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Some technology giants now spend their days designing the car driver or building virtual worlds. In Yahoo, the big problem that took their leaders this year, worked as an offshoot of its stake in the Chinese Internet business without racking up a massive tax bill.
The fact that the Silicon Valley company, whose roots date back to the earliest days of the network stuck clarify the accounting tricks is a sign of how dire the situation is at Yahoo. Another sign: One of its largest shareholders suggests that Yahoo essentially give up completely and just become a Shell Company for the valuable card in the Chinese e-commerce giant Alibaba
The last sentence can now win the day .. On Tuesday afternoon, CNBC He said that Yahoo give up its plans to spin-off Alibaba and instead look at the disposal of its business history and become, in fact, holding. Yahoo can announce tomorrow the decay of spin-offs, according to CNBC.
So what happens to Yahoo? Here are some things to know about the current state of the company.
1. Some say that Yahoo itself is worth nothing or less than nothing, but this is an exaggeration
Here’s the deal. Yahoo, the current market value of about $ 32.9 billion.
This is much less than the cost of the things which he possesses. Shares Alibaba Yahoo, worth about $ 32400000000, and its share in Yahoo Japan is worth about $ 8.7 billion. It also has $ 1.3 billion in cash and about $ 5.5 billion in other securities, and $ 1.2 billion debt. All that adds about $ 46 billion
Thus, if the market estimates Yahoo’s $ 33 billion, does that mean the actual business Yahoo -. Web sites, applications, digital advertising tech – it’s worth less than zero?
Not at all – and that’s when the tax issues come into play. Investments in Japan and China Yahoo, the value of all the mass gained over the years, and all that is taxed when it is sold. According Hedge fund Starboard Value tax bill for shares Alibaba put its true value to the shareholders for about $ 19.6 billion share of Yahoo Japan will cost about $ 5.3 billion.
Once you take these taxes into account, it is more similar to Yahoo investors assess its actual business in a little more than $ 2 billion. This figure, which was supported by activist investors Starboard Value, as well as analysts and Nomura Pivotal Research.
2. The current plan Yahoo, to avoid the tax question completely
is planned to create a new holding company for its very valuable Asian investments to current Yahoo shareholders receive equal shares in the new business.
If it goes according to plan, the spin-off would include any tax not paid for time being – the shareholders will be liable for the tax bill, if and when they decide to sell. But the IRS has to approve the deal, and it took a skeptical still, refusing to pre-approve it.
officials questioned the strategy of using Yahoo to avoid taxes on the transaction, which includes including the “operational” company token among the assets to be identified – in this case, small businesses and sales unit Yahoo. Uncertain about how the IRS will consider the case is the uncertainty surrounding the potentially massive tax bill.
“Yahoo is the only company in Silicon Valley we know that the current share price has almost entirely due to the amount of the item out of his control,” says Starboard Value, in his letter of November.
Jack Ma, chairman and founder of Alibaba.
STR / AFP / Getty Images
3. But some offer a Plan B
concept: Instead of getting rid of an extremely valuable asset and a decrease in the core business of maintaining, as a fulfillment of the other way around …
Some, including Starboard Value, stated that the uncertainty regarding the tax is reason enough to consider to get rid of the business, we know how to “Yahoo” and the current transformation into a holding company for shares of car Alibaba and Yahoo Japan.
Under this deal, the core Yahoo business will need to either sold to a new buyer or isolated into a separate public company.
4. The core Yahoo business is still quite large. But it is in decline
Yahoo’s core business, while not actually grown in years, was able to knock down $ 4.3 billion in revenue over the past 12 months, when you take money Yahoo holds drive traffic to its sites. About $ 1.7 billion of which came from the search and display advertising.
Twitter pulled in $ 1.9 billion in revenue in the last 12 months and suffered a loss in the same period. He still valued by investors nearly $ 18 billion, because investors are optimistic about the future :. Twitter Revenue grew by 58% last year, while as Yahoo, declined by 8%
“core business Yahoo, in a seemingly permanent reduction,” said a leading analyst Brian Wieser, who value it at $ 1.9 billion.
Nomura expects the company’s revenue to decline by 8%, and then smooth over two years because advertisers to abandon the old-fashioned display advertising that Yahoo is still heavily dependent on.
Market research firm eMarketer predicts that the market share of Yahoo’s digital media advertising in the US will fall from 4.6% of the display advertising market of the United States in 2014 to 3.9% in 2015, while Twitter will increase from 5% to 5.9%.
In mobile advertising, where Yahoo has invested billions of dollars, time and management attention, eMarketer projects Yahoo will fall below 3% market share this year and continue to fall in 2017, getting behind the Twitter and littered with Google and Facebook.
5. In other ways, Yahoo is still a giant
There may be cooler kids on the block these days, but Yahoo still has a massive online presence.
According to ComScore, Yahoo has a global audience of 618 million – the fourth largest of any company, second only to Google, Microsoft, and Facebook. In the US, 211 million desktop and mobile unique visitors to Yahoo make it the third largest place after Google and Facebook.
“Our total network, including Tumblr continued to serve a global user base of more than 1 billion monthly active users,” said Yahoo CEO Marissa Mayer was the last call came. Facebook, by comparison, has more than 1 billion [19459012ezhednevnye] active users. In terms of numbers of two comparable :. Yahoo has 10,700 full-time employees, while Facebook has about 12000
net income of Yahoo, slowly declining since Marissa Mayer took over in 2012
Yahoo / SEC / Via yahoo.com
6. And Yahoo is still spitting out a lot of money
Nomura expects to have $ 832 million Yahoo in earnings before interest, taxes, depreciation and amortization in 2016, which means that investors value the company at about 2, 6 times forward earnings.
When AOL acquired Verizon’s this year for $ 4.4 billion, a deal valued AOL about 8.5 times its projected 2015 EBITDA earnings.
In this case, Verizon was Placing great importance on investment at AOL digital advertising, something the telecom giant will increasingly need in the future. Offered another leading telecommunications company, or even Verizon, can be a buyer for the Yahoo. “The big question is, will anyone actually show a substantial rate,” Weiser wrote.
7. There are some likely buyers, if Yahoo’s sale of
Investors in the stock market, as a rule, do not like the company, whose revenues and earnings decline – Yahoo’s stock by 32% this year – but it can be useful as part of another company, or in the hands of private owners of content to squeeze all the profit is.
code Wall Street Journal reported, citing anonymous sources that Verizon, IAC, News Corp, and Time Inc. “Is likely to” investigate buying some or all of Yahoo, if the company will be offered for sale.
“It is possible that private equity firms will find value in the core of Yahoo, a business,” team Analysts at Nomura said in a note last week. Among the buyers of private equity Re / code, citing anonymous sources, reported that TPG will be “the most serious” of those potentially considering a proposal.
And if they do not reduce the price of the old business, what new thing is there for someone to buy?
Maybe a big, splashy social media platform Tumblr, like Yahoo, which recently bought for $ 1.1 billion, or video advertising platform (BrightRoll, acquired for $ 640 million), or e-site Commerce (Polyvore, about $ 200 million), or maybe even a preliminary little business live streaming NFL games.
“Grace for Yahoo is that it still has a relatively large user base … and still relatively strong (and still relatively high) sales team,” Weiser wrote in his note. “While both of these factors remain in place, it would be time for the acquirer to establish new strategies and develop products while real estate continues to generate cash flow.”