
Alibaba Raises $21.8B in Initial Public Offering - SuperKlaus
http://www.nytimes.com/2014/09/19/business/dealbook/alibaba-raises-218-billion-in-initial-public-offering.html
======
skuhn
Alibaba going for a higher selling price just makes the continued undervaluing
of Yahoo itself increasingly hilarious. At some point, I would think someone
will want to buy them for all of this free money they have sitting around.

    
    
      YