
Yahoo Board to Weigh Potential Sale of Internet Business, Sources Say - coloneltcb
http://www.wsj.com/articles/yahoo-board-to-weigh-potential-sale-of-internet-business-sources-say-1449015461
======
reeboo
Let's say the first domino falls and they decide to sell. Next Google buys
them and converts all Yahoo! search traffic to Google search traffic. That
leaves Mozilla in a really odd spot. Most of their revenue comes from Yahoo!
so they would eventually have to either go back and make a deal with Google or
move over to using Bing as their default.

Search engine competition gives Mozilla an upper hand at the bargaining table,
this could be not great for them.

~~~
ekianjo
Wouldn't such a merger be prevented by anti-trust laws or something?

~~~
reeboo
I don't know. I'm not a lawyer.

~~~
late2part
Neither do the lawyers, usually.

~~~
dmourati
[http://www.unclaw.com/chin/teaching/antitrust/herfindahl.htm](http://www.unclaw.com/chin/teaching/antitrust/herfindahl.htm)

disclaimer: recovering attorney who studied this in law school long ago. no
longer practicing.

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colmvp
> Activist investor Starboard Value LP last month called on the company to
> halt its Alibaba spinoff and instead find a buyer for its Internet business.
> In a letter to Yahoo, Starboard said its position changed following the
> federal government’s decision not to rule on whether the Alibaba spinoff
> would incur billions of dollars in taxes.

Does anyone know anything about Starboard Value LP? What is an activist
investor? The term itself screams adversarial. Do all CEO's have to deal with
this? I can't imagine having to both plan how to pull a company out of the
water and have to deal with people outside of the company who think they know
better.

~~~
apocalyptic0n3
An Activist Investor is an investor who purchases a not-insignificant stake in
a company in order to pressure the board into making a decision that will make
that investor a lot of money, generally in a very short period of time. The
high-profile investors tend to want to shutter the company completely or to
downsize immensely. Basically gut, maximize profits for a quarter or two, and
sell.

Biggest example is probably Carl Icahn. He's well known in the tech world for
trying to do these types of things to Apple, Netflix, and Dell. Not sure about
the others, but Netflix actually has a Carl Icahn rule that prevents any one
investor from gaining too much control. If I remember correctly, Icahn sold
his stake almost immediately after the rule was put in place.

~~~
sharkweek
Netflix adopted a poison pill
([http://money.cnn.com/2012/11/05/technology/netflix-poison-
pi...](http://money.cnn.com/2012/11/05/technology/netflix-poison-pill/) \-
more professionally labeled a shareholder rights plan) to prevent Icahn from
getting too crazy; he was basically threatening to make Netflix acquisition-
bait. Icahn recently sold off his Netflix stake, but managed to make a
ridiculous amount of money as the company saw some solid growth while he held
a position.

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Analemma_
Reminder: in 2008, Microsoft offered to buy Yahoo for $45 billion, and Jerry
Yang turned them down. Whatever they get for the core business (which, as
jonkee says, the street thinks is worth nothing), I'm guessing it's going to
be a lot less than $45 billion. something something looking a gift horse in
the mouth.

~~~
guelo
Microsoft has probably burned in that neighborhood to get Bing to where it is
now, they probably would have been better off if they had been able to close
that $45b deal.

~~~
smt88
That's an unreasonably high estimate, and there is some data to support the
idea that it's unreasonable[1].

Microsoft has been losing, at most, a few billion[2] a year on Bing. Assuming
they've spent $45B since 2009, that's $6.4B per year spent on Bing. A net loss
of $2B on Bing would mean Microsoft is making $4.4B per year, which isn't in
the ballpark.

1\. [http://www.businessinsider.com/chart-of-the-day-microsoft-
on...](http://www.businessinsider.com/chart-of-the-day-microsoft-online-
operating-income-2012-10)

2\. [http://hal2020.com/2013/01/18/about-that-2b-annual-loss-
from...](http://hal2020.com/2013/01/18/about-that-2b-annual-loss-from-
microsofts-search-business/)

~~~
guelo
Even if the real number is only in the $20-30B range I'd still consider that
"in the neighborhood" as I said. And they would have had a much stronger start
by not having to build a brand from scratch.

