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Yahoo! Inc. Message Board

  • thetoadtimes thetoadtimes Nov 10, 2012 12:06 PM Flag

    Facebook Or Yahoo: Which One Gets Back To $38 First?

    Both Facebook and Yahoo are turnarounds.

    So, which company will be first to get back to the share price of $38?

    My bet is on Yahoo – literally. I am a Yahoo shareholder.

    On September 18th, Yahoo turned deferred cash into cash when it closed a deal with Alibaba, the Chinese Internet company. Yahoo had 40 percent stake in the company and Alibaba repurchased half of it back. In the deal, Yahoo received approximately $7.6 billion — $6.3 billion in cash and $800 million in preferred shares of Alibaba, as well as $550 million under a revised licensing agreement.

    In addition, Yahoo owns a 35 percent equity stake in Yahoo Japan (YAHOF.PK), a public company that was formed in 1996 by Yahoo and Softbank. As of October 23, 2012 Yahoo's stake in Yahoo Japan was valued at $7.5 billion (before taxes). It was reported in January 2012 that Yahoo wished to sell its stake.

    Altogether, Yahoo’s cash equivalent holdings total $13 billion with about 1.18 billion outstanding shares. Cash per share is $11. Doing the math, at a share price of $16.84 (as of market close 10/31/12), that’s how I arrived at 65.4 percent as the amount of its share price backed up by cash.

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