I have to admit I cannot recall seeing expectations of earnings growth at the levels people likely did expect. Revenue growth, as you pointed out was there, and I think people seemed to believe that margins would stay steady, which has been the issue. Mobile is lagging a bit, but improving. I also think that the longer term approach is the correct one. Look at amazon with the big data, that is starting to pay off.
Like you said, it is remarkable given the level of investment and build outs, and even some of the failures to see this much earnings growth. Certainly it was the top line, and perhaps mobile GMs not moving as quickly as people wanted that caused the pause on the stock post earnings. I do think BABA is being hit more due to china in general, which creates an opportunity long term, in my view. But if you are only looking out 6 months, I have no idea what is going to happen. I mean I think oil is also going to go higher form here eventually, but i'll be damned if I can call the bottom in that either lol.
They can sell short and have a net negative position by borrowing shares from other longs who "rent" them out. They will receive the money from the shares, then turn around and buy yahoo. They will continue to need to pay the rent for as long as some baba shareholders are wiling to rent the shares. (simplifying this a little but it is close enough)
The idea is that the baba shares in yahoo might be marked to 75 cents on the dollar, and when they go closer to 100, you reverse your trade, and buy baba back, and sell yahoo. To put it in perspective, baba shares WERE being discounted at best 10% (so 10 or greater) a few months ago, prior to the IRS ruling. Now it is at least 22.5% as of yesterday. We actually hit a minimum discount rate of 24.5% last week. So this means even if we just get back to a 10% discount, yahoo should go up relative baba, regardless of the direction. Now this also assumes nothing else goes wrong in yahoo, or with its other major assets (cash, YJ primarily). The core is completely discounted to 0 in the 10% and 22.5% numbers I use. It is highly likely some value IS being put on the core, but that only means the potential in the trade I mentioned is greater, if you think yahoo can spin tax free. Although in that model, you have more variability based on what the core is doing... The one thing that could rear its head is the discounting itself. If baba were to become a rocket ship, and the fact the baba portion will always be discounted somewhat on yahoo/spinco, the narrowing of the discount could be outpaced by a rise in baba, but I don't see that as likely given the magnitude required.
I'm not sure it is questionable, but you are certainly correct that he market is pricing in some tax. From my calculations, if the market on average is giving yahoo a 0 value on the core, then back out cash, it is saying baba/yj will be discounted (either in spinco's or by a direct tax) in excess of 24% as of yesterday near the close. Haven't checked today, but that number was around 10% prior to the IRS statement. Considering the Core probably does have some value (there is RE and IP), I figure we are basically already at a full assumption of tax here.
The big risks for yahoo are BABA and YJ values. I suppose the subsequent worries would be Yahoo buying stuff, and that is probably the reason for the move from ~20% assumed tax with a 0 value on the core to 24%+ assumed tax on the non core assets.
Again, not everyone in the market is pricing the core at 0, or using this method, but it does provide some comfort assuming you can hedge out the BABA value (If you want to do that. I personally like BABA longer term anyway, but that is another topic since we can hedge against a baba fall)
A well known blogger seems to indicate that the October 2015 rumours are true. Nice to see at least as of now we are on track to see it before 2016. I think the compatibility with SP3 accessories will also make the upgrades less painful than in the past, as you can just upgrade the core unit.
To be fair, he has been saying for months (at least the last time I watched a few months ago) to play GMCR through coke instead.
Agreed. When I saw the quick out of the gates I remembered back a couple of quarters ago when we saw the same action. It is all short sellers getting out of the way now that coh and kate reported decent numbers, not to mention RL. Kors likely goes up tomorrow no matter what, as it is another beaten down stock, After the kors movements we will see all three companies head upwards. Not to mention the upgrade cycle beginning. I think we see a good rest of the year... at least until black Friday, if history is a guide.
I think the problem is, people look at the company and say, hmmm... yahoo isn't doing much for a 37 billion dollar market cap company... and while that would be true, you need to back out the baba portion of the valuation. Lets say we assume 20% tax to be conservative on the baba (lets not even talk about yahoo japan, but the same principles apply...), that's 26 billion less, so you get to an 11 billion dollar company... suddenly what yahoo is doing doesn't look so bad. But wait, lets say yahoo japan is worth... I don't know... 8 billion. Take the same 20% off for taxes so that's another -6.4 million. so suddenly you have a company with a market cap of 4.6 billion with about 1-2 billion of cash (this is the number I need to update from the CC in my model still), that could probably generate earnings of about 1 billion a year. Re: taxes my suspicion is that baba gets taxed/discounted less, so the net market cap attributable to the yahoo core to be bought out starts to approach 0, even if the yahoo japan tax is slightly higher.
So where is yahoo getting this cash to take itself private? They don't get any cash out of this spinco. They already announced they aren't levering up the spinco with debt to get cash out of it... though they might do that with YJ, we still need to wait and see on that one.
It is much more than a billion. They did a good job at levering up the company to ensure Fairfax gets its pay day no matter what (IMHO). That is the one reason despite any buyout chances I won't touch BBRY with a ten foot pole. I do love my Z30 though. MSFT should buy bbry for the alarm clock, virtual kb, and hub alone, let alone all the security and other IP (QNX gets them into cars).
As a MSFT shareholder I would actually love to see them pickup bbry while it is down here. You then probably spin out the handset division to someone who wants to make phones with the great physical kbs.
