4 ms·

You can read about this in Securities Analysis (1940). Basically you don't trust management, so companies can trade for less than liquidation value [edit: and

You can read about this in Securities Analysis (1940). Basically you don't trust management, so companies can trade for less than liquidation value [edit: and investors don't trust / overlook that a negative subsidiary can be unwound, although that's not technically true in yahoos case if all subs are profitable]. It's really amazing how nothing changes in finance; it's just that memories are short.

ams6110 12y ago
Somewhere around 2001 Apple shares were about $12, giving it market cap less than its liquidation value.
- dasil003 12y ago
  From what I can tell, Apple's low post Steve Jobs return was $12.72 on April 2003. I believe that was the month the iTunes Store launched. Sort of shocking that was their low point after the success of the iMac and the iPod. Investors must have thought the store would go bust like all the other music store attempts before, but man it just goes to show how clueless market analysts (or maybe everyone) are when it comes to tech.
  - pavlov 12y ago
    I think you're missing one stock split -- the April 2003 price would be $6.36 for current AAPL stock. Technically the low point after Jobs's return would be Dec 1997, when AAPL was around $3.30... But maybe that doesn't count since the iMac hadn't been introduced yet.
bambam12897 12y ago
Wouldn't this just provide an opening for a investment firm to swoop in, buy Yahoo, sell all their assets and cash out? Because no one is doing that... I'd have to guess there is more going on
- vecter 12y ago
  Liquidity has a cost. Yahoo probably has many illiquid assets, not to mention transaction costs. Plus, who has $37B to throw around?
  - ISL 12y ago
    Google. Berkshire. Apple. Etc.
    - parfe 12y ago
      Google wouldn't want to face the anti-trust hearings. Apple doesn't have any goals to spend half their cash on hand (Other than the iphone 6 being 11% larger/smaller/whiter/lighter) Buffet isn't a fan of tech stocks (or any bussiness he doesn't understand) http://wallstcheatsheet.com/stocks/heres-why-warren-buffett-mostly-avoids-tech-stocks.html/?a=viewall http://wallstcheatsheet.com/stocks/heres-why-warren-buffett-...
    - sirkneeland 12y ago
      or a middle eastern sovereign wealth fund, or a Chinese mega-corp?
- prostoalex 12y ago
  There's likely a bunch of liabilities and break-up fees involved in such liquidation. Real estate, data center space is likely to be under long-term leases with penalties for early termination. Personnel layoffs are not a trivial thing either - there are severance costs which in case of upper management can run into tens of millions - http://sacramento.cbslocal.com/2014/04/17/fired-yahoo-coo-gets-58m-severance-package-for-15-months-of-work/ http://sacramento.cbslocal.com/2014/04/17/fired-yahoo-coo-ge... And that's just US - Yahoo! has a network of European offices which likely have more protective labor laws.
  - dlubarov 12y ago
    Rather than liquidating the entire company, Yahoo could sell its Yahoo Japan and Alibaba shares, pay a one-time dividend, and keep its core business intact. The now-isolated core business would have positive value. But it might be difficult to acquire a controlling interest in Yahoo without driving up the price.

ams6110 12y ago

Somewhere around 2001 Apple shares were about $12, giving it market cap less than its liquidation value.

dasil003 12y ago
From what I can tell, Apple's low post Steve Jobs return was $12.72 on April 2003. I believe that was the month the iTunes Store launched. Sort of shocking that was their low point after the success of the iMac and the iPod. Investors must have thought the store would go bust like all the other music store attempts before, but man it just goes to show how clueless market analysts (or maybe everyone) are when it comes to tech.
- pavlov 12y ago
  I think you're missing one stock split -- the April 2003 price would be $6.36 for current AAPL stock. Technically the low point after Jobs's return would be Dec 1997, when AAPL was around $3.30... But maybe that doesn't count since the iMac hadn't been introduced yet.

bambam12897 12y ago

Wouldn't this just provide an opening for a investment firm to swoop in, buy Yahoo, sell all their assets and cash out? Because no one is doing that... I'd have to guess there is more going on

vecter 12y ago
Liquidity has a cost. Yahoo probably has many illiquid assets, not to mention transaction costs. Plus, who has $37B to throw around?
- ISL 12y ago
  Google. Berkshire. Apple. Etc.
  - parfe 12y ago
    Google wouldn't want to face the anti-trust hearings. Apple doesn't have any goals to spend half their cash on hand (Other than the iphone 6 being 11% larger/smaller/whiter/lighter) Buffet isn't a fan of tech stocks (or any bussiness he doesn't understand) http://wallstcheatsheet.com/stocks/heres-why-warren-buffett-mostly-avoids-tech-stocks.html/?a=viewall http://wallstcheatsheet.com/stocks/heres-why-warren-buffett-...
  - sirkneeland 12y ago
    or a middle eastern sovereign wealth fund, or a Chinese mega-corp?
prostoalex 12y ago
There's likely a bunch of liabilities and break-up fees involved in such liquidation. Real estate, data center space is likely to be under long-term leases with penalties for early termination. Personnel layoffs are not a trivial thing either - there are severance costs which in case of upper management can run into tens of millions - http://sacramento.cbslocal.com/2014/04/17/fired-yahoo-coo-gets-58m-severance-package-for-15-months-of-work/ http://sacramento.cbslocal.com/2014/04/17/fired-yahoo-coo-ge... And that's just US - Yahoo! has a network of European offices which likely have more protective labor laws.
- dlubarov 12y ago
  Rather than liquidating the entire company, Yahoo could sell its Yahoo Japan and Alibaba shares, pay a one-time dividend, and keep its core business intact. The now-isolated core business would have positive value. But it might be difficult to acquire a controlling interest in Yahoo without driving up the price.