Yahoo Board to Weigh Potential Sale of Internet Business, Sources Say

http://www.wsj.com/articles/yahoo-board-to-weigh-potential-sale-of-internet-business-sources-say-1449015461

by coloneltcb • 11 years ago

118 135 11 years ago

jonknee2• 11 years ago

Wall Street was valuing the web businesses as worthless so this should be interesting (Yahoo's total market cap was about equal to its remaining stake in Alibaba). Shares are up 5% after hours on the news.

speeder• 11 years ago

Actually many times Yahoo had negative valuation (ie: Yahoo market cap was lower than Yahoo shares in Alibaba, thus if you discounted Alibaba value, Yahoo had negative value).

sixQuarks• 11 years ago

They have a lot of employees to feed with a dying web property.

jonknee2• 11 years ago

There are still big tax issues with the Alibaba stake so that definitely has something to do with it. If they can get it to be a tax free spin off the value should increase quite a bit.

HiLo3• 11 years ago

Or just as not worth more than the trouble they're bringing to this whole ordeal, when viewing it all as a portfolio of assets. (referring to the core biz)

Analemma_• 11 years ago

Reminder: in 2008, Microsoft offered to buy Yahoo for $45 billion, and Jerry Yang turned them down. Whatever they get for the core business (which, as jonkee says, the street thinks is worth nothing), I'm guessing it's going to be a lot less than $45 billion. something something looking a gift horse in the mouth.

SilasX• 11 years ago

Hindsight is 20/20.

dorfsmay• 11 years ago

Exactly. Google has had similar offers...

ipsin• 11 years ago

I don't even think of this as hindsight. At the time of the offer, everyone I knew at Yahoo was incredulous, because the org seemed so dysfunctional.

It felt like there were a few years lost, spent just injecting and removing tiers of middle managers.

sirkneeland2• 11 years ago

It's okay, at least Microsoft still got their chance to burn money on Nokia.

...so much money...

InclinedPlane3• 11 years ago

Offshore cash, same as the Mojang acquisition, practically funny money given the ratio of how much of it it's possible to keep when repatriating it to the US.

bkjelden• 11 years ago

Microsoft could've bought 6.5 Nokias for $45 billion

pbreit2• 11 years ago

Well, the Alibaba part is worth $30b+. Yahoo Japan another $10b. So the world's third (or 4th or 5th) largest internet property would only need to be worth $5b to "break-even". Thanks for the reminder!

HiLo3• 11 years ago

It's only worth that if somebody pays that, which would be who in this case?

thejosh• 11 years ago

Why is Yahoo Japan worth so much?

InclinedPlane3• 11 years ago

Yeah, that deal would have been great for Yahoo and terrible for Microsoft. It's funny how history works out.

guelo2• 11 years ago

Microsoft has probably burned in that neighborhood to get Bing to where it is now, they probably would have been better off if they had been able to close that $45b deal.

ekianjo4• 11 years ago

They burned a lot of money for sure, but close to 45 $B? No, probably not.

mrcwinn• 11 years ago

Having no citation or inside knowledge, I can say for certain they did not spend $45 billion to develop, market, and grow Bing.

smt883• 11 years ago

That's an unreasonably high estimate, and there is some data to support the idea that it's unreasonable[1].

Microsoft has been losing, at most, a few billion[2] a year on Bing. Assuming they've spent $45B since 2009, that's $6.4B per year spent on Bing. A net loss of $2B on Bing would mean Microsoft is making $4.4B per year, which isn't in the ballpark.

1. http://www.businessinsider.com/chart-of-the-day-microsoft-on...

2. http://hal2020.com/2013/01/18/about-that-2b-annual-loss-from...

radicaldreamer• 11 years ago

Generally, acquisitions are a good deal in monetary terms, but that's really not what companies are looking for at the time. Remember, the thing that got these companies to that spot are not an affinity to sell to another.

jackgavigan• 11 years ago

Reminder: Yahoo invested in Alibaba in 2005.

jacquesm7• 11 years ago

Nice to have a board that leaks like a sieve.

rdtsc• 11 years ago

Agile board!

jacquesm7• 11 years ago

Move fast and break stuff...

adharmad2• 11 years ago

Can't be worse than HP board

jacquesm7• 11 years ago

Possibly. But this is a bad sign for Marissa Mayer, if the board is acting out-of-order like this her days are probably numbered, it's a sign of pretty strong dissent. Someone (or multiple someone's) is trying to force her hand.

jbrad73542• 11 years ago

What are they without the "internet business"?

