Why would they offer $46 when Yahoo wouldn't even boost their earnings $1? They make over $40 per share so that comes out to a measly 2.5%...they could make more than that buying corporate bonds or doing a currency hedge like Yahoo did, which btw was MORE profitable last quarter than Yahoo was. Apple had revenues of $160B, last year, and buying one with $5B is pointless. Their ITunes is vastly bigger, has hundreds of TV shows, and sells something like 75% of all movies sold. Let's run some hypothetical numbers.
Shares outstanding: 1.1B
Yahoo Japan $9B
Alibaba at 75B(10%) $7.5B...$5B after tax
Alibaba final stake $150B($15B)...$10B after tax
Cash and receivables: $5B if I remember right
$29B/1.1=$26.36 and you want another $20 or $22B which is 4 TIMES revenue or about 25X's operating profit for a stagnant core with no moat around anything? Apple's LICENSING deal with HTC is almost as profitable as Yahoo's core and it cost them nothing.
****Apple isn't buying Yahoo as their stock buyback and debt raise boosted the share price multiple Yahoo's. Apple is in the PRODUCT business and outside of IAd they have no link together. Apples worst products have margins far higher than Yahoo even. Sounds great to dream but the reality is it would have happened long before Marissa took over if it was going to happen.
Great post. You hit it right on the head. $26 is the fair value for Yahoo stock just considering their asian assets and cash. However, once Yahoo shows growth in revenue and mobile users, then you will see that core value of 4 times revenue. I'm looking at $50 per share within 18 months. IMHO