Yahoo to Spin Off Its Core Businesses
nytimes.com
nytimes.com
Most telling is that Yahoo was up after the markets closed on this news. Heck Bloomberg just sent me a note saying the sentiment of the news on Yahoo was very positive, even the machines like this news:)
Sadly this probably means 3 things are going to happen in the next 6 months:
1) The CEO leaves, and is replaced by an interm CEO from a PE firm who will negotiate the wind down of Yahoo.
2) There will be a lot of companies coming to look at Yahoo. If a deal can be done quickly then I don't think there will be layoffs right away. If no deal can be reached quickly then in 6 months I'll bet there is a very large round of layoffs as the company shutters what it can't sell to make the rest of Yahoo look more appetizing.
3) If Alibaba buys the holding portion of Yahoo( Alibaba and Yahoo Japan) then look for Alibaba to seek to acquire the rest of Yahoo Japan.
From teh article:
> Yahoo’s shift in strategy comes as Ms. Mayer and her husband, Zachary Bogue, are expecting the birth of twin daughters this month
I hope she takes a full year off, if not more. The past 4 years couldn't have been easy on her. It will be interesting to see what she does next.
It's clear she's great at product design and not so good at people skills. Unfortunately, that doesn't fit well with becoming a CEO again.
Everyone wins here. Managers win, of course, but shareholders, who have been patient, get short-term returns and the potential for long-term ones as well. Employees will see their jobs stay, because of this repackaging.
Yes, Mayer will be gone in a year, replaced by someone with experience selling a company. But it's been a good run. She turned Yahoo from a place with mediocre engineers into a decent place to work; she resuscitated existing brands and gave them a place in the world; and now she did some reasonably clever financial engineering.
1. She failed at putting Yahoo back on the map. She spent billions on acquiring businesses that bring in close to no revenue. Maybe it's a great place to work, but if there's no money coming in, it won't stay great long.
2. She failed at financial engineering; she couldn't even get a tax free spinoff through.
I would've been happy to cut her some slack if she did one of these things right, and messed up the other one. Some people aren't meant to be product people and others just aren't financial engineers. But this is basically throwing in the towel.
Don't forget, this idea of a reverse spinoff didn't come from Marissa. It came from an activist investor, who are basically, master financial engineers.
When Mayer took over, they had no ability to attract or retain any kind of tech talent. Now, they can do so at the same rate as any other ad company. That's a big change.
She didn't hit it out of the park, but she's delivered her shareholders a solid double.
She managed to keep a part of Alibaba stake. This reverse spin off will also be tax free.
The BABA stake had to be separated from Yahoo, but this is literally the worst possible way, aside from selling the shares + paying taxes, to achieve this.
That's not proof of badness, but it does suggest desperation and lack of imagination.
It's completely different. Yahoo is not splitting up its core businesses.
They're taking a non-core asset (the Alibaba stake) that they can't sell without incurring a huge tax bill, and separating it from yahoo Core so that they can hand it over to Yahoo's shareholders (presumably in the hope that someone else - e.g. Alibaba - will step up to acquire it, thus unlocking the value for the shareholders), and re-focus on Yahoo's core businesses again.
There is a separate issue that the core of Yahoo is performing poorly, and that fact may well result in Yahoo Core being split up and sold off but it's important now to conflate the two issues.
Board feels Yahoo's core business is undervalued. The spin off will help clear the picture of how much Yahoo's core business independently value.
They are not looking for buyers (unless someone has a offer they can't refuse).
http://www.bloombergview.com/articles/2015-09-09/yahoo-s-ali...
So if the above is roughly accurate it's more like the loophole everybody used is closing and now they're going with a less desirable loophole.
> It's not clear to me that it actually does anything worth paying for at this point.
Few users of Google and Facebook actually "pay" for those services, they're primarily all advertising funded companies.
I didn't mean that users would pay for them; I meant that I don't see how one could use them to make money, or at least enough money that it would be worth bothering to acquire them.
News is massive.
Sports is massive and has one of the top Fantasy operations, a growing market.
Homepage is still the homepage for people who set homepages.
All are monetized through one of the most effective ad selling operations out there.