762236• 11 years ago

Compelling investments in Alibaba and Yahoo Japan.

jbrad73542• 11 years ago

Yes, but what's the point of existing?

Sell the investments, return money to all shareholders. Bye bye Yahoo.

jonathankoren• 11 years ago

"little more than a holding company for its Alibaba shares."

via http://www.theverge.com/2015/12/1/9832780/yahoo-considering-...

pbreit2• 11 years ago

This is the third #nottheonion article today. "Ford considers selling off car business".

rmason2• 11 years ago

Where did your read that? It would be really huge news here in Michigan.

nkozyra• 11 years ago

I think the joke is "isn't that all they do?"

Obviously it's not true for either company. Like any corporation that big the revenue sources are diverse.

SCAQTony2• 11 years ago

They have a robust delivery platform. I have no idea why they don't hire a notable CEO and entertainment team snatched from the entertainment industry and start producing content like Amazon.

hackaflocka• 11 years ago

Upvoted.

JulianMorrison• 11 years ago

Because Amazon. (And Google, Hulu, Netflix...) You don't break into a mature market unless you have money to burn.

loceng• 11 years ago

They own a huge marketing channel. You need some money and to fund just a few good producers to get the ball rolling.

happycube2• 11 years ago

They tried and lost millions.

leoc• 11 years ago

That was the Terry Semel tenure as CEO, right? https://en.wikipedia.org/wiki/Terry_Semel

cwyers• 11 years ago

Is there any evidence that Amazon's original programming is anything more than a loss leader to sell Prime subs and increase the amount of stuff people buy through Amazon? Loss leaders only work when you have some sort of gain follower to go with it.

(And they DID try this, with Community and Other Space.)

SCAQTony2• 11 years ago

I am sure it did lose money but the series is still an asset, much like rental property. Breaking Bad, The Shield, Mad Men will be making money for years in streaming, syndication releases, and whatever technology is next. Breaking Bad and The Shield cost more than the advertising dollars brought in but they are profitable now.

kriro• 11 years ago

They did stream an NFL game this season (exclusively) so they still try this every now and then I suppose. It was one of those "odd times in the US" games held in London iirc. I wonder how that game worked out for them/what the internal goals were.

thesehands• 11 years ago

Its worth noting how well received this was. Fan sentiment seemed very high at the experiment, noting crystal clear quality and minimal buffer time. It was reported that all advertising spots had been sold too.

spikels• 11 years ago

Yahoo has already done almost exactly that and had to write off $42 million in October when their original content effort failed.

http://variety.com/2015/digital/news/yahoo-misses-q3-earning...

mydpy2• 11 years ago

Bah paywall.

shawndumas• 11 years ago

scroll to the top and click 'web'

mydpy2• 11 years ago

Yeah, thanks. I was impatient last night. :-/

oh_sigh• 11 years ago

open it in incognito mode

jordache• 11 years ago

oh no! please keep yahoo yql finance api up and running! i need that data feed

Nicholas_C• 11 years ago

Yahoo Finance is the only reason I ever go to Yahoo. I feel like they could beef up their finance news and products and do something with that.

colmvp2• 11 years ago

Activist investor Starboard Value LP last month called on the company to halt its Alibaba spinoff and instead find a buyer for its Internet business. In a letter to Yahoo, Starboard said its position changed following the federal government’s decision not to rule on whether the Alibaba spinoff would incur billions of dollars in taxes.

Does anyone know anything about Starboard Value LP? What is an activist investor? The term itself screams adversarial. Do all CEO's have to deal with this? I can't imagine having to both plan how to pull a company out of the water and have to deal with people outside of the company who think they know better.

akg_67• 11 years ago

I am well-aware of Starboard Value LP. The hedge fund is behind combination of Office Depot and Staples, changes at Olive Garden, etc. They are activist investor typically acquire influential stake in small-to-midsize company, take board seats and try to push changes that may increase shareholder value.

I personally don't hold anything against them. They seem to go after management who get too comfortable in their role. Activism seems to be the primary way now hedge funds create Alpha.

A Primer on Starboard, the Activist That Pushed for a Staples-Office Depot Merger http://dealbook.nytimes.com/2015/02/04/a-primer-on-starboard...

