Alibaba Raises $21.8B in Initial Public Offering
nytimes.com
nytimes.com
YHOO market cap : 42.3bn
+ liabilities : 3.7bn
= 46bn (to own outright)
Cash on hand = 1.1bn
+ Other assets = 15.3bn
+ Cash from Alibaba sale = 8.3bn
+ Value of remaining Alibaba stock = 22bn
+ Value of Yahoo Japan stock = 9bn
= 55.7bn (of value, if you can unlock it)
However, $17bn is a pretty big window of error, and this isn't even taking into account the crazy notion that you could keep running the actual business. It has revenues of $1bn a quarter, nothing to sneeze at.
Is it? Sell everything else at accounting value and realize a little under half price on the combined Y! Japan and Alibaba stock, and suddenly you are merely breaking even.
> and this isn't even taking into account the crazy notion that you could keep running the actual business. It has revenues of $1bn a quarter, nothing to sneeze at.
Revenues aren't profits. And Yahoo's net income is all over the map ($1.37B in 2013, $3.95B in 2012, $1.05 in 2011) -- there's no clear trend in the value of running the business, and I think one of the reasons Yahoo stock is so apparently undervalued given a simplistic look at assets and liabilities is the market doesn't really think Yahoo! has much of a roadmap for running the actual business.
That year they sold some $BABA, that's why the revenue was higher.
This becomes particularly interesting if I can buy $100 of gold bars for $50. Even if I can't sell them, I can use them to my advantage.
My point wasn't that you can turn stock into cash, but that you can turn stock into some of the same things that large amounts of cash might be used for -- acquisitions.
2) Secondly, companies routinely do secondary sales in which they sell stakes of themselves far in excess of 0.1%.
It's rare for a company to do a secondary offering.
That's a keeper!
Liquidity is a high-velocity component to markets. There's more depth that the sub-OP credits the market with at the present instant. But it really can disappear fast. I think there's actually a lot less depth to US equities than most people think, over the long run.
proceeds from short term capital gains: 1,700,000,000
You missed a few digits there ;)
(minus taxes and discounts on the value, etc.)
http://online.barrons.com/news/articles/SB521330210524938232...
http://online.barrons.com/news/articles/SB521330210524938232...
> Investors now value Yahoo on a sum-of-the-parts basis. The core business could be worth $8 a share and its cash and Yahoo! Japan stake could be worth another $8 a share (assuming a full tax bite on the sale of Yahoo Japan). The 140 million shares of Alibaba to be sold in the IPO should net after taxes around $6 billion, or $6 a share. That totals about $22 a share.
> So, Yahoo's share price direction probably hinges on the value of the remaining Alibaba stake—based on the Alibaba share price—and the tax treatment of the likely sale or disposition of that stock.
> Bulls argue that Yahoo's shares could trade into the $50 range if Alibaba appreciates sharply after the IPO and Yahoo can find a way to get its remaining stake to holders in a tax-efficient way. This also suggests that Yahoo shares could find support around current levels given the value of that Alibaba stake.
I think that's your $9B profit right there.
I am not not sure if Marissa is up to the task, but they do have a legion of smart employees and an insane amount of capital. If they fail to build meaningful growth now, it's her fault.
I would never just write someone with her intellect off - but she does still have something to prove. Hopefully she can do it.
Their pre-Marissa acquisitions were almost universally wastes of time and money. It's too soon to tell about the recent acquisitions, but I don't see them making that $1bn back from Tumblr in my lifetime.
Yahoo is an also ran, constantly playing catch up and trying to emulate the successful behaviors of other companies. The negative public perception of a lot of their services in the technical community is mirrored inside the company, and there is nothing anyone can do to force positive change. Things that Google and Facebook and others announce were projects 3-4 years ago inside Yahoo, that never launched. Once you see that happen a few times, you get sufficiently disillusioned and leave. I don't think for all of Marissa's impact that this has fundamentally changed.
For example: Yahoo employees have to use Yahoo Mail for all of their work e-mail. The web interface only, with ads. It's a great exercise in dogfooding, IF you commit to rapidly iterating on the product to make it best of breed for your employees (not to mention real users). But that will never happen at Yahoo, there is no will to make an excellent product for a technically demanding audience.
Now your employee productivity suffers, which means every other product in the company suffers. Eventually you will have to let them go back to using e-mail the way they want to or they will find a way to screen scrape the messages into fetchmail in order to get back to work.
That seriously leads me to ask me what the fuck the engineers are actually doing there if they're not improving a core product.