That nokia situation was a long time coming. Honestly, anyone who was surprised by that, deserves to have sold their shares yesterday for a smaller gain than they could later. It is actually the perfect time to take the pain, out with the old, 8, nokia, etc, and in with the new, cloud, crm, server, xbox, bing, surface, office 365 and obviously windows 10 which launches next week.
Exactly. We beat without the nokia write down. That was one of the last vestiges of the old MSFT being shed off. Makes sense to shed it prior to widows 10 launching. I was very happy to hear the 365 subs are doing so well. As more people use it, and start talking about it, and start using it differently (on their phones, and to share with others), I think we will see an acceleration in adoption. I also think the strategy of getting your foot in the door in a number of areas, and designing annuity services that work well together is absolutely the way to go. There are going to be lots of add ons. Also nice to see bing and xbox will be making contributions this year.
Take a chance to listen to the call, imho it is worth hearing the tone on this one. Not as important as the jan or april one, but you really got the context and can read a little more into the WP situation. MS is not abandoning phones at all, but they are going to try to create opportunities for partners, so they can focus on the platform and the marquee phones.
I actually wouldn't mind them keeping a little cash. The levels just keep on dropping. That said, at these levels... although I would prefer them to wait until baba reports. If it is a bad number, and lockup is right around the corner, it could be a planetary alignment type event in terms of a buying opportunity.
Agreed, we can only deviate from BABA so much. While I was happy with the revenue number, yhoo sure did have to spend to get it. The good news is it looks like search is making a turn from a race to the bottom. MSFT and GOOG all doing much better, will need to wait till next week to see if FB is as well. I suspect it will be good numbers, but won't be able to keep pace with expectations given the massive run the last few weeks, so we shouldn't be fooled by a decline post earnings.
As I said yesterday, the only 2 things we watch for in terms of dates we know, are the baba earnings and the unlock date. After those 2 events, baba will go up from wherever it is, as it will be down big on fear jack ma, Softbank and yahoo shares will be sold in bulk... I don't see that happening, but I suppose it is a risk in the short term. While I wouldn't want to guess the timing, I think purchasing the stock here is pretty safe. Options would be a bit riskier, as you don't know how far it could go up on earnings, or how much it will fall on the lockup fears (might even mute great earnings). Obviously if we have terrible earnings that will compound with the lockup fears to give us a REALLY good deal, but I don't know that that can happen when looking at other big names like jd... although some of their recent traction is the US expansion news.
Exactly. Sell bing! Sell Xbox! While sometimes simplicity can be a good thing, as AAPL is pretty easy to value, you look at iPhone sales, and your model is mostly done... there is something to be said for having the server business, the cloud business, the entertainment side, moving into CRM, and also partnering with everyone under the sun, and letting them be successful rather than trying to keep all the margins for yourself (think GTAT/ the reason we don't have sapphire on many phones as a competitive feature).
I think the bing traction is particularly surprising given how well goog and yhoo did on search. Seems like the race to the bottom in that space may have finally subsided.
Given how bad everyone seems to think 8 was, I think there probably is.
If I am going back in history and looking at windows ME, if the worst experiences form MSFT are going from ME to vista to 8, then we are improving the worst case scenarios. I don't think there is any question that MSFT are improving their best releases. As 7 is much better than xp. Anyone who loves xp still must be forgetting that plug and play wasn't really so plug and playish. This was especially true for any wireless internet. I'm looking forward to 10 being agile enough for developers to be able to roll out apps across a platform of devices all at once, so I can use the same programs across my pc, tablet, game console, phone, holo lens, or whatever else might be in the future (cars consoles come to mind... throw a touch enabled monitor in the back for the kids). Time will tell of course.
I hear you. My primary home PC and my Surface Pro 3 work just fine on 7. I think it is the free upgrade that will get me to upgrade before the deadline. I'll let everyone else try it out for the first 6 months, though Cortana is probably the one feature that might get me to upgrade early, assuming 10 doesn't slow down the SP3 at all. Having used the voice stuff on my XB1, it is just fantastic, and changes the way you do things in a good way. I suppose the only downside is once I have cortana on my xb1, I'll need to work out how not to have every pc react to command when I am talking to the xbox. Reminders on my TV that are integrated with my calendar... I cannot wait for that, or perhaps something that tells me to bring an umbrella quickly while I am watching the news in the mornings.
iPhoneNext launching next week. But some people are saying they won't be buying iPhoneOutOfDate this week. Time to panic and sell your AAPL....
Come on. It is well established that on the EVE of these tech upgrades sales are going to slow as retailers clear the channels. If you listened to the CC you could hear they are generally excited by the prospects. I suspect if they could, they would stop selling 7 8 and supporting anything from the past all together, as 10 is where they want to be, but luckily for continuity good guy MSFT supports older product lines much longer than almost anyone.
Windows 10 is the game changer. Why would anyone interested in windows phone buy one now? Even with the upgrades, you want to make sure you have the hardware that takes advantage. I was actually really happy to hear they will be likely focusing on the marquee windows 10 mobile devices and letting partners capture the lower end. They didn't say that directly, but that was the gift of what I gleaned.
All this said, it won't be the steady eddy dividend stock, it is going to be a wild ride (as we have seen ~40 to ~50 this year alone) as people see how things are progressing going forward. I'm really happy to see the office 365 numbers. I think we will actually see an acceleration as people understand the product and how great it is. I've had it a year now, and I am just stating to change my processes. I cannot wait for my work to upgrade to 365, as it really makes the collaboration process much easier.