Starboard’s Olive Garden Slides: Salting the Water, Custom Straws and More http://blogs.wsj.com/moneybeat/2014/09/12/starboards-olive-g...

scottmcleod• 11 years ago

Thanks for sharing

ubernostrum• 11 years ago

"Activist" typically refers to investors who try to either obtain enough shares, or sway the votes of enough shares, to get seats on a company's board and enact a specific agenda they want. It's often used pejoratively to refer to investors who want to gain influence just long enough to reap a profit from gutting the company, leaving other investors with now-worthless shares in the husk they leave behind.

WalterBright4• 11 years ago

Sometimes a company's parts are worth more than the company, and "parting it out" like one would an old car is the right thing to do.

apocalyptic0n3• 11 years ago

An Activist Investor is an investor who purchases a not-insignificant stake in a company in order to pressure the board into making a decision that will make that investor a lot of money, generally in a very short period of time. The high-profile investors tend to want to shutter the company completely or to downsize immensely. Basically gut, maximize profits for a quarter or two, and sell.

Biggest example is probably Carl Icahn. He's well known in the tech world for trying to do these types of things to Apple, Netflix, and Dell. Not sure about the others, but Netflix actually has a Carl Icahn rule that prevents any one investor from gaining too much control. If I remember correctly, Icahn sold his stake almost immediately after the rule was put in place.

sharkweek• 11 years ago

Netflix adopted a poison pill (http://money.cnn.com/2012/11/05/technology/netflix-poison-pi... - more professionally labeled a shareholder rights plan) to prevent Icahn from getting too crazy; he was basically threatening to make Netflix acquisition-bait. Icahn recently sold off his Netflix stake, but managed to make a ridiculous amount of money as the company saw some solid growth while he held a position.

gaius• 11 years ago

Back in the 80s, they were called by the term "corporate raiders". The movie Wall Street (a classic, unlike the dismal sequel) is all about them.

napoleond• 11 years ago

https://en.wikipedia.org/wiki/Activist_shareholder

http://www.bloomberg.com/research/stocks/private/snapshot.as...

Yes, basically all public company CEOs have to deal with this, especially if their share prices are not going up.

xbryanx• 11 years ago

If that sounds onerous to you, then don't become a publicly traded company.

finance-geek• 11 years ago

Other comments already explained what an activist investor is. It is adversarial...but that is the price to pay if you want to be a public company. If a company wants to raise capital from the public, they then need to deal with shareholders, especially large shareholders' wishes. If they dont want that type of noise, they can stay private.

The activist investor wants what is best for the stock, so it is not necessarily bad. It can be bad though if they only want a short-term pop in the stock, instead of a longer term growth plan.

pjc50• 11 years ago

people outside of the company who think they know better

They're called "owners", and despite the best efforts of managerial capitalism to transfer power entirely to the executive officers they do get a vote on what the company does.

profeta3• 11 years ago

they are called late minority holders.

they are the ones that bought stock yesterday, on a company that do not pay dividends, making the long term holders foot all the proverbial bill.

Just because those recent minority holders are a little more vocal than all the long timers minority holders do not make them more of a owners. In fact, we should have things in place to make them less of. that would probably reduce the value of companies for later sells. but would make investing in companies what it was supposed to be about. before the banks took all the fun away.

frik• 11 years ago

The most stupid decision was to stop their own search engine based on Hadoop (Yahoo run the largest Hadoop cluster ~ 2009). Nowadays Yahoo could run their own cloud hosting platform, etc.

toast0• 11 years ago

Stupider than deciding to shut it down and outsource to Bing was outsourcing and not shutting it down. (outsourcing to Microsoft was a poor decision as well: Microsoft did about as well for Y! as Y! did itself with less flexibility; but outsourcing to google again was nixed by regulators)

mkagenius• 11 years ago

Search still is a significant source of revenue and growth for them.

1. http://adage.com/article/digital/yahoo-s-display-search-reve...

aikah• 11 years ago

It's interesting that they are talking about the Board directly and not Marissa Mayer. Is it common for the press to do so ? Isn't the CEO like the spoke-person of the board of investors ? Why would the board side step the CEO that way in the media ?

smt883• 11 years ago

It's interesting that they are talking about the Board directly and not Marissa Mayer

They're talking about something the Board, and not Marissa Mayer, is doing. Marissa Mayer is not deciding these things. There's no reason to bring her up.

Is it common for the press to do so ?

It depends on the situation. If the Board is doing something, the media talks about the Board. If the CEO is doing something, the media talks about the CEO.

