It's interesting that the Alibaba holdings are more of a liability than an asset in this situation.
YHOO is essentially a proxy for BABA, nothing Yahoo does affects the stock price in any meaningful way, and the value of the core business is effectively negative, if you subtract the post-tax value of Alibaba, Yahoo Japan, and cash on hand. But the value of a declining business with billions in revenue each year must be positive.
So selling off Alibaba and Yahoo Japan is the best bet, except you have investors demanding that it be done tax-free, so you can't just sell them, even though the decline of the value of Alibaba during the time it takes to do this process might be larger than the taxes. If Alibaba keeps going down in value, selling it now gives you more money than selling it tax-free in the future. But that might still get you sued by the shareholders, which is stupid.
A reverse spin-off, i.e. selling the core business, has some funny implications as well. Many employees are on work visas, which are tied to a specific employer at a specific address. If this changes, all of those visas become invalid. Obviously, selling the assets and shrinking the market cap, would make it much easier for someone to buy Yahoo.
Why the assumption that BABA keeps declining in value? Shareholders probably have more faith in BABA than Yahoo core. Would make sense to sell core yahoo and keep Yahoo Japan and BABA under the Yahoo ticker. Reason being the tax from selling the latter two affects your PV more if you believe they will keep growing.
You know how I know I'll never be a CEO of a huge company like this? Because I read what you just wrote and thought, "this doesn't sound like something that 1) I could ever solve 2) it just doesn't sound remotely fun to try and figure all this stuff out"
> If Alibaba keeps going down in value, selling it now gives you more money than selling it tax-free in the future.
You can't possibly predict that, and thus, a tax free spin off is the only sane option. Also, you can't just dump 15% of BABA stock and expect to get the current market share price. Its value would probably decline by 30-40%.
If they succeed and Alibaba buys back that 15% stake (even at a discount) they will have returned an additional $5-7bn to shareholders by structuring it like this.
> But the value of a declining business with billions in revenue each year must be positive.
Sure, it is - it's worth a few billion. Their current market cap is $27bn and own they 15% of Alibaba (worth ~$24bn pretax).
Remove the fake ads from your home page.
Remove the misleading ads from your home page.
Sponsored
How To Pay Off Your Mortgage
Homeowners are surprised and furious. If you owe less than $625,000 on your home, you better read this.
Remove the ads from your already terrible email service.
Remove the gossip columns that you call news and burry them deep where no one can find it.
Stop trying to be good at everything, because right now you can't do one thing well.
Stop with the ads that take over the whole screen.
Stop copying and pasting or embedding content from other sites
Stop using these crazy layouts that change all the time. It's impossible to find what you are looking for and it takes forever to load.
Promote content that matters.
Assume your audience is intelligent
Be creative
Be innovative
How do they generate revenue from webmail now? Millions rely on the yahoo webmail interface, and every request that server fields subtracts from the company's bottom line.
I would love to use Yahoo! as a "homepage" and get my news from there, if not only to show support for this company because the Yahoo! brand holds a place in my heart.
... But the duplicitous insertion of "sponsored" content that is intended to look like news among the legitimate news is too much for me to handle. Trying to consume news requires enough focus, nevermind having to scan each news story on their homepage to determine if it's a form of actual journalism or someone trying to sell me something.
A major problem with Yahoo! is the lack of compelling reason to even visit their properties. Everything is half-baked.
Yahoo's finance page is very good, better than anyone else's. With one click URL I can get quotes on all the stocks I'm interested in, with a thumbnail graph, and links to charts, news, etc.
I'd imagine most of yahoo's users are not as tech-savvy to know how to disable ads, and since so many people use it it's probably full of these "common-denominator" stuff that we're not used to
Drucker had this idea of a "Business X Ray". Yahoo needs to apply that concept to the business: the most profitable 20% lines of business today and tomorrow need to survive: the other need to be axed; the money flowing into those 80% can be now redirected towards the profitable few.
What Yahoo has is breadth of platform: leveraging that can be done, but it will involve pay-to-play for consumers of the platform, something that is always taken badly by the freeloaders.
It's time for some hard decisions that won't sit well with ICs.
"We admit we have no vision for this company, or its purpose, outside of maximizing shareholder value. Literally, we have no reason to exist other than preserving capital."
