7 ms·

Thoughts on why this was an all-cash deal as opposed to similar comps (Instagram, YouTube) which were cash/stock mix?

by inmygarage 13y ago

RexRollman 13y ago
Maybe they don't have faith in Yahoo's future?
- pavs 13y ago
  Or maybe yahoo's stock is not as sought after like it was for google (and still is)?
keiferski 13y ago
My best guesses: 1. Yahoo would rather spend cash than stock (possibly because they anticipate Yahoo stock going up in the future). If Yahoo thinks that $1 in stock today will be worth $2 in 3 years, it might make more sense to spend cash. This is a huge gamble, of course. 2. Cash is intrinsically more valuable than stock; in other words $1 cash != $1 stock. Yahoo may feel more comfortable spending $1 Billion cash than spending $2 Billion stock. 3. The obvious, but maybe too obvious, answer: Tumblr doesn't see a future in Yahoo stock.
- deleted 13y ago
  [deleted]
- steven2012 13y ago
  This doesn't make sense. Which CEO doesn't believe that their stock won't go up in 3 years? If they don't believe it, they should be fired. Cash is much more valuable than stock. Any CEO worth their salt would ALWAYS issue stock and never cash, since stock is essentially free (with some GAAP repercussions, but better that then spend cash). But it sounds like tumblr wanted cash instead of cash/stock. It doesn't matter to the employees, they get paid out from the purchase, and then will all get YHOO retention stock options when they join. Great deal for tumblr, terrible deal for YHOO, it's a waste of cash and as someone else pointed out last week, it's reminicient of Geocities from the dotcom days. Every employee from tumblr will start exiting, maybe after 2-3 years, and the entire thing will fall apart. I'm disappointed in Mayer.
  - rgbrenner 13y ago
    "This doesn't make sense. Which CEO doesn't believe that their stock won't go up in 3 years? If they don't believe it, they should be fired." This is clearly untrue. Which moron CEO at the head of a newspaper anticipates anything more than a very modest increase in their stock over the next few years? Most newspapers are very much aware of their problems. Do you think a CEOs job is to bury their head in the sand and ignore all of the company's problems? Because that's the only way your statement could even come close to being true. And 2.. as far as Yahoo.. keiferski is right.. it depends on how rapidly yahoo anticipates to grow. Obviously a stock growing at 50% is worth more than one growing at 10%.. and maybe Mayer is incredibly bullish on Yahoo, and believes Yahoo stock is worth more than what the market thinks it is.
    - steven2012 13y ago
      A CEO's job is to increase shareholder value. End of story. This means increasing the stock price. So yes, I do believe that this statement is absolutely true. The CEO needs to figure out a way to increase shareholder value, whether they are Yahoo, or Washington Post, or New York Times, or Groupon. They are not supposed to sit around and maintain dividends. Whether it's breaking into new businesses, selling their current underperforming businesses, etc, that is why they are CEO, to think of new ways to make money and increase stock price. Not to sit on their laurels and collect their paycheck. 3 years is MORE than enough time for any CEO to execute a strategy that increases shareholder value. If they can't, then they should be fired.
      - rgbrenner 13y ago
        "3 years is MORE than enough time" So you're saying there were no CEOs at the end of 2008 that thought that even with all of the work they were doing to improve their company, that the recession would have net negative effect on their business. Do you really believe that? And as this applies to Yahoo... we have no idea how bullish Mayer is on Yahoo.. maybe she thinks the company is going to grow very rapidly over the next few years, and doesnt want to give up a single share. If she is MORE bullish on Yahoo than the market, then Mayer would have considered Tumblr's demand for X number of shares unreasonable.
emmelie 13y ago
The Yahoo board are saving Tumblr investors and will expect the favor returned down the line. This is boardroom back scratching. Yahoo is being stripped of its cash for the benefit of VC-istan. Here are the Yahoo board of directors. http://yhoo.client.shareholder.com/directors.cfm http://yhoo.client.shareholder.com/directors.cfm Here are the investors in Tumblr. http://www.crunchbase.com/company/tumblr http://www.crunchbase.com/company/tumblr
nwenzel 13y ago
From the acquirer side: Maybe they wanted to put some excess cash to work. Cash is important when you don't have it. But once you have it, it's a dead asset that produces no meaningful return. Excess cash is important as an option on future opportunity. Apparently, Yahoo found their opportunity. Or, maybe they didn't want to revise EPS estimates down. An extra $1B worth of $YHOO out in the marketplace would dilutes EPS by about 3% until the revenue starts flowing. From the acquiree side: Opportunity vs sure thing + choice of opportunities. $1.1B in $YAHOO today will be worth something else tomorrow. Maybe more. Maybe less. Maybe $0. Cash is guaranteed to go down in value at the rate of inflation. But not more. And they get to decide on some other opportunity(ies) to go after.
loceng 13y ago
Tumblr might not have valued Yahoo! stock; They would lose control and possibility of fucking everything up is possibly high.