Glad to hear they still have a following. I thought GMail and Hotmail were bigger than Yahoo! Mail but what do I know!
(Genuine question, not snark). Why "sadly"? Companies, even technical companies, get obsolescent and die all the time. Maybe it is just Yahoo's time to go.
Between the chats, instant messenger, search before Google, multiplayer games online with strangers (albeit simple ones like chess and poker), and Geocities it was my first taste of the types of things I do online to this day. I think it's okay to mourn a bit for how we remember the company.
I remember receiving a two-disk copy of Netscape Navigator from a local ISP at a computer show in early 1995 and setting the home-page immediately to Yahoo. At the time I remember seeing hard copies of "The Internet Yellow Pages" at the local Barnes and Noble, but most search was through Yahoo or Alta Vista. Back then AV had several fewer orders of magnitude web pages to crawl and SEO/spam hadn't yet taken off, but even still the AV results weren't always useful. Without page rank or a decent sorting algorithm, I remember often going through pages of results.
Yahoo had it all: games, continuously updated stock quotes (at a time when I would look up share prices in the morning's paper, priced to the nearest eighth of a dollar), weather, news, and hand picked results from around the web. It was all I was previously getting from CompuServe/Prodigy, but at no cost.
But now I haven't visited Yahoo in years. It's like when your favorite teenage band breaks up. You're a little sad, but you've moved on. The fond memories are for life.
Edited to add: we all used a home page back then because tabs hadn't yet been invented, meaning the restore previously opened tabs option that we all use today also didn't exist. One's home page had a much greater importance back then.
I won a Final Four bracket against high school classmates on the site's fantasy sports page and knowing nothing about college basketball. I made $150 from that.
Even though they clearly made strategic mistakes and Mayer's revival may have been too little too late it's still sad when an "old-school" tech firm goes under, especially one that touched so many lives.
I miss discovering new search engines (Lycos, Lycos FTP Search, Dogpile, this new one with a stupid named called Google). I didn't use Yahoo! heavily at that time but I did use Geocities pages alot (before they were bought).
Where are the rainbow horizontal rulers now, eh? And marquee tags? They should make a comeback.
This is my Nokia heartbreak all over again
I gave up Yahoo mail years ago.
The only thing I ever went to glance at was finance.yahoo.com -- because it seemed to be the literally only page that you could gleen info from yahoo in a split second...
1979/80 would both put you in Gen X as a birth year ('61-'81, although Harvard for some reason thinks '64-'84 - either way, bad luck, Coupland novel it is).
cough
Dude, give up the skinny jeans :)
https://en.wikipedia.org/wiki/Generation_X
"Generation X, commonly abbreviated to Gen X, is the generation born after the Western Post–World War II baby boom. Demographers and commentators use birth dates ranging from the early 1960s to the early 1980s."
But never will I give up the skinny jeans!
With that said, it's been my observation that people born within a few years of the line in each direction -- as far as '77 to '88 -- tend to share the same values and have characteristics of both Millenials and Xers (born in '84 here, and I'll gladly apply that description to myself). I've also seen people, particularly those in the S&H community, use the term "Generation Y" specifically to refer to this cusp and not to Millennials as a whole.
Gen-X stereotypes tend to be more true for people born '76 and earlier, and Millennial stereotypes tend to be more true for people born '89 and later.
https://en.wikipedia.org/wiki/Millennials
"Millennials are the demographic cohort following Generation X. There are no precise dates when the generation starts and end; most researchers and commentators use birth years ranging from the early 1980s to the early 2000s."
Someone 35 is on the bubble.
"Millennials (also known as the Millennial Generation[1] or Generation Y) are the demographic cohort following Generation X. There are no precise dates when the generation starts and ends; most researchers and commentators use birth years ranging from the early 1980s to the early 2000s."
But even now Yahoo is still hanging on to some valuable things we're likely to lose in this change. I'm still a heavy user of Flickr for example - and though many others have tried, it's still IMO the best photography community out there (sorry 500px).
It's been a perennial money-loser for Yahoo, kept around because what self-respecting tech giant doesn't have a photo hosting service? I fear with this spinoff we're seeing the end days for that product.
