The stock still seems cheap to me, even if the company's revenue doesn't grow as long as doesn't decrease.
If Yahoo used all the cash after tax from selling their stake of Alibaba and yahoo japan and the cash on hand they could purchase $22billion back of Yahoo shares
At $34 they could re-purchase about 650million shares and the float would be 350million shares.
Now if EPS is at $1.21 with 1billion shares afloat, EPS would be $3.46 with 350million shares afloat.
Give Yahoo a P/E of 15 since growth is minimal, and the share price should be $51.90.
The problem is that yahoo will spend the windfall on a bunch of acquisitions that end up being worth nothing. There is only so much advertising $$ out there to be had. There are far too many internet companies chasing far too few advertising dollars. It is inevitable that the cost of advertising on the net will go down because the supply is spinning out of control. I just don't see internet advertising as having solid long term revenue growth potential. Yahoo should think of something else to do with the money rather than buy a bunch of internet advertising companies.
Upon the AG's IPO completion, private equity company should take YHOO to private. 1. keep all the cash at hand. 2. sell off some of the non-profitable businesses to others. 3. focus on core competencies to generate ads revenues with lower headcounts.. 4. take YHOO to IPO again after a few years in private (re-organized, new focus)..
Obviously MM and Ken G know this scenario but I hope they will consider your rationale. I think they will continue their shares buyback program once they get those billions$$$ from sale from AG stakes. MM was asked during forum and she hinted that she will continue the shares buyback program.
I dont expect all 22billion to be used to re-purchase shares but I think this show what is possible. I do fear purchasing companies could hurt the stock price because when you purchase company 1 of 2 things will happen I feel.
1. You have to pay more then what the company is worth. You can't really purchase a company for what it is worth because then the company wouldn't want to sell to you. Example Apple purchasing Beat for a high amount.
2. They get a start up company that isn't profitable or making revenue for at the moment. Example Tumblr.