Thoughts on why this was an all-cash deal as opposed to similar comps (Instagram, YouTube) which were cash/stock mix?

RexRollman 13y ago

Maybe they don't have faith in Yahoo's future?

pavs 13y ago
Or maybe yahoo's stock is not as sought after like it was for google (and still is)?

keiferski 13y ago

My best guesses: 1. Yahoo would rather spend cash than stock (possibly because they anticipate Yahoo stock going up in the future). If Yahoo thinks that $1 in stock today will be worth $2 in 3 years, it might make more sense to spend cash. This is a huge gamble, of course. 2. Cash is intrinsically more valuable than stock; in other words $1 cash != $1 stock. Yahoo may feel more comfortable spending $1 Billion cash than spending $2 Billion stock. 3. The obvious, but maybe too obvious, answer: Tumblr doesn't see a future in Yahoo stock.

deleted 13y ago
[deleted]
steven2012 13y ago
This doesn't make sense. Which CEO doesn't believe that their stock won't go up in 3 years? If they don't believe it, they should be fired. Cash is much more valuable than stock. Any CEO worth their salt would ALWAYS issue stock and never cash, since stock is essentially free (with some GAAP repercussions, but better that then spend cash). But it sounds like tumblr wanted cash instead of cash/stock. It doesn't matter to the employees, they get paid out from the purchase, and then will all get YHOO retention stock options when they join. Great deal for tumblr, terrible deal for YHOO, it's a waste of cash and as someone else pointed out last week, it's reminicient of Geocities from the dotcom days. Every employee from tumblr will start exiting, maybe after 2-3 years, and the entire thing will fall apart. I'm disappointed in Mayer.
- rgbrenner 13y ago
  "This doesn't make sense. Which CEO doesn't believe that their stock won't go up in 3 years? If they don't believe it, they should be fired." This is clearly untrue. Which moron CEO at the head of a newspaper anticipates anything more than a very modest increase in their stock over the next few years? Most newspapers are very much aware of their problems. Do you think a CEOs job is to bury their head in the sand and ignore all of the company's problems? Because that's the only way your statement could even come close to being true. And 2.. as far as Yahoo.. keiferski is right.. it depends on how rapidly yahoo anticipates to grow. Obviously a stock growing at 50% is worth more than one growing at 10%.. and maybe Mayer is incredibly bullish on Yahoo, and believes Yahoo stock is worth more than what the market thinks it is.
  - steven2012 13y ago
    A CEO's job is to increase shareholder value. End of story. This means increasing the stock price. So yes, I do believe that this statement is absolutely true. The CEO needs to figure out a way to increase shareholder value, whether they are Yahoo, or Washington Post, or New York Times, or Groupon. They are not supposed to sit around and maintain dividends. Whether it's breaking into new businesses, selling their current underperforming businesses, etc, that is why they are CEO, to think of new ways to make money and increase stock price. Not to sit on their laurels and collect their paycheck. 3 years is MORE than enough time for any CEO to execute a strategy that increases shareholder value. If they can't, then they should be fired.
    - rgbrenner 13y ago
      "3 years is MORE than enough time" So you're saying there were no CEOs at the end of 2008 that thought that even with all of the work they were doing to improve their company, that the recession would have net negative effect on their business. Do you really believe that? And as this applies to Yahoo... we have no idea how bullish Mayer is on Yahoo.. maybe she thinks the company is going to grow very rapidly over the next few years, and doesnt want to give up a single share. If she is MORE bullish on Yahoo than the market, then Mayer would have considered Tumblr's demand for X number of shares unreasonable.

emmelie 13y ago

The Yahoo board are saving Tumblr investors and will expect the favor returned down the line. This is boardroom back scratching. Yahoo is being stripped of its cash for the benefit of VC-istan. Here are the Yahoo board of directors. http://yhoo.client.shareholder.com/directors.cfm http://yhoo.client.shareholder.com/directors.cfm Here are the investors in Tumblr. http://www.crunchbase.com/company/tumblr http://www.crunchbase.com/company/tumblr

nwenzel 13y ago

From the acquirer side: Maybe they wanted to put some excess cash to work. Cash is important when you don't have it. But once you have it, it's a dead asset that produces no meaningful return. Excess cash is important as an option on future opportunity. Apparently, Yahoo found their opportunity. Or, maybe they didn't want to revise EPS estimates down. An extra $1B worth of $YHOO out in the marketplace would dilutes EPS by about 3% until the revenue starts flowing. From the acquiree side: Opportunity vs sure thing + choice of opportunities. $1.1B in $YAHOO today will be worth something else tomorrow. Maybe more. Maybe less. Maybe $0. Cash is guaranteed to go down in value at the rate of inflation. But not more. And they get to decide on some other opportunity(ies) to go after.

loceng 13y ago

Tumblr might not have valued Yahoo! stock; They would lose control and possibility of fucking everything up is possibly high.