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Yahoo! Inc. (YHOO) Message Board

sjones8924 8 posts  |  Last Activity: 5 hours ago Member since: Apr 28, 2009
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  • Reply to

    NAV %51/shr.

    by analyst112 Jul 28, 2014 12:15 PM
    sjones8924 sjones8924 5 hours ago Flag

    I think you must be using capital gains rates to compute your after tax values. Corporations don't get that benefit. So if Yahoo eventually sells all of its 22.6% stake in Alibaba (absent something like a cash-rich split), they will pay around 35% in taxes.

    Thus, a $160 billion IPO value would yield about $23.5 per share, not $33 (i.e., 160 x .226 x .65).
    And an increase from $160B to $200B wouldn't yield an additional $8 per share, but somewhat less than $5.90 (i.e., 40 x .226 x .65).

    Unless you're computing it in a different manner that I'm just not understanding -- which could be. It wouldn't be the first time I've been confused.

  • Reply to

    BULLISH ALGORITHMIC FORECAST FOR YAHOO

    by tomsongarry Jun 30, 2014 4:02 PM
    sjones8924 sjones8924 Jul 2, 2014 8:47 AM Flag

    Also, Yahoo doesn't own 40% of Alibaba, but just 22.6%.

  • Reply to

    BULLISH ALGORITHMIC FORECAST FOR YAHOO

    by tomsongarry Jun 30, 2014 4:02 PM
    sjones8924 sjones8924 Jul 2, 2014 8:46 AM Flag

    Tax is 35%, not 15%. When corporations sell capital assets, the profit is treated as ordinary income. And, yeah, Yahoo was valued at $15 a couple years back, but that included the Y-Japan and Alibaba stakes (which I think was about 40% back then). So $5-7.5 billion valuation still sounds about right for the core portion. Maybe even less than that.

  • Reply to

    BULLISH ALGORITHMIC FORECAST FOR YAHOO

    by tomsongarry Jun 30, 2014 4:02 PM
    sjones8924 sjones8924 Jul 1, 2014 6:43 PM Flag

    If the Alibaba interest "net of taxes" is $50 billion, you're valuing Alibaba at $340 billion, which I haven't seen anyone get even close to. I'll believe a $20 billion valuation for Yahoo's core when I see it. So far the market seems to be valuing it at between $5-7.5 billion plus about $3 billion in cash.

  • Reply to

    The math is simple...what am I missing?

    by pugmanton Jun 17, 2014 1:06 PM
    sjones8924 sjones8924 Jun 17, 2014 6:12 PM Flag

    No. The "street" understands that Yahoo has to pay T A X E S when it sells its Alibaba interest. TAXES. Taxes taxes taxes. Thirty-five percent of them. And it's a 22.6% interest, not 22.5.

    If it ever comes out that Yahoo has a plan to avoid those taxes, via a cash rich split or otherwise, then we'll see a tremendous spike. Until then, deduct the taxes when computing Yahoo's value.

  • Reply to

    Amatuer Question

    by finzup08 Jun 17, 2014 7:47 AM
    sjones8924 sjones8924 Jun 17, 2014 8:38 AM Flag

    What's going on is (1) corporations have to pay about 35% taxes when they sell stock and (2) the market is not valuing Alibaba at $200 billion. So there is no $46 per share. Even at a $200 billion valuation, there would only be about $29 per share from Alibaba. At $150 billion, it would be more like $22 per share.

  • Reply to

    Yahoo Owns 14% of Alibaba Post IPO

    by argentindeep May 12, 2014 7:25 PM
    sjones8924 sjones8924 Jun 11, 2014 5:14 PM Flag

    I think the market is really valuing Yahoo core at about $5 or 6 billion, plus the $3 billion cash on hand. Yahoo Japan (after taxes) is about $5 or 6 billion. Yahoo's AFTER-TAX interest in Alibaba, assuming a $150 billion valuation, is about $22 billion. All of that comes to about $36-7 billion, which is pretty much in line with the current PPS of $36.63.

    I think that people who complain that the market is giving Yahoo core a zero value are neglecting to consider the probable fact that the market is looking at the monetization of Yahoo's Alibaba and Japan assets as taxable events.

    I've also noted lots of you are counting the Alibaba interest as 24%, rather than 22.6%, which is what it is.

  • Reply to

    Yahoo Owns 14% of Alibaba Post IPO

    by argentindeep May 12, 2014 7:25 PM
    sjones8924 sjones8924 Jun 7, 2014 6:24 PM Flag

    Only if Yahoo doesn't have to pay taxes.

    I think the market will price Yahoo based on what its Alibaba stake is after taxes. At a $200 billion valuation, that comes to about $29 billion total cash after taxes. Yahoo Japan is probably about $5-6 billion after taxes. Yahoo has $3 billion in cash on hand and maybe the core is arguably worth $7.5 billion.

    That puts a reasonable market price of about $45 per share if Alibaba comes in at $200 billion. Anything past that will depend on Alibaba growth and Yahoo making better profits on its core.

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