When I used it, all I remember is that 90% of comments were sparkling banners saying "YOUR PHOTO HAS BEEN AWARTED BEST FLICKR OCEAN SUNSET AWARD MAY 2010! CLICK HERE TO JOIN OUR GROUP! JOIN JOIN JOIN!" to the point where it interfered with anyone trying to have an actual conversation.
Which was a shame because outside of the enormous volume of spam they had a pretty good thing going.
I hadn't checked it out recently, but it looks like they're still doing fine as far as having a ton of great photos posted. As long as the "community" aspects don't bug you, maybe it's a winning strategy?
OTOH I have no idea if they're profitable or not.
It's fashionable to bash on flickr because it's "languished" and, one redesign aside, hasn't moved a whole lot in a long time. I've certainly taken casual swipes at them myself.
However, the truth is that--while I can imagine some features I'd like--it works pretty well and has a lot of great photography. At the end of the day, it's entirely possible that I wouldn't like it if they were constantly taking the site in new directions because social or mobile or big data or whatever the current hype is.
I haven't been putting any of my photography online for a couple of years now (aside from sharing to friends on Facebook), but the thought had cross my mind recently. It's a tossup between hosting them on my own site or going somewhere else where it can be "social" and more importantly, more broadly visible.
It's not a big thing but the very modest price, the low friction, and contributing to the commons in however small a way work for me.
Flickr decided for a long time to not prioritize the best photo display possible and limited photo size and wouldn't offer things like black backgrounds.
And now I may get an infinite less number views, I don't have to deal with the comments, and photography is no longer associated with gamification (when do I post this for the most views to hit explore, etc).
Flickr has a bit of a "look" to what is popular, and while I'm big on good photo processing and the history of the dark room, what makes it today is often too processed, too HDR, and so on, and playing the "game" is not something I'm interested in.
In the early days of Flickr, people DID look more at all the photos in groups they posted to, and that was pretty great.
Getting more people into photography is great though - just shouldn't be about numbers.
But (much like Reddit) the smaller communities were a lot more sane. And (much like Reddit) it was easy to create new communities - groups with memberships in the dozens or hundreds were infinitely better and actually useful for getting feedback and sharing your work with people who gave a damn.
So, the mass groups were pretty shit, but there is a thriving mass of smaller communities there that are quite pleasant and useful. (Again, much like Reddit!) - and competing services largely haven't cloned this or offered an alternative.
500px doesn't do small niche communities - there isn't really a concept of a "community" besides "the whole userbase", and as a result commentary on photos there is exactly like the big Flickr groups - all noise.
Smugmug targets specifically portfolio hosting and presentation, which it does very well, but it has minimal social components.
The only service - oddly enough - that seems to have attracted small photography communities is Google+. Weird.
Isn't that why CEOs are paid the big bucks?
I mean, a Yahoo whose sole purpose is to be a tax-efficient vehicle for holding shares in Alibaba is not the endgame anyone envisioned, and let's be honest, doesn't really need a CEO either... Not that she ever has to work again.
[1] I'm not saying that their impact is never high, but CEOs are paid as if it is always high, and that's essentially been demonstrated by economists not to be the case, particularly with large complex organizations.
Isn't Yahoo Japan being spun off from the Alibaba portion? Ie. all that remains of the current "Yahoo" company will be its Alibaba stake.
http://www.reuters.com/article/us-yahoo-divestiture-idUSKBN0...
Yahoo! Inc doesn't own the majority of Yahoo! Japan (believe it or not), Softbank does. Yahoo! is only a minor shareholder of Yahoo! Japan.
As it has been put by others, Mayer will hold the title in corporate history as the most expensive CEO for a very long time.
I do hope they find a good home for Flickr...I will miss it terribly if it is gone.
Don't you end up with pretty much the same thing in both scenarios? One business that's an internet company and another that is a holding corp for Alibaba stock.
I'm not saying your wrong (a lot of people are saying this). I just don't personally understand the reasoning.
That spike seems to have been very short lived
http://finance.yahoo.com/echarts?s=YHOO+Interactive#{"range"...
Can you remind me which great products she's designed?
She was in charge of the design of the front page of the search engine, as far as I know. From what I understand, our mental image of the Google brand—bright primary colors on white—came straight from her.
