I see baba going to $45, a 15 pe, and yhoo to $32 to $35. If baba could get its problems solved id be a buyer of yahoo. Baba is a problem however because they didn't make full disclosures in their s1. At the time you go public all has to be disclosed or with 20/20 hindsight they will hang you with things that were hidden. When the big boys lose too much they will get on board and complain that they never would have invested had they known about the talks with the Chinese government. Securities fraud pretty much becomes strict liability.
O savings. The tax liability carries over to Spinco. Factor that into your share price. Meanwhile baba goes down as I have predicted. And more to come.
Having worked one office over from a securities lawyer I can tell you that you are full of bull. They did not disclose the counterfeit issues and discussions with the Chinese government. That's a slam dunk. End of story. That's why I'm out of yhoo. Moved my money to csiq last week at 19.56. Don't fall in love with a stock it will only break your heart.
Never shorted a stock in my life. You obviously don't understand how securities lawsuits work. It's pretty obvious baba did not make adequate disclosures. The securities lawyers are going to hang them with that. You will see baba 60s or lower soon.
I beg to differ. I like yhoo but got out because of baba. Securities fraud lawsuits and counterfeit issues are going to tank baba.
If Baba acquires Spinco with baba shares to shareholders of Spinco, I assume a lot of them will sell on the open market. Not sure I see a big difference between that and Spinco selling some outright.
Secondary offering of Spinco stock? Or selling Baba stock into the market? If the latter, the price of Baba getting those Spinco shares back is to issue Baba shares (less some discount) to the shareholders of Spinco where they go into the market sooner than if Spinco simply holds them.
Alibaba has no incentive to acquire Spinco. It's simply another shareholder. The only reason it would acquire Spinco is for $$$$$$$$, it's that simple. Spinco stock will trade at a substantial discount to it's assets to reflect the built in tax. I agre with Hotmodel.
Tim is assuming the Spinco shares will not be heavily discounted to reflect the tax built into the baba shares held by Spinco because he thinks baba will acquire spinco and make those gains go away. Baba has no incentive to acquire spinco unless they get a good deal (discount). I think what HotModel is saying is IF (and to me that's a big if) Spinco doesn't trade at a discount because the market assumes baba will acquire it, it will trade at full discount if Baba indicates they have no desire to acquire spinco. And that's a great bargaining tool. They are the only game in town that can do this and they are going to want at least half of the savings as incentive to acquire spinco.
I wouldn't mind being in Yahoo if it didn't own baba stock. I am out for now and watching, neither long nor short. As baba goes so goes Yhoo right now and I'm just not comfortable with what I know about baba. Next earnings date could have a big impact on baba and therefore yhoo. Good luck to you though. I took my losses and happened to get lucky buying CSIQ at $19.56 last week.
Why in the world would baba pay a premium? They are not going to issue 100x shares to a spinco shareholder to get 90x back from Spinco. Will be the other way around. And, the built in tax will be reflected in the price of the spinco stock when it trades.
Not diversified at all, it's virtually a holding company for Baba stock. I like yhoo but won't touch it again until Baba is gone. I think baba is facing great problems and will be half it's value after next earnings.
Baba is not a pass thru entity for tax purposes. That income never hits Spinco. If I'm reading you right you're saying 810 million of baba's earnings reach Spinco? More likely, 50 million from the business which is 5 cents a share at most using your numbers. Adds 50 cents to the Spinco share price at a PE of 10. Then the $34 B Baba stock less built in tax gives another $22 to $23 boost to Spinco's share price. Spinco should trade at $22 to $24 a share if done today and same number of shares issued as Yhoo.
They stated they would recognize 20 to 25% of $2.4 B late stage projects in 2015. Gross Margin 10 to 15%. Additional costs $7 million per quarter. Revenue = $480 to $600 Million. GM $72 to $90 million, less $28 million additional costs for year = $44 to $62 million to bottom line. = $.76 to $1.12 per share additional income in 2015. Even more in 2016.
A 12 percent discount on the stock (.12 times 34B) is about 40 percent of the tax savings and that is in the ballpark. We were talking apples and oranges and this is apples to apples.
Agreed. It really makes more sense to me, if you think the core is undervalued or if growth will occur, to hold off on buybacks until after the spinoff. Then Yhoo cash is buying Yhoo stock at a much reduced value since half or more of the value goes to Spinco.