~~~
smt88
I take your point, but I want to add a couple more things.

Buying a company costs a _lot_ more than the purchase price. Due diligence,
regulatory compliance, legal expenses, HR expenses, lost productivity due to
changes, employee turnover, and other factors put a huge premium on top of
that price.

Plus, a company that you buy has its own cash-flows, assets, and liabilities,
and those might be costly, too. It's not always a good idea to buy a ship
that's slowly sinking.

I think Microsoft has done incredibly well without Yahoo, and it's also using
Bing in interesting ways that don't require direct competition with Google
(powering Cortana, for example).

~~~
jacquesm
You forgot break-off risks related to the buyer.

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gcb0
here's the reason why every six months you read this same headline:

previous yahoo investors invested with almost zero dividends. that means,
yahoo kept all its profits.

now yahoo is still profitable, it's just not growing as fast as the
competition. those money reserves are still in the bank.

new investors think they can just pony up a few dollars for YHOO shares, pay a
magazine to say yahoo is worth nothing, and convince the board to force a
sale.

that would then expose those big money reserves to the current holders, giving
them instant huge profits for nothing.

and this is the reason you see that every six months.

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SCAQTony
They have a robust delivery platform. I have no idea why they don't hire a
notable CEO and entertainment team snatched from the entertainment industry
and start producing content like Amazon.

~~~
cwyers
Is there any evidence that Amazon's original programming is anything more than
a loss leader to sell Prime subs and increase the amount of stuff people buy
through Amazon? Loss leaders only work when you have some sort of gain
follower to go with it.

(And they DID try this, with Community and Other Space.)

~~~
SCAQTony
I am sure it did lose money but the series is still an asset, much like rental
property. Breaking Bad, The Shield, Mad Men will be making money for years in
streaming, syndication releases, and whatever technology is next. Breaking Bad
and The Shield cost more than the advertising dollars brought in but they are
profitable now.

------
jacquesm
Nice to have a board that leaks like a sieve.

~~~
rdtsc
Agile board!

~~~
jacquesm
Move fast and break stuff...

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pbreit
This is the third #nottheonion article today. "Ford considers selling off car
business".

~~~
rmason
Where did your read that? It would be really huge news here in Michigan.

~~~
nkozyra
I think the joke is "isn't that all they do?"

Obviously it's not true for either company. Like any corporation that big the
revenue sources are diverse.

~~~
rmason
Well in the case of Yahoo I think that it is only a matter of time. You could
buy Yahoo, sell the shares in Yahoo Japan and Alibaba and end up with Yahoo
for free and have a couple of billion dollars in the bank to boot. This is a
takeover artists dream deal.

------
aikah
It's interesting that they are talking about the Board directly and not
Marissa Mayer. Is it common for the press to do so ? Isn't the CEO like the
spoke-person of the board of investors ? Why would the board side step the CEO
that way in the media ?

~~~
smt88
> _It 's interesting that they are talking about the Board directly and not
> Marissa Mayer_

They're talking about something the Board, and not Marissa Mayer, is doing.
Marissa Mayer is not deciding these things. There's no reason to bring her up.

> _Is it common for the press to do so ?_

It depends on the situation. If the Board is doing something, the media talks
about the Board. If the CEO is doing something, the media talks about the CEO.

The first confusing exception is when the CEO owns most of the company, which
makes the Board irrelevant. This is the case with Facebook: Mark Zuckerberg
owns the majority of voting shares, so he has absolute control over Facebook.
The Board has no power to overrule his decisions as CEO.

The second confusing exception is when the CEO and Chairman of the Board are
the same person. This was much more common in the past.

> _Isn 't the CEO like the spoke-person of the board of investors ?_

No, unless the CEO is also the Chairman of the Board. The CEO can have very
conflicting opinions and actions compared to the Board.