She went in with a lot of good will. I don't see that she still has that.
Interesting question: could Yahoo have been grown, and if so, how?
> I hope she takes a full year off, if not more. The past 4 years couldn't have been easy on her. It will be interesting to see what she does next.
Do you think other CEOs don't have children, or don't have hard jobs? Running a profitable growing company is as hard as failing to save a dying company.
I can't imagine the morale issues in the trenches of Yahoo, it's gotta be just horrible in there.
And why not?
In what kind of reasoning, if you could continue to make money and employee thousands of people for 10+ years of slowly declining revenue and relevance, would you refuse it?
A "hot" CEO or employee might want to jump ship ofcourse for greener pastures. But there's absolutely no sense in closing the company and leaving all the money it could make (even if declining) on the table.
If it wasn't profitable, that would be another story. But it is.
[edit] fixed typos.
I sure would. I've seen that happen at a couple of companies where I know people and it's entirely depressing. Slowly declining revenue on the path to planned death means:
* knowing that the next round of layoffs will always be soon
* having a hard time retaining people
* having a very hard time hiring people
* nobody wanting to do deals with you
* having to pay way over market to keep the people you have
* workers much more inclined to negative behaviors
* no sense of promise in the future
I would much rather sell individual pieces to companies that can make use of particular assets, move as many people as possible to other companies, and then gracefully wind down whatever's left.
In my view, profit isn't why we do things, it's just how we measure sustainability of a venture. Maybe there are people out there who would be happy working in a dying company trying to suck every last nickel of profit out. But those aren't the kind of people I'd hire on the way up, so there's no way I'd ask them to spend years being miserable on the way down. I'd also be reluctant to sell my customers to somebody who would be happy doing that; I wouldn't trust them to do right by the users.
Anyway, I'm thinking more from the perspective of the grunt workers than the big execs who will walk away rich no matter what. If I was them I'd be looking for the lifeboats and getting the hell out.
They're likely trying to do that and spinning off Japan may make that easier.
Yahoo!
I feel silly saying it. I feel silly asking someone if they Yahoo!? It feels silly seeing it on stock tickers. Do I want to invest in a silly business? Work for a silly business?
The answers are yes and yes in an objective world, if the company is producing interesting products that are selling. But when it comes to marketing to users, investors and future employees alike, I'm not so sure it isn't a small hurdle in the way of that conversation.
Yeah, nothing like the gravitas and seriousness of Google.
Memories.
I remember reading a tech trade rag back in the late 90's where some consulting company or other was talking about their business. They were getting tons of requests to help provide branding and corporate identity for tech clients.
Apparently "Yahoo" was the gold standard, and everybody and their cousin wanted a name or trademark or other branding component akin to Yahoo.
All of that is because of $BABA. If you add up the current value of $BABA and Yahoo Japan shares that Yahoo holds, it's more than the market cap of Yahoo; which means, the $4B/year revenue business that is rest of Yahoo is valued negatively by the market. SMH....
She didn't appear to add any value to Yahoo at all. I agree that I'm not sure anyone could have, but that doesn't change the fact that she didn't accomplish the job she was hired to do.
Yes, it's a good financial call, but it puts all of the control in someone else's hands.
> One of the weirdest things about Yahoo when I went to work there was the way they insisted on calling themselves a "media company.
That was a bad decision then, but at the time content and media were newer on the internet and had value. They don't anymore. Yahoo finance and fantasy sports are nice things to provide, but they aren't a google killer for sure.
Yahoo's core business is media not technology. If the NYT and Wall Street Journal are any indication, media is a bad business to be in.
http://www.nytimes.com/2015/10/30/business/media/new-york-ti...
http://www.cnet.com/news/yahoos-ceo-reaches-out-to-hollywood...
http://www.cnet.com/news/google-vs-yahoo-clash-of-cultures-1...
http://www.wired.com/2007/02/yahoo-3/
http://metue.com/06-18-2007/yahoo-ceo/
The Wired article looks particularly painful. If memory serves, Yahoo first declined to buy proto-Google for one million. Then again in 2002 for 5 billion.
She's a Silicon Valley darling; in what way was she an outsider?
