3 ms·

My bet is that Microsoft will buy them to bolster their ecosystem (second time's a charm), and Yahoo's strategy is still angling to get bought, the question is

by mhomde 12y ago

My bet is that Microsoft will buy them to bolster their ecosystem (second time's a charm), and Yahoo's strategy is still angling to get bought, the question is just price. Personally I have a problem seeing much value in Yahoo except maybe Flickr and some other assets but maybe MS can use it to boost Bing or something

debacle 12y ago
YHOO is going to be way more expensive now (possibly 10x the price) than the last time MSFT tried to buy them. I think it's unlikely. Edit: maxerickson pointed out my wrongness. YHOO will be much more expensive, but the 10x number was in error.
- maxerickson 12y ago
  Microsoft offered $44.6 billion. Current market cap of Yahoo is $45.76 billion. The market cap doesn't necessarily capture the takeover price, but I doubt it is wrong by 10 times.
  - debacle 12y ago
    YHOO is artificially low right now. I think their value will double if any sort of buyout is put on the table. That said, I hadn't realized MSFT offered so much before. I thought their last offer was when YHOO was still at 17, so I was incorrect. I think a buyout price will be somewhere in the range of 80-100bln.
  - jcampbell1 12y ago
    Buy the company for $50B, sell the alibaba / japan stock for $45B, and the net cost is $5B. Let's not pretend like Yahoo is a $45B company. It is consistently valued between +/- $5B.
    - maxerickson 12y ago
      I don't understand what your point is. There is nothing in the upthread context that tries to put a valuation on the US operations of Yahoo, it's pretty clearly about the entire corporate entity that trades as YHOO.
      - jcampbell1 12y ago
        Microsofts $44.6B offer was roughly assets + $20B (a fair pice). The same offer today from Microsofts perspective, would be $65B. That is no increase in cost from the previous offer, even though it is numerically higher. Buying Yahoo today for anything less than $65B would be cheaper than the previous offer. I was agreeing with you, and my point was that Yahoo is today still an extremely cheap buyout target. Any argument that MM has increased the market value of the US operations (which is the part she actually runs) appears unfounded.
    - adventured 12y ago
      This isn't accurate. If you dumped the Alibaba and Yahoo Japan holdings, Yahoo would be doing $1.x billion per year in profit. That $1.x billion would still be valued at a likely 15 to 25 times. Yahoo's core business is worth a lot closer to $20 billion, and under no scenario would it ever be valued at $5 billion. The calculation you're using is backwards: it's the Alibaba & Yahoo Japan assets that are being discounted. Typically assets and cash are always discounted. It's earnings that matter the most, by far, when it comes to the valuation. And that's trivially easy to prove: your argument rests on the claim that $1.x billion in earnings would be valued at 4x times. That would never happen.
      - fspeech 12y ago
        Be careful about numbers. Yahoo consolidates baba and Japan earnings as 20+% owners. Baba may be deconsolidated going forward. Does your $1b number take the consolidation into account?
        adventured 12y ago
        Yahoo has historically been capable of generating 15% to 20% net income margins (before Alibaba contributed anything meaningful to their results). I see no reason why they wouldn't be able to continue that in the future. Yahoo has also become more efficient, having trimmed a lot of expenses from operations. Even if you were aggressive and pushed their net income down to $500 million on $4.5b in sales, you're talking about a 10 pe ratio. That also would not happen. Even when things were at their absolute worst in the last ten years - pre Alibaba - Yahoo still carried an $11 to $15 billion valuation. And that's the absolute worst context post dotcom bubble crash. The parent's position was that Yahoo's core is worth $5 billion. Well today AOL is worth $3.7 billion (with not much on their balance sheet of consequence). It's plainly obviously that under no scenario will Yahoo's business be valued at $5b when AOL is commanding a $3.7b valuation.
      - deleted 12y ago
        [deleted]
- kabdib 12y ago
  You can do a lot of R&D for $40B. A lot.
- mhomde 12y ago
  I dunno, I get the feeling that time is running out for Yahoo and they're looking for an exit. It might be little more expensive but I don't think it'll be by that much

by mhomde 12y ago

debacle 12y ago

YHOO is going to be way more expensive now (possibly 10x the price) than the last time MSFT tried to buy them. I think it's unlikely. Edit: maxerickson pointed out my wrongness. YHOO will be much more expensive, but the 10x number was in error.