This reads like a classic sale script. Cut costs(hence the 15% cuts), focus on generating revenue (comments about focusing on core areas), then sell the business. Should be interesting
It's strange to me that this article with such brevity is on the front page, yet the NYTimes article about the difficulties of individuals to survive in retirement age got bumped?
The article is about strategic decisions Yahoo! faces as a business. And you're using a five year old anti-LGBT bullying video as a sarcastic joke? That's double insulting.
[+] [-] henrikschroder|10 years ago|reply
YHOO is essentially a proxy for BABA, nothing Yahoo does affects the stock price in any meaningful way, and the value of the core business is effectively negative, if you subtract the post-tax value of Alibaba, Yahoo Japan, and cash on hand. But the value of a declining business with billions in revenue each year must be positive.
So selling off Alibaba and Yahoo Japan is the best bet, except you have investors demanding that it be done tax-free, so you can't just sell them, even though the decline of the value of Alibaba during the time it takes to do this process might be larger than the taxes. If Alibaba keeps going down in value, selling it now gives you more money than selling it tax-free in the future. But that might still get you sued by the shareholders, which is stupid.
A reverse spin-off, i.e. selling the core business, has some funny implications as well. Many employees are on work visas, which are tied to a specific employer at a specific address. If this changes, all of those visas become invalid. Obviously, selling the assets and shrinking the market cap, would make it much easier for someone to buy Yahoo.
[+] [-] Riod|10 years ago|reply
[+] [-] sharkweek|10 years ago|reply
[+] [-] charlesdm|10 years ago|reply
You can't possibly predict that, and thus, a tax free spin off is the only sane option. Also, you can't just dump 15% of BABA stock and expect to get the current market share price. Its value would probably decline by 30-40%.
If they succeed and Alibaba buys back that 15% stake (even at a discount) they will have returned an additional $5-7bn to shareholders by structuring it like this.
> But the value of a declining business with billions in revenue each year must be positive.
Sure, it is - it's worth a few billion. Their current market cap is $27bn and own they 15% of Alibaba (worth ~$24bn pretax).
[+] [-] dfar1|10 years ago|reply
Remove the fake ads from your home page. Remove the misleading ads from your home page.
Sponsored How To Pay Off Your Mortgage Homeowners are surprised and furious. If you owe less than $625,000 on your home, you better read this.
Remove the ads from your already terrible email service. Remove the gossip columns that you call news and burry them deep where no one can find it. Stop trying to be good at everything, because right now you can't do one thing well. Stop with the ads that take over the whole screen. Stop copying and pasting or embedding content from other sites Stop using these crazy layouts that change all the time. It's impossible to find what you are looking for and it takes forever to load.
Promote content that matters. Assume your audience is intelligent Be creative Be innovative
[+] [-] muglug|10 years ago|reply
How do they generate revenue from webmail now? Millions rely on the yahoo webmail interface, and every request that server fields subtracts from the company's bottom line.
[+] [-] brandon272|10 years ago|reply
... But the duplicitous insertion of "sponsored" content that is intended to look like news among the legitimate news is too much for me to handle. Trying to consume news requires enough focus, nevermind having to scan each news story on their homepage to determine if it's a form of actual journalism or someone trying to sell me something.
A major problem with Yahoo! is the lack of compelling reason to even visit their properties. Everything is half-baked.
[+] [-] WalterBright|10 years ago|reply
Nobody else is even close.
[+] [-] ljk|10 years ago|reply
[+] [-] pnathan|10 years ago|reply
What Yahoo has is breadth of platform: leveraging that can be done, but it will involve pay-to-play for consumers of the platform, something that is always taken badly by the freeloaders.
It's time for some hard decisions that won't sit well with ICs.
[+] [-] alttab|10 years ago|reply
[+] [-] charlesdm|10 years ago|reply
[+] [-] Riod|10 years ago|reply
[+] [-] colmvp|10 years ago|reply
[+] [-] kqr2|10 years ago|reply
https://news.ycombinator.com/item?id=11022097
[+] [-] foltz|10 years ago|reply
[+] [-] profeta|10 years ago|reply
[+] [-] metaphorm|10 years ago|reply
[+] [-] Steko|10 years ago|reply
[+] [-] ljk|10 years ago|reply
[+] [-] jvandonsel|10 years ago|reply
[+] [-] acheron|10 years ago|reply
[+] [-] vidoc|10 years ago|reply
https://www.youtube.com/watch?v=E37-iqnvzZ4
[+] [-] mtmail|10 years ago|reply