>I think the hand she took over when she sat down at the table was bad.
I agree with this.
>she played smart
But not this. During her tenure the company treaded water for a few years, lost nearly all value, and now might be looking to break itself up. Is this the standard we should be holding high-profile, high-priced executives to?
The smart part is meant as not gambling on a Carly Fiorina-type merger to "save" the company. Her deals were smaller and focused, and my contention is she didn't blindly throw capital around (at least in a way that makes headlines) to try to save the company. Value is decided by the capital markets, and I still believe core Yahoo is not worthless, whatever it's problems or other management issues.
(edits for spelling, slight re-phrasing of last point)
If Ms.Mayer is able to sell Yahoo! assets to Google in a profitable way for shareholders, that would be a WIN, without it, her regime is a failure not a total failure, but a failure none the less.
I think Yahoo makes a great case study on how optimizing for revenue per user can kill your brand.
Part 1: https://amp.twimg.com/v/76b8a5e2-9a6c-40c3-9c1b-e2c8bcf91159 Part 2: https://amp.twimg.com/v/ce42d263-7b9c-4716-8d06-b320ed243606
Mayer seems completely bored by the whole thing and keeps passing stuff off to Webb as "board level consideration". Doesn't make me excited for Yahoo whatsoever.
do you also fire your doctors because they don't pray?
the CEO should be rallying troops and making deals. well, at least that is the excuse for their obscene salaries and bonuses.
She looked like she was asleep. Wasn't rallying anyone or making any deals. Did you watch the interview? She was talking about the most important thing she has ever done as a CEO and couldn't care less. She has checked out.
1. Messenger
2. Mail
3. Flickr
4. Tumblr
(I do wonder if iterations of this pattern panned out better when paired with not-Microsoft)
Without their search engine, there is no advertising business.
They do have significant advertising businesses beyond search (AdSense, gmail, etc.).
My understanding is that if search and ads were separate businesses and ads paid search for search result ads at market rates then search would not be profitable (similarly for e.g. Gmail). (In reality if search were an independent company then it might be able to be profitable by selling information to ads in addition to direct advertising revenue - OTOH the legal barriers to selling information to a third party might make that impractical, whereas conveniently they're not an issue while Google remains a single company)
[1] Page 24, https://investor.google.com/pdf/20141231_google_10K.pdf
While I don't agree with the parent you're implying that search is the ONLY Google property that displays ads but that's not true. A decent percentage of that is coming from gmail. I'm not sure how much however.
What? I have never heard that AdWords runs at a loss and find it incredibly dubious.
I'll just say that's a convoluted definition of a loss-leader. If a revenue line requires an expense, that expense is not a loss-leader, it's just a cost. That's like saying that having a website is a loss-leader for Amazon, since they really make their money on selling products.
The search engine runs ads, and is enormously profitable.
The rest had been obsolete for a while anyway.
My guess, someone will buy it and it'll languish for a year or two as the product strategy is developed and migration of technology occurs, then the new vision by new owners will be executed.
Personally, I'd find it something of a bummer if flickr were to go away or seriously decay. I could switch but it would be a definite pain. (I also find flickr a great source of CC photos.)
It's the archives I'd really, really miss, from people who more or less stopped taking photos.
If Flickr was to offer what Smugmug and 500px does for pros ( like direct upload from Lightroom, eyecandy portfolios, etc. ) instead of focusing on an app that uploads every picture it finds by default, I believe they'd see a return of the many and probable could become profitable. But this would need immediate and massive changes, which I don't think will happen at all.
Actually, I think that's built in to Lightroom.
That's fair. The greatest loss if flickr were to go away at some point would be that a lot of content would be permanently removed from the Web. And flickr's scale is such that I can't really imagine something like the archive team being able to copy flickr content and archive it in a useful searchable way. I may be wrong though.
Given that there are functioning businesses in the flickr vein, I'm reasonably hopeful it will continue on though. Even if that's wishful thinking on my part.
Then "Origami" was supposed to launch and solve that - but they shut down before they could even go live!
I agree that galleries of some sort would be a great addition. I put a lot of photos up on flickr so they're available to myself and others. But I'd like the ability to showcase a more curated collection.