~~~
jacquesm
> The CEO can have very conflicting opinions and actions compared to the
> Board.

Which usually does not end well for the CEO.

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jonknee
Wall Street was valuing the web businesses as worthless so this should be
interesting (Yahoo's total market cap was about equal to its remaining stake
in Alibaba). Shares are up 5% after hours on the news.

~~~
speeder
Actually many times Yahoo had negative valuation (ie: Yahoo market cap was
lower than Yahoo shares in Alibaba, thus if you discounted Alibaba value,
Yahoo had negative value).

~~~
jonknee
There are still big tax issues with the Alibaba stake so that definitely has
something to do with it. If they can get it to be a tax free spin off the
value should increase quite a bit.

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frik
The most stupid decision was to stop their own search engine based on Hadoop
(Yahoo run the largest Hadoop cluster ~ 2009). Nowadays Yahoo could run their
own cloud hosting platform, etc.

~~~
toast0
Stupider than deciding to shut it down and outsource to Bing was outsourcing
and not shutting it down. (outsourcing to Microsoft was a poor decision as
well: Microsoft did about as well for Y! as Y! did itself with less
flexibility; but outsourcing to google again was nixed by regulators)

~~~
mkagenius
Search still is a significant source of revenue and growth for them.

1\. [http://adage.com/article/digital/yahoo-s-display-search-
reve...](http://adage.com/article/digital/yahoo-s-display-search-revenues-
growing/298173/)

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jbrad7354
What are they without the "internet business"?

~~~
762236
Compelling investments in Alibaba and Yahoo Japan.

~~~
jbrad7354
Yes, but what's the point of existing?

Sell the investments, return money to all shareholders. Bye bye Yahoo.

~~~
harryh
If they sell the investments they have to pay taxes on the gains. These tax
issues are the driving force behind everything going on at Yahoo right now.

------
ryporter
The idea makes a lot of sense, but why can't Yahoo! simply spin off their core
business? They ran into troubles spinning out the Alibaba stake, but spinning
themselves out would split their valuable Asian assets from their core
business, which has an implied negative valuation. Would the IRS frown upon
them leaving behind what is effectively a holding company?

------
netman21
What I can't understand is why they already spun off Yahoo Small Business to
the holding company for the Alibaba stock, Aabaco.
[https://www.aabacosmallbusiness.com/](https://www.aabacosmallbusiness.com/)

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andy_ppp
I've always thought of companies as mining a local maxima of their solution
space.

Whatever you say about Yahoo! They are extraordinarily successful at
extracting the maximum revenue for display advertising. I'd let them sell
display ads for me.

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jordache
oh no! please keep yahoo yql finance api up and running! i need that data feed

~~~
Nicholas_C
Yahoo Finance is the only reason I ever go to Yahoo. I feel like they could
beef up their finance news and products and do something with that.

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mydpy
Bah paywall.

~~~
shawndumas
scroll to the top and click 'web'

~~~
mydpy
Yeah, thanks. I was impatient last night. :-/

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pjzedalis
Steve Ballmer will buy Yahoo after all.

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voltagex_
Goddamnit, time to migrate everything off Flickr. Anyone got good
alternatives? I only need ~50GB of space.

~~~
jameslk
I've been really happy with 500px. Their interface is quite pain-free to use.
They're more geared towards photographers looking to host their portfolio

~~~
pmlnr
I'm having issues with both the philosophy and more, the forced square cuts of
500px.

Also: [http://www.naturephotoguides.com/blog/photo-consumption-
conf...](http://www.naturephotoguides.com/blog/photo-consumption-conformity)

~~~
jameslk
I agree with the popularity aspect being sort of a pissing contest. As for
your concern regarding the forced squares--I assume you're talking about the
layout of portfolio photos--they seem to have moved away from that a bit, with
wide landscapes being more reasonably displayed. They actually updated a bunch
of their UI as of late. It's not the ideal service but unfortunately I don't
know of any other options that are much better overall as mentioned in the
piece you linked.

