahoo executives just don't have the clout to hold together any longer. The market thinks Yahoo's assets have negative value: the only thing propping up their stock is their investments, and shareholders want to hold those investments by themselves.
lmm|10 years ago
Usually there would not be a parent company but two separate companies (Google is a special case).
Yahoo's case is again very different; it's about avoiding tax rather than anyone else. The Alibaba stock that Yahoo currently holds is worth about $20 more per-share to Alibaba than to anyone else (provided it can make it into Alibaba's hands without getting taxed along the way, because Alibaba can take the shares off the market, whereas anyone else would (ultimately, one way or the other) have to pay the $20 of tax liability that they come with). So the puzzle is to find a way to allow Alibaba to buy those shares without having to buy the rest of Yahoo (which it evidently doesn't want to) and without doing anything that will constitute a taxable event for those shares.
smeyer|10 years ago
scholia|10 years ago
In HP's case, the idea was that the shares in the enterprise company were depressed by worries about the viability of the PC/printer company. In Yahoo's case, the problem is that Yahoo's core business has little or no value (ie it's not reflected in the price of the shares) compared with the value of its shareholdings in Alibaba and Yahoo Japan.
In Google's case, it's currently just re-arranging deckchairs. However, the underlying problem is that Google's share price reflects Google Search, and does not reflect all the other businesses that now come under the Alphabet umbrella.
dagw|10 years ago
peter303|10 years ago
bastijn|10 years ago
crudbug|10 years ago
Trust me, you will thank me later. :)
pitt1980|10 years ago
given that we now know the postscript (or at least much of it)
did that multiple make any sense?
ghaff|10 years ago
mgalka|10 years ago
Google has beaten them at search, maps, email, and news. And their homepages is still confusing web 1.0 jumbled mess.
What do people still use Yahoo for anyway?
spikels|10 years ago
First, while Yahoo's core "portal" business model was losing market share to search (i.e. Google) the overall market for online advertising was growing rapidly which masked it's weakness for many years.
Second, it invested it's huge early profits into the growing Internet both in the US and internationally. Most of these investments were failures but two were HUGE successes: Alibaba and Yahoo Japan.
Yes, Yahoo is a declining platform but still has millions of users for all of the things you list. Like it predecessor AOL there is a very long tail as people are creatures of habit and don't like to change email or start page, etc.
PaulHoule|10 years ago