The reality is that most people are just fine with uploading their camera phone pics to Facebook and be done with it. The number who are willing to spend $25-50 per year for a premium site is probably a pretty small percentage--and would be even smaller if you up that to $100+.
Even if
Flickr/Yahoo! have taken some steps related to allowing users to monetize their photos over the years. There's been an agreement with Getty and they've done some other things as well. At its heart, though, flickr started out with very much a community orientation and, while they haven't necessarily done the best job of it, they've maintained more of a community than a commercial flavor.
Aside from the young, female, and attractive though, it's pretty hard to commercialize a flickr presence in any significant way. Even microstock sites which are explicitly about selling aren't a great source of income for most.
"Yahoo! Inc., together with its consolidated subsidiaries is a guide focused on informing, connecting, and entertaining our users. By creating highly personalized experiences for our users, we keep people connected to what matters most to them, across devices and around the world. In turn, we create value for advertisers by connecting them with the audiences that build their businesses. For advertisers, the opportunity to be a part of users' digital habits across products and platforms is a powerful tool to engage audiences and build brand loyalty. Advertisers can build their businesses through advertising to targeted audiences on our online properties and services or through a distribution network of third party entities who integrate our advertising offerings into their websites or other offerings. Our revenue is generated principally from search and display advertising."
Reading that was a bit strange to me as it doesn't fit with my image of Yahoo. From that description, it seems they think of themselves as a social network + ad platform. I'm finding it a bit hard to clarify what my image of Yahoo exactly is but its not that.
Deleted comment
The actual answer is that Yahoo sells ads. That's their business model, just like it's Google's and Facebook's and hundreds of other companies', some very old and some founded yesterday.
I'd like it to have more advanced options, but it's probably the best choice and well integrated with Google Drive and Google+ (if you use it).
And free 2-day shipping (if you're in the US).
I don't think cloud storage or image hosting are unsolved problems.
The article puts Yahoo's Alibaba stake at 31bn. Google finance is reporting Yahoo's market cap as 32.75bn. Does this mean that Yahoo's non-Alibaba value is a rounding error?
http://www.bloombergview.com/articles/2014-04-17/how-can-yah...
It's possible that some shareholders would realize significant capital gains on that, and the taxes would offset part or all of the profit. But of course other shareholders would not only make a profit, but would also have a fat capital loss to go with it. It just depends on when they bought the shares and what they paid.
Overall, though, when one factors in all the tax effects, the market is assigning a negative value to Yahoo proper. Why? Because they, quite reasonably, assume that Yahoo proper will chew up the cash that's currently on the books and any that is obtained via asset sales. That is, should the shareholders ever receive a dividend of any kind, it is likely to be the current cash value of the company less some large fraction wasted between now and whenever that might hypothetically happen.
Bluntly, if the company were being valued as a going concern, the market would be pricing it a lot lower even than it is. The only reason for the share's relatively high price is the expectation that some kind of spinoff will happen to allow the shareholders to receive a larger fraction of the value of the company's assets than they would if the company sold those assets itself and used the capital to continue its own operations. In the latter event, one must reasonably assume the ultimate return to shareholders would be very close to zero (an eventual sale of the rotted carcass to private equity) or zero (bankruptcy).
I have a tremendous amount of respect for them, but even with Marissa at the helm the biggest challenge they have not seemed able to overcome, was to tranform into something more 'web 3.0' ish.
I would not be surprised in the slightest if Microsoft spun out Bing as a subsidiary, and absorbed the assets and IP of Yahoo! into their own search centered business with a portal attached.
By resizing that combined business to be profitable based on the search and ad revenue I expect the case could be made for that as a long lived entity that remains when Google implodes. And having an already separate (or separable) would allow Microsoft to step away to avoid anti-trust concerns while keeping a partial interest to capture the value appreciation.
[1] the 0th Internet was what emerged right after HTTP started propagating, GNN, bookmarks etc.
The issue for Google is that while their search is good, Microsoft has crossed over into the "good enough" space (for the customers, advertisers) and the product (people using the service) are less and less likely to force switch the search engine default to Google. Worse, the back stop efforts that Google has been doing to protect revenue growth have caused many long time users to become dissatisfied with their user experience. Google's portal portfolio (News, Finance, G+, Pictures, and Blogger) and cloud offering (GCE) have not kept up with other offerings in the space they are losing share.
