Nothing speculative about it. They're going to sell. The question is whether there will be additional tax disadvantages that no one has talked about yet. If you don't care about that, you're not a very reasonable investor.
As far as enjoying the summer is concerned, I'm more than capable of enjoying my summer and considering significant economic issues. I can also chew gum at the same time. I'm multi-faceted, apparently unlike yourself.
Let's say Yahoo sells the core and patents and real estate to someone for, e.g., $6 billion. Would that not be a taxable event based on the sales price minus the difference between that $6 billion and the cost basis of those assets? In other words, assuming there's a $1 billion basis, wouldn't the after-tax value of a sale of those assets be closer to $4 billion, if you assume about 35% taxes?
And if that's true, what is the point of this sale, since the market -- in my opinion, anyway -- has never considered a tax deduction for the potential sale of non-Asian assets?
Well, the $5-8 (or $4-7)) is probably for all assets including patents and real estate, whereas the $2-3 probably did not include those assets, so that's kind of misleading. Also, if this turns out to cost Yahoo an extra billion dollars, that's a dollar a share that could have gone into my pocket, rather than being flushed down the toilet.
On a brighter note, maybe there will be no loss. It all depends if Mozilla wants to do business with the new buyer. If that turns out to be Verizon, why would Mozilla not want to hook up with them?
What the heck happened to all of those 100-page confidentiality agreements that all the potential buyers were complaining about? Are they unenforceable? Are there no severe penalty provisions? That being said, this Mozilla giveaway is one more huge and inexplicable bungle by MM. What an incompetent goof she's turned out to be.
Honest to goodness, pebble, when are you going to stop whining about your posts being deleted? I've been on this board for more than 4 and a half years and I've never had a post deleted. You're doing something wrong. If you can't figure out what in all that time, maybe it's you and not them.
The market has never valued the Yahoo core at zero. What it has done is to value it at about $5 billion and then valued all the Asian assets at a 35% discount, to reflect the tax bite that will eventually come if those holdings are sold. Figure it out.
Right now 35.5% of Yahoo Japan is worth $6.108B, after taxes. Yahoo's 383 million shares of BABA is worth $19.398B, again after taxes. Yahoo has a net of $4.73B cash after its debt is deducted. Yahoo's core, at $5B, brings the total Yahoo valuation to $35.236B. Since there are about 950 million shares outstanding, that puts the pps right now at $37.09, which is almost exactly today price.
Commentators who have claimed that the market is valuing the Yahoo core at zero -- or less -- have always either had an agenda or simply dispayed their ignorance of Yahoo and the still existing tax problems.
It #$%$ me off too. This company habitually refuses to let its actual shareholders know what is going on, hiding things until the last possible moment, usually till the quarterly earnings conference call -- and sometimes even beyond that by being ambiguous and then saying more news will be forthcoming.
I'm not a huge believer in shareholder class actions, but I sense a huge one is coming once MM is gone and information is finally revealed as to what occurred during her tenure.
That is a fair question and, until the cash is taken out of her hands, the stock will continue to be undervalued, because the market fears that she will just piss it away.
I'm hoping Yahoo will couple BABA and Yahoo Japan as a combined tracking stock, almost like a mutual fund without much need for management expenses. Am I wrong or doesn't the market usually discount those kinds of investments by about 10-15 percent?
If that's the way it goes, I could live with that.
Couldn't agree more. BABA was up $5.40. Yahoo owns 383 million shares of BABA and has 944 million of its own shares outstanding. If you do the math, just based on the BABA surge, YHOO should naturally go up $2.19 per share, almost exactly what it did go up.
Jeezus, can't anybody in America write anymore? Maxx, did you graduate from the third grade?
There should be no comma after the word "integrity" in your first sentence. The word "whichever" is and always has been one word, not two. Finally, if you're going to talk about something being "third rate" -- other than your writing ability -- you might try to recall that it's a hyphenated phrase.
I don't often pull the grammar card, but, honest to goodness, if you want your thoughts to be respected, then at least try to make it seem as if you are an educated person.
Tim, I have to disagree. I don't think the current deflated price of YHOO shares is due to uncertainty as to the amount of the discounted price that Alibaba would pay for Spinco. I think it's due to the market's uncertainty as to whether Alibaba will buy Spinco at all.
I don't think that eventuality is a certainty or even close to a certainty. It's a possibility. It makes sense from certain perspectives. But it's purely speculative. If it was more than that, the current price of YHOO stock would be much much higher, given the huge amount of the tax avoidance -- even if Alibaba paid a discounted price.
But in no way is the purchase itself a certainty. I wish it was. I'm holding a ton of YHOO stock and, although I'm hopeful that it will pay off handsomely at some point in time, I'll continue to be nervous until it actually does become certain that Spinco actually will be able to avoid taxes on the sale of BABA shares.
I agree 100%. The alternative is to believe that: (1) Yahoo core has either a zero or negative value, which makes no sense in light of the historical earnings of this company; and (2) Investors believe that, when Spinco sells its BABA shares, it won't have to pay any taxes -- which also makes no sense unless and until someone explains to the world how those taxes are to be avoided (for instance, a BABA repurchase of its own stock).
Clearly, the price of YHOO continues to be based on a full tax deduction for BABA (and also, I believe, for Y-Japan).