That is... terrifying. No wonder smart people leave.
I don't know where you got this from, if it was true but no longer isn't, or if it's only true in parts of the company, but I was just there for 13 months after an acqui-hire and no one ever made me or anyone on my team use Yahoo Mail.
Yahoo corp mail was previously Exchange (!). Also awful, but at least it supports IMAP.
Try adding about 25% to 40% as a premium.
There went your calculated profit.
Who'd want to buy stock from a company firing everyone and shutting down?
It's a common problem in the stock market when you find stocks selling for less than your analysis of liquidation value. You may be right that at this snapshot in time, that's actually the case. But since you're a minority investor without control, you can't force a liquidation or breakup of the company at your convenience.
http://online.wsj.com/articles/alibaba-ipo-to-give-yahoo-win... http://blogs.wsj.com/digits/2014/07/21/how-yahoo-could-skirt...
YHOO market cap : 41.86bn
+ liabilities : 3.7bn
= 45.56bn (-0.44bn)
Cash on hand = 1.1bn
+ Other assets = 15.3bn
+ Cash from Alibaba sale = 8.3bn
+ Value of remaining Alibaba stock = 37.7bn
+ Value of Yahoo Japan stock = 9bn
= 71.4bn (+14.3bn)
If people are so negative about Yahoo that they would rather leave $25bn laying on the ground rather than be associated with them, I think Yahoo has an insurmountable obstacle to future success.
More seriously, the Economist put a valuation at $55-$120b. This puts it at $168b. Or 9 WhatsApps. The IPO was expected to raise $20b, so this is really good.
It took 3 years after founding in 1998 to reach profitability.
It defies most conventional notions of a startup, despite having started in somebody's apartment. It's unbelievably unfocused, it does pretty much every kind of business you can do on the Internet.
It might be one of the first Asian-style conglomerates to be born on the Internet.
There are plans for it to open brick and mortar stores.
It defies the Silicon Valley notion of startup. China's internet market is still new, and Alibaba is like Yahoo in the old days - it does everything online.
Hopefully it doesn't turn out like Yahoo.
Apple generates ~1,000% more net income than Alibaba (projected 2014).
Amazon has about ~900% more revenue than Alibaba.
Apple has about ~2,000% more revenue than Alibaba.
eBay does 100% more in revenue than Alibaba
Yahoo made the super wise decision to buy part of Alibaba a few years ago, and now the whole Yahoo is worth nothing more than its share of Alibaba!
That's because Jack Ma is unbelievably focused.
This is standard in China, as well as other Asian nations, which have high-context cultures[0]. People in high-context cultures value familiarity more than people in low-context cultures. What we see as a lack of focus is seen by Chinese consumers as part of Alibaba's value proposition.
0: http://en.wikipedia.org/wiki/High-_and_low-context_cultures
The reasons for Alibaba's success might have more to do with the unique political and economic conditions that obtain in China than any special feature of the Chinese consumer mind that makes them favor lack of focus.
Do you actually know anything about psychology, or are you just talking out of your ass? Because the idea of high and low context cultures is not a recent or controversial one, and high context cultures are not all "Oriental." In fact, they can be found in southern Europe (not to mention other non-Asian parts of the world) as well.
> The reasons for Alibaba's success might have more to do with the unique political and economic conditions that obtain in China than any special feature of the Chinese consumer mind that makes them favor lack of focus.
1. Similar conglomerates exist in most other Asian nations as well, so it can't be explained away by China's politics or economics.
2. So basically you have no idea of your own as to why Alibaba is successful, other than for the vague claim of "unique political and economic conditions." If anyone is contributing to the high level of bullshit in our culture, it would definitely be you.
Personal attacks are not allowed on Hacker News.
http://www.forbes.com/sites/investor/2014/09/15/four-reasons...
If I'm reading that right Yahoo stands to triple their cash position almost overnight which today stands at around $4b.(1)
Given Marissa Meyer's appetite for acquisitions this puts them into a potentially interesting new ballpark of scale.
I highly recommend watching it. To save time, watch it on Chrome at 2x speed.
2. Click the gear icon in the bottom right of the player and change selection in the "Speed" dropdown
https://www.youtube.com/html5?gl=BE
P.S. You could easily google this!
If you're curious (I was), Wikipedia puts the Agricultural Bank of China as the largest IPO, with Facebook at number 6.
http://en.wikipedia.org/wiki/Initial_public_offering#Largest...
Includes withdrawn, priced and filed IPOs. Very clean data, straight from SEC Edgar filings.