All of that summarizes to "web services are becoming commodities" and while profitable (as Bing has demonstrated) it's not going to continue to be profitable enough for Google to do that and any of the other projects that 90% of the other employees work on.
So first Google will start reporting down quarters because no matter how many ads they cram on a page it doesn't improve their RPM, then start cutting projects internally left and right to cut costs, and then they start cutting more of the benefits, and then they start downsizing groups to stay within the 'profitable' envelope, and like a main sequence star that has run out of hydrogen to burn, the collapse to white dwarf has begun. What Alphabet does at that point will be interesting, but their margins on the G business will only be sufficient to support the G business and not anything else. If they aren't making any money elsewhere then poof.
So when? Can't say, really it depends on them being able to pull out into a sustainable business model on the lower margins of commoditized search. Google seems to understand the threat to the business (given their moves, like Alphabet, changing CFOs Etc.). And they are really smart so if there is a way out they may be able to find it, and they have enough cash to "coast" for a long time (look how long Yahoo has coasted right?) But a lot of these things end up being additive, the shine goes off of working there, a lot of solid people leave and then you can lose the ability to change fast enough to avoid your fate.
Companies that pull it off (re-inventing themselves) are much rarer than companies that auger into the ground.
Google is trying to pull off a Saudi Arabia: make as much profit as they can and pour said profits into R&D (tourism) so that when the time comes and people are not interested as much as now in AdWords (oil), the "moonshot" investments will have unlocked new sectors where profit can be made.
Matt Levine wrote a good piece on this a week ago: http://www.bloombergview.com/articles/2015-12-02/yahoo-is-lo...
Does this mean the end of Yahoo?
Is it being acquired?
Are they shutting down Flickr or Tumblr?
Why would this change make any difference to those questions?
I don't think it does. I think the difference is that Starboard suggested that Yahoo sell its core business - http://www.wsj.com/articles/starboard-urges-yahoo-to-drop-al... - and Verizon's CFO suggested that they might be interested in buying Yahoo Core if it was put up for sale - http://www.bloomberg.com/news/articles/2015-12-07/verizon-wo...
To turn the question on its head: why should some capital gains be taxed twice and others once (or in rare cases, three times or not at all)?
On the conference call this morning, the management team sounded really downbeat. I expected them to sound positive and optimistic, talking about unlocking shareholder value and focusing on Yahoo Core but they sounded like somebody had died.
As of this moment, the market value of Yahoo's stakes in Alibaba and Yahoo Japan are $32.5bn and $8.67bn respectively, while Yahoo itself has a market cap of $32.37bn.
To quote Matt Levine, "the whole point of Yahoo as a company right now is to not pay taxes on Alibaba. [...] If there was a way to avoid paying taxes on the Alibaba shares that involved burning all of Yahoo's actual businesses to the ground, Yahoo should do that all day long, and then do it again the next day. It would still add shareholder value."
"And the market, right now, is valuing Yahoo as though it will fail in that mission, which is its only mission."
Source: http://www.bloombergview.com/articles/2015-12-02/yahoo-is-lo...
They're currently bathing in legal battles and will probably be out of business in very short order. It's a liability for Yahoo, not an asset to brag about.
http://www.nytimes.com/2015/11/11/sports/football/draftkings...
Draft Kings is in the business of running a fantasy-inspired gambling scheme: people pay them money, and some fraction returns to the guy with the most fantasy points.
Market share isn't comparable here; only one of these is an actual profit center. (I have no strong opinions on the viability of DraftKings/FanDuel, but they are plausible moneymakers on their own, Yahoo or ESPN fantasy aren't, other than as a source of ad eyeballs.)
And she's probably dealing with a lot of anger around not getting to do her turnaround. Whether they were working or not, she was surely emotionally invested in her efforts to rebuild Yahoo as a company and now that is being rejected.
It's devastating when you are pouring your heart and soul into something and then the company just kills it and it's beyond your control. I'm sure a lot of us have been through that (I've been through it twice now, at Palm when HP killed webOS, and at Nokia when they announced they were giving up on phones), and I don't think it's any easier at the top level.
