Yahoo to Reconsider Sale of Web Business Instead of Spinoff
bloomberg.com
bloomberg.com
The effect of the messaging is usually that the company implements some of the changes themselves to avoid being forced or ousted, which also usually leads to short-term stock gains, which is what the activist investor was after in the first place.
If the business is ad-supported, a bigger player can negotiate better rates for their combined inventory, a smaller player is relegated to AdSense and similar.
True, but I guess this is true for all startups. And the reality is, for a bunch of guys and gals working out of a garage you don't need a lot of that stuff until you are actually successful.
> how many of these tiny pieces would generate enough cash flow to sustain themselves a few years down the road
Not many, and I guess that is the point. You are giving the worthy parts of Yahoo the freedom to succeed, while letting the dead wood go to dust. It seems the alternative is watching the whole thing die a slow death and there will be nothing left at all (apart from the not-really-Yahoo Alibaba and Yahoo Japan).
Because if you spin off say, Mail, News and Games from Yahoo, all have depended on the yahoo.com domain name for their SEO and traffic.
Could news.yahoo.com do well if it lost all its rankings because its domain name was kept by the remains of the main company? What about Yahoo Mail? It's likely one of the more popular parts of their business, but if it was spun off, then everyone would likely lose their email address. Not great for existing users.
Flickr and Tumblr could easily return to being independent though.
It feels like there is nothing much left outside of the web business unless I am missing something. May be the Baba shares?
Just imagine a $20bn seed fund and the type of companies that could be funded. Startups in more difficult industries that need a larger upfront investment (genetics, pharmaceuticals, aerospace, etc.)
I have an extremely paltry amount of Yahoo stock (5 shares) that I bought on a whim in 2014. This is the only investing I've done outside of my company 401k. I know absolutely nothing about investing. What the heck should I do with it at this point?
Its current worth is about 5*$30.63 ~= Not much.
So best advice is to sit on it and do nothing... and when you're bored, go to www.investopedia.com and read up about how stock markets work - it will come in useful in future!
If you had 5000 shares I'd probably say the same thing -- this was already priced into the stock and almost all of the value in the stock is the Alibaba holding.
If the stock is up from when you bought it, maybe I'd say take some profit off the table, but honestly a sale of Yahoo's web business would probably increase the value, but who knows.
I personally don't invest in tech stocks because they're too volatile. :)
Or skip that and just stick to index funds in the future. Also, check your 401K and make sure the expense ratio is low compared to something like a Vanguard index fund. If not, make some noise.
If the shareholders don't like it, they can sell their shares and try investing in another crappy internet portal that burns money. Shareholders have no right to complain about their companies' actions AFAIC; if you don't like the way the company is run, sell your shares. You're not the owner of the company when you own 1-millionth or whatever of it. The only people who have a right to push for a change in the corporate direction are the members of the board of directors. Everyone else is nothing more than in investor, basically just a gambler.
The activist investors in question believe that changing strategies will return more capital back to them than they can get by selling their shares today.
> when you own 1-millionth or whatever of it
Starboard owns closer to 1/100th than 1/1,000,000th of Yahoo.
There is no single "owner" of a public company. Everyone who holds voting shares holds a share of ownership. Anyone is free to try to convince anyone else to vote their shares a certain way. Ultimately the board serves at the pleasure of the shareholders collectively, and that is exactly how activist investors like Starboard work.
So yeah, if you have enough shares that the board really wants to listen to you, complain away. For most people though, that's a waste of time. Just sell your shares and move on. The board doesn't give a rat's ass about some people who just own shares through their retirement funds, only what really large investors want, as those people have the power to affect their position on the board.
Uh...it's the complete opposite. First, anyone has the right to complain about anything. But shareholders (i.e., owners) are practically obligated to weigh in on the actions of things they own.
Maybe, but the rest of us have the right to make fun of those people for tilting at windmills.
This concept of US-Investors is known as "Cricket Plague Investor" (Heuschreckeninvestor) in Germany.
It wasn’t "at market rates", it was far above that, and just intended to bleed out every piece of property from the company and transfer it as profit to the investors.
A year ago, Yahoo announced that they would spin off their stake in Alibaba (around 30B). Somewhere along the last year, it was determined that the spinoff might incur a huge tax bill, costing shareholders a few billion dollars. Last month, they decided to do a reverse spin-off. Instead of spinning off Alibaba, spin off everything else (which is only worth a few billion). The tax bill on 4B is much less than the tax bill on 30B.
In other words, all that would be left after the spinoff is an Alibaba holding company.
This creates friction with investors. They'd like access to the value of those holdings without them being used to fund what they see as a losing wager. That's why Yahoo in worth $12b less than the value of their assets.
By spinning off Yahoo, people who don't think it to be a losing bet could invest in it. They think that with time they could turn it around into a sellable asset worth considerably more than if they sold it today. But investors currently don't want to wait for that to happen because they don't like the management team and think they'll just hemorrhage money.
EDIT: I've previously said on HN that I'd like to buy Flickr and roll it into a benefit corp/non-profit sort of deal. I firmly believe that Pro users can pay enough that Flickr can self-sustain itself.
Integrate with Tumblr has a good upshot - browsing Flickr picture is kind of dull. If you have a Medium-like site for photo publish, you can create a web photo magainze!
The one - on Tumblr is all the custom themes. IDKY, but Medium just looks better for readers. Yahoo needs to make Tumblr for high quality posts, but Tumblt started out with teens, mostly asks, gifts and quotes. Now really just about reblogging every day and like I said I keep seeing the same stuff reblogged every day.