The first confusing exception is when the CEO owns most of the company, which makes the Board irrelevant. This is the case with Facebook: Mark Zuckerberg owns the majority of voting shares, so he has absolute control over Facebook. The Board has no power to overrule his decisions as CEO.

The second confusing exception is when the CEO and Chairman of the Board are the same person. This was much more common in the past.

Isn't the CEO like the spoke-person of the board of investors ?

No, unless the CEO is also the Chairman of the Board. The CEO can have very conflicting opinions and actions compared to the Board.

jacquesm7• 11 years ago

The CEO can have very conflicting opinions and actions compared to the Board.

Which usually does not end well for the CEO.

reeboo3• 11 years ago

Let's say the first domino falls and they decide to sell. Next Google buys them and converts all Yahoo! search traffic to Google search traffic. That leaves Mozilla in a really odd spot. Most of their revenue comes from Yahoo! so they would eventually have to either go back and make a deal with Google or move over to using Bing as their default.

Search engine competition gives Mozilla an upper hand at the bargaining table, this could be not great for them.

ekianjo4• 11 years ago

Wouldn't such a merger be prevented by anti-trust laws or something?

reeboo3• 11 years ago

I don't know. I'm not a lawyer.

seanwilson• 11 years ago

Google would likely avoid something like this I think seeing as they're already under anti-trust scrutiny.

talmand5• 11 years ago

I would have to assume that any deal currently held by Yahoo would have to be upheld or compensated for if they sold to a third party. That's a contract and those just don't go away quietly.

As for one less search engine, true it might be an issue. But I'd rather they went with DuckDuckGo than Bing. Seems more in line with their stated philosophies.

reeboo3• 11 years ago

I'm sure in the short term they would be fine, but when they need to renegotiate their contract eventually and then they'll be dealing with Google.

The organization that most of us know as Mozilla is heavily dependent on the revenue brought in by their search bar. They know this and are trying to diversify (ads in the browser, third party integrations like pocket and hello). I don't know how much DuckDuckGo could spend on a contract with Mozilla, but I doubt its near how much (previously) Google and Yahoo! have spent.

pjzedalis• 11 years ago

Steve Ballmer will buy Yahoo after all.

voltagex_2• 11 years ago

Goddamnit, time to migrate everything off Flickr. Anyone got good alternatives? I only need ~50GB of space.

striking• 11 years ago

Mega.nz works, for free. YMMV.

rodgerd• 11 years ago

You never know. Perhaps flickr will end up with someone who will run it better.

Or Google will buy it, loot the customer data, and close it down.

voltagex_2• 11 years ago

They were actually doing pretty well at New-Yahoo, except for when they removed Google login support and I ended up with 2x Yahoo accounts and can't move my Flickr amongst them.

jameslk2• 11 years ago

I've been really happy with 500px. Their interface is quite pain-free to use. They're more geared towards photographers looking to host their portfolio

pmlnr• 11 years ago

I'm having issues with both the philosophy and more, the forced square cuts of 500px.

Also: http://www.naturephotoguides.com/blog/photo-consumption-conf...

andy_ppp• 11 years ago

I've always thought of companies as mining a local maxima of their solution space.

Whatever you say about Yahoo! They are extraordinarily successful at extracting the maximum revenue for display advertising. I'd let them sell display ads for me.

ryporter• 11 years ago

The idea makes a lot of sense, but why can't Yahoo! simply spin off their core business? They ran into troubles spinning out the Alibaba stake, but spinning themselves out would split their valuable Asian assets from their core business, which has an implied negative valuation. Would the IRS frown upon them leaving behind what is effectively a holding company?

netman21• 11 years ago

What I can't understand is why they already spun off Yahoo Small Business to the holding company for the Alibaba stock, Aabaco. https://www.aabacosmallbusiness.com/

gcb0• 11 years ago

here's the reason why every six months you read this same headline:

previous yahoo investors invested with almost zero dividends. that means, yahoo kept all its profits.

now yahoo is still profitable, it's just not growing as fast as the competition. those money reserves are still in the bank.

new investors think they can just pony up a few dollars for YHOO shares, pay a magazine to say yahoo is worth nothing, and convince the board to force a sale.

that would then expose those big money reserves to the current holders, giving them instant huge profits for nothing.

and this is the reason you see that every six months.

Yahoo Board to Weigh Potential Sale of Internet Business, Sources Say

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