Though those eye-watering golden parachutes can't hurt...
A company makes an amazing, generation defining large bet on a startup in a fantastic market. Which pays off as one of the best investments in history.
That same company then proceeds to do _nothing_ with its actual business. It purchases a series of tiny startups that go _absolutely nowhere_, the acquired talent of which create _zero value_.
And, simultaneously, new, younger competitors start eating their lunch in every one of their established markets.
If that's not unprecedented, I'd love to hear the other example. That situation would have to be just as fascinating.
Yahoo has a terrible track record regarding emails. I already lost one due to inactivity. They gave it to somebody else. That somebody probably has access to several of my accounts now. On websites where I used my Yahoo address and then just forgot about it.
Yahoo bought delicious.com, said they were going to kill it, but later sold it. Most of the users that left never came back.
Has Yahoo done anything worthwhile in the last 15 years besides disrupt innovation in a bad way?
Always playing catch up in an industry that is lead or die. Good to great engineers with failed leadership trying to coast on past success then, when the stuff hits the fan, trying to effect a culture change on a bloated structure. Finally, the sell off.
It's unfortunate that the tax code is so complex that ambiguous "tax risk" is a thing.
In Yahoo's case it's a bit unique in that the only thing they really have that the market likes is their holdings in other companies. Essentially Yahoo is like a mutual fund that made some good investments but the fund managers are blowing it by running a poorly performing lemonade stand on the side. A lot of the investors just want the holdings and then are happy to let the stinker, Yahoo's original business, just go away. At the moment the market assigns the core business a negative valuation so it's beyond a stinker, it's an anti-company offsetting the value of investment holdings elsewhere under the corporation. It's a real mess.
1. Executives generally don't want to have separate companies. Having it all under their purview gives them more power and control.
2. Shareholders often want separate companies, especially when they perceive one division as being much more valuable than the rest. With separate companies, they can own the profitable division but not the others.
The balance of power between these two groups is why ends up dictating what happens. This is why Google was able to turn into Alphabet (a single company) instead of spinning off their non-core assets (as some shareholders desired). Unfortunately, Yahoo executives just don't have the clout to hold together any longer. The market thinks Yahoo's assets have negative value: the only thing propping up their stock is their investments, and shareholders want to hold those investments by themselves.
Usually there would not be a parent company but two separate companies (Google is a special case).
Yahoo's case is again very different; it's about avoiding tax rather than anyone else. The Alibaba stock that Yahoo currently holds is worth about $20 more per-share to Alibaba than to anyone else (provided it can make it into Alibaba's hands without getting taxed along the way, because Alibaba can take the shares off the market, whereas anyone else would (ultimately, one way or the other) have to pay the $20 of tax liability that they come with). So the puzzle is to find a way to allow Alibaba to buy those shares without having to buy the rest of Yahoo (which it evidently doesn't want to) and without doing anything that will constitute a taxable event for those shares.
In HP's case, the idea was that the shares in the enterprise company were depressed by worries about the viability of the PC/printer company. In Yahoo's case, the problem is that Yahoo's core business has little or no value (ie it's not reflected in the price of the shares) compared with the value of its shareholdings in Alibaba and Yahoo Japan.
In Google's case, it's currently just re-arranging deckchairs. However, the underlying problem is that Google's share price reflects Google Search, and does not reflect all the other businesses that now come under the Alphabet umbrella.
Trust me, you will thank me later. :)
given that we now know the postscript (or at least much of it)
did that multiple make any sense?
Google has beaten them at search, maps, email, and news. And their homepages is still confusing web 1.0 jumbled mess.
What do people still use Yahoo for anyway?
First, while Yahoo's core "portal" business model was losing market share to search (i.e. Google) the overall market for online advertising was growing rapidly which masked it's weakness for many years.
Second, it invested it's huge early profits into the growing Internet both in the US and internationally. Most of these investments were failures but two were HUGE successes: Alibaba and Yahoo Japan.
Yes, Yahoo is a declining platform but still has millions of users for all of the things you list. Like it predecessor AOL there is a very long tail as people are creatures of habit and don't like to change email or start page, etc.