maxerickson 12y ago
Microsoft offered $44.6 billion. Current market cap of Yahoo is $45.76 billion. The market cap doesn't necessarily capture the takeover price, but I doubt it is wrong by 10 times.
- debacle 12y ago
  YHOO is artificially low right now. I think their value will double if any sort of buyout is put on the table. That said, I hadn't realized MSFT offered so much before. I thought their last offer was when YHOO was still at 17, so I was incorrect. I think a buyout price will be somewhere in the range of 80-100bln.
- jcampbell1 12y ago
  Buy the company for $50B, sell the alibaba / japan stock for $45B, and the net cost is $5B. Let's not pretend like Yahoo is a $45B company. It is consistently valued between +/- $5B.
  - maxerickson 12y ago
    I don't understand what your point is. There is nothing in the upthread context that tries to put a valuation on the US operations of Yahoo, it's pretty clearly about the entire corporate entity that trades as YHOO.
    - jcampbell1 12y ago
      Microsofts $44.6B offer was roughly assets + $20B (a fair pice). The same offer today from Microsofts perspective, would be $65B. That is no increase in cost from the previous offer, even though it is numerically higher. Buying Yahoo today for anything less than $65B would be cheaper than the previous offer. I was agreeing with you, and my point was that Yahoo is today still an extremely cheap buyout target. Any argument that MM has increased the market value of the US operations (which is the part she actually runs) appears unfounded.
  - adventured 12y ago
    This isn't accurate. If you dumped the Alibaba and Yahoo Japan holdings, Yahoo would be doing $1.x billion per year in profit. That $1.x billion would still be valued at a likely 15 to 25 times. Yahoo's core business is worth a lot closer to $20 billion, and under no scenario would it ever be valued at $5 billion. The calculation you're using is backwards: it's the Alibaba & Yahoo Japan assets that are being discounted. Typically assets and cash are always discounted. It's earnings that matter the most, by far, when it comes to the valuation. And that's trivially easy to prove: your argument rests on the claim that $1.x billion in earnings would be valued at 4x times. That would never happen.
    - fspeech 12y ago
      Be careful about numbers. Yahoo consolidates baba and Japan earnings as 20+% owners. Baba may be deconsolidated going forward. Does your $1b number take the consolidation into account?
      - adventured 12y ago
        Yahoo has historically been capable of generating 15% to 20% net income margins (before Alibaba contributed anything meaningful to their results). I see no reason why they wouldn't be able to continue that in the future. Yahoo has also become more efficient, having trimmed a lot of expenses from operations. Even if you were aggressive and pushed their net income down to $500 million on $4.5b in sales, you're talking about a 10 pe ratio. That also would not happen. Even when things were at their absolute worst in the last ten years - pre Alibaba - Yahoo still carried an $11 to $15 billion valuation. And that's the absolute worst context post dotcom bubble crash. The parent's position was that Yahoo's core is worth $5 billion. Well today AOL is worth $3.7 billion (with not much on their balance sheet of consequence). It's plainly obviously that under no scenario will Yahoo's business be valued at $5b when AOL is commanding a $3.7b valuation.
    - deleted 12y ago
      [deleted]
kabdib 12y ago
You can do a lot of R&D for $40B. A lot.
mhomde 12y ago
I dunno, I get the feeling that time is running out for Yahoo and they're looking for an exit. It might be little more expensive but I don't think it'll be by that much