The markets never value anything properly. The spinoff puts all of the 385 million shares on the market at the end of the lockup. So with this arrangement, MM has flooded the market with BABA shares. That caused BABA to fall and Yahoo went with it. This may prove to be a short-duration over-reaction.
Keep in mind that the overall market also fell out of fear of world wide deflation. It's hard for any stock to rise under such circumstances.
The announcement yesterday had no material change on the value of Yahoo. The market price of Yahoo did not reflect a tax saving today because there was no tax saving, only a deferment. What's important now is whether Alibaba can repatriate the shares at a lower tax rate, or even wants to. If they can make a couple billion dollars by doing so it would seem to justify a couple days work.
Yahoo's announcement may have hurt BABA shares because it made clear that the full 384 million that Yahoo currently holds will be actively traded in the form of Spinco at the end of the lockup. If I were running Alibaba I would be pretty angry about the whole thing.
The best thing that could happen now is for someone to come forward and buy Yahoo after the spinoff, and put MM out of her misery. She completely unqualified to run a company.
The shares in Spinco will sell at a discount because the transaction is not tax free, only tax deferred. The book value of Spinco will be about 66% of the value of the BABA shares, since the unpaid tax will be recorded as a liability on the balance sheet. MM has screwed up again.
OCN got into trouble by pushing the envelope on business practices. Once they pull back to the satisfaction of regulators, normal operations will resume.
During the fiscal crisis, failure to pay a mortgage became acceptable, even desirable. Then the government stepped in to protect the cheats, making matters even worse. The net result will be higher costs and more difficulty for low income people trying to get a mortgage.
There's a slight benefit to spinning off BABA shares; specifically, some investors will want a pure play rather than buying BABA and YHOO as a single package. It will be interesting to see how much of a discount the BABA shares sell at once they're spun off, if any.
JCP was showing signs of a terrific recovery; however, their decision to raise prices quickly to restore margins appears to have stunted growth before they could restore profitability. The USA is going into recession now, and JCP will not escape the effects.
The Fed, due to years of mismanagement, is in no position to do anything useful about upcoming problems. Only a sharp increase in the federal government deficit will have a beneficial effect.
Unfortunately, the market conditions of today will be repeated many times as investors come to realize just how bad the situation is. Many thought that Tsipras would soften his rhetoric after the elections, but the opposite may be closer to the truth. His objective may be, in fact, to pull Greece from the Euro.
The ECB is doing what it can to save the Euro, but it may not be enough, despite what Draghi says.
Danzey, rest assured that calling people clowns will not make the market move in the direction you want.
Do you not think that the Dow stocks reporting disappointing earnings due to forex difficulties will soon be resorting to layoffs?
The conditions being expressed today by a sharp drop in the markets stem from foundation issues that are not soon going to change. We have just embarked on a bear market that will take the S&P below 1500. JCP is a great company, but I'll be surprised if it levels off above $4.