Yahoo to Reconsider Sale of Web Business Instead of Spinoff

http://www.bloomberg.com/news/articles/2016-01-08/yahoo-said-to-reconsider-sale-of-web-business-instead-of-spinoff

by w1ntermute • 11 years ago

48 52 11 years ago

cpeterso• 11 years ago

Are there any advantages for Yahoo! of a spinoff over a sale of the web business units? I assume Yahoo! would retain some ownership shares in a spinoff company, which could be valuable if they Yahoo! was bullish on the new company. In that case, though, why would they spin off those units?

dot• 11 years ago

Off topic but that leaning exlamation point made me feel a huge boost of nostalgia. Probably for the mid to late nineties when Yahoo was pretty awesome.

phamilton2• 11 years ago

Understanding the background here is important.

A year ago, Yahoo announced that they would spin off their stake in Alibaba (around 30B). Somewhere along the last year, it was determined that the spinoff might incur a huge tax bill, costing shareholders a few billion dollars. Last month, they decided to do a reverse spin-off. Instead of spinning off Alibaba, spin off everything else (which is only worth a few billion). The tax bill on 4B is much less than the tax bill on 30B.

In other words, all that would be left after the spinoff is an Alibaba holding company.

mrfusion• 11 years ago

Why spin off anything then?

mintplant2• 11 years ago

What would a holding company with a narrow focus like that do? Sit on the shares? Make other investments? Liquidate assets and return money to shareholders?

localcrisis• 11 years ago

The numbers here always amaze me. Would they be better off keeping Yahoo going than, say, investing $20bn into the next generation of startups?

Just imagine a $20bn seed fund and the type of companies that could be funded. Startups in more difficult industries that need a larger upfront investment (genetics, pharmaceuticals, aerospace, etc.)

ddorian43• 11 years ago

Judging by the startups that yahoo actually bought I don't think it will pan out.

ProAm• 11 years ago

Most startups are worth nothing, you wont convince Yahoo's activist investors to throw money away on longshots that probably won't pan out.

smegel3• 11 years ago

I feel like Yahoo would be best broken up into lots of tiny pieces which would have the opportunity to become little independent start-ups in their own right, taking whatever "bit" they have and turning into a new concept and building a business around it. They need that injection of innovation and modern startup mentality which probably won't happen in a monolithic behemoth where everything is lumped together.

mey• 11 years ago

Conceptually, who would fund the spin offs?

smegel3• 11 years ago

Sell off the parts of Yahoo still worth something to give each team some startup cash, and let them raise more from investors? I am sure many would also just be bought outright by other companies for the talent alone.

prostoalex• 11 years ago

As all of them would now have to pay for legal, accounting, recruiting, HR, customer support and other services that used to be shared as well as negotiate their own real estate leases, server purchases and data center leases, how many of these tiny pieces would generate enough cash flow to sustain themselves a few years down the road?

If the business is ad-supported, a bigger player can negotiate better rates for their combined inventory, a smaller player is relegated to AdSense and similar.

smegel3• 11 years ago

As all of them would now have to pay for legal, accounting, recruiting, HR, customer support and other services

True, but I guess this is true for all startups. And the reality is, for a bunch of guys and gals working out of a garage you don't need a lot of that stuff until you are actually successful.

how many of these tiny pieces would generate enough cash flow to sustain themselves a few years down the road

Not many, and I guess that is the point. You are giving the worthy parts of Yahoo the freedom to succeed, while letting the dead wood go to dust. It seems the alternative is watching the whole thing die a slow death and there will be nothing left at all (apart from the not-really-Yahoo Alibaba and Yahoo Japan).

beambot• 11 years ago

Isn't that the idea behind Alphabet (formerly Google): Permit lots of small(er) independent companies under the same umbrella parent corp?

CM30• 11 years ago

Who would get the Yahoo domain name?

Because if you spin off say, Mail, News and Games from Yahoo, all have depended on the yahoo.com domain name for their SEO and traffic.

Could news.yahoo.com do well if it lost all its rankings because its domain name was kept by the remains of the main company? What about Yahoo Mail? It's likely one of the more popular parts of their business, but if it was spun off, then everyone would likely lose their email address. Not great for existing users.

Flickr and Tumblr could easily return to being independent though.

SatoshiRoberts• 11 years ago

They should invest all their money in real estate around Silicon Valley

pbreit3• 11 years ago

The so called "smart money" wants them to sell their real estate.

harryh3• 11 years ago

The "smart money" wants them to sell their real estate and return the cash to shareholders who can then, if they so choose, invest in real estate directly rather than through a convoluted corporate holding company that was never designed to be a real estate company.

bobajeff• 11 years ago

I wonder if Flickr and Tumblr would be better off under a spun off entity.

toomuchtodo2• 11 years ago

I'd buy Flickr. I would not buy Tumblr. Tumblr is worthless.

jonursenbach• 11 years ago

Why?

w1ntermute• 11 years ago

Related HN thread on planned Yahoo layoffs from yesterday: https://news.ycombinator.com/item?id=10861925

pbreit3• 11 years ago

I don't get how proxy investors who hold such a tiny percent of a company have so much sway. Can't they just tell them to get lost?

reubensutton• 11 years ago

Not really, a proxy fight is when activist investors persuade a majority of the votes to support their vision for the business.

henrikschroder• 11 years ago

The stated intention of the messaging from the "activist" investors is to persuade a majority of shareholders that their vision for the company is better than the current leadership's, thus forcing change at the company.

The effect of the messaging is usually that the company implements some of the changes themselves to avoid being forced or ousted, which also usually leads to short-term stock gains, which is what the activist investor was after in the first place.

xenihn• 11 years ago

So I have a question...

I have an extremely paltry amount of Yahoo stock (5 shares) that I bought on a whim in 2014. This is the only investing I've done outside of my company 401k. I know absolutely nothing about investing. What the heck should I do with it at this point?

drglitch• 11 years ago

Speak to a professional, not randos on the internet, if it really worries you.

Its current worth is about 5*$30.63 ~= Not much.

So best advice is to sit on it and do nothing... and when you're bored, go to www.investopedia.com and read up about how stock markets work - it will come in useful in future!

georgeecollins• 11 years ago

My free advice: nothing.

jedberg• 11 years ago

5 shares? Probably nothing, just let it ride. You'd probably drop $150 on a dinner or two.

If you had 5000 shares I'd probably say the same thing -- this was already priced into the stock and almost all of the value in the stock is the Alibaba holding.

If the stock is up from when you bought it, maybe I'd say take some profit off the table, but honestly a sale of Yahoo's web business would probably increase the value, but who knows.

I personally don't invest in tech stocks because they're too volatile. :)

davidw• 11 years ago

Sell a few of them and buy a copy of this:

http://amzn.to/1PjrGpY

Or skip that and just stick to index funds in the future. Also, check your 401K and make sure the expense ratio is low compared to something like a Vanguard index fund. If not, make some noise.

yalogin• 11 years ago

What is Yahoo's main business? What assets come under the web business?

It feels like there is nothing much left outside of the web business unless I am missing something. May be the Baba shares?

deadalus• 11 years ago

It is the fifth most visited site on the planet.

mintplant2• 11 years ago

I think yalogin was asking what would be left if Yahoo sold off its "web business", besides its Alibaba holdings.

charlesdm2• 11 years ago

Now if only it would be the fifth most profitable site on the planet..

wmeredith• 11 years ago

Yahoo News and its associated content portals are absolute monsters in online publishing.

ksec• 11 years ago

For the same reason I think why a lot of the company will go private in the next few years.

Yahoo to Reconsider Sale of Web Business Instead of Spinoff

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