4 ms·

The problem with Yahoo in my opinion is that is the tail being wagged by the dog (baba), and that Marissa Mayer's hobby is to set cash on fire. Once BABA is se

by hodder 11y ago

The problem with Yahoo in my opinion is that is the tail being wagged by the dog (baba), and that Marissa Mayer's hobby is to set cash on fire. Once BABA is separated, and Mayer is 'remixed, a creative CEO may very well be able to turn it around.In my opinion the business is ripe to follow a Berkshire model of using cash flow from the dying business (search engine) to buy a few free cash generating, growing businesses.

dhimes 11y ago
In my opinion, they need to focus. Cut a bunch of stuff, find a niche they can dominate, and rebuild. Either be a bad-ass server platform, amazing social app, or perhaps apply themselves towards a select group of people (aging seniors or something)-- whatever they think they can do-- but focus. It will be painful. But it's their best path forward I think.
- hodder 11y ago
  Makes sense, but the problem is, those niches described are filled by entrenched competitors, or don't really justify the market cap. I feel the best for the company is juicing rev, earnings, and FCF, and they can't do that by trying to get a foothold in saturated markets as the cost is too huge or ramp up time too long. I am also not proposing they take a VC approach like they have where they pay huge multiples hoping to somehow have the success at selecting winners like yc. I am proposing they buy companies that are generating growing free cash flow at sub 25x levels.
  - dhimes 11y ago
    My niches were not meant to be a knowledgeable insight, just examples. And you have a good point about buying cash-generating companies (companies that are winning the niche battles). But they really need to focus- and only buy companies that are in that focus. If they are a media company then they are competing with Condé Nast, Youtube, and bloggers everywhere. But if they are, for example, an educational media company, then the scope is clearer and they can muster some leverage.
prodigal_erik 11y ago
The Berkshire model works because investors admire Buffett and are willing to pay to benefit from his judgment. Why should shareholders want to let Yahoo invest their money, instead of giving it back so they can do so themselves? Does Yahoo have a track record of M&A success beyond Alibaba?
- Riod 11y ago
  Exactly. Plus buffett came with a hugely successful track record from his partnership days and bought Berkshire outright. What the hell has anyone on Yahoo's current board or Marissa done in terms of earning a return on capital?

by hodder 11y ago

dhimes 11y ago

In my opinion, they need to focus. Cut a bunch of stuff, find a niche they can dominate, and rebuild. Either be a bad-ass server platform, amazing social app, or perhaps apply themselves towards a select group of people (aging seniors or something)-- whatever they think they can do-- but focus. It will be painful. But it's their best path forward I think.

hodder 11y ago
Makes sense, but the problem is, those niches described are filled by entrenched competitors, or don't really justify the market cap. I feel the best for the company is juicing rev, earnings, and FCF, and they can't do that by trying to get a foothold in saturated markets as the cost is too huge or ramp up time too long. I am also not proposing they take a VC approach like they have where they pay huge multiples hoping to somehow have the success at selecting winners like yc. I am proposing they buy companies that are generating growing free cash flow at sub 25x levels.
- dhimes 11y ago
  My niches were not meant to be a knowledgeable insight, just examples. And you have a good point about buying cash-generating companies (companies that are winning the niche battles). But they really need to focus- and only buy companies that are in that focus. If they are a media company then they are competing with Condé Nast, Youtube, and bloggers everywhere. But if they are, for example, an educational media company, then the scope is clearer and they can muster some leverage.

prodigal_erik 11y ago

The Berkshire model works because investors admire Buffett and are willing to pay to benefit from his judgment. Why should shareholders want to let Yahoo invest their money, instead of giving it back so they can do so themselves? Does Yahoo have a track record of M&A success beyond Alibaba?

Riod 11y ago
Exactly. Plus buffett came with a hugely successful track record from his partnership days and bought Berkshire outright. What the hell has anyone on Yahoo's current board or Marissa done in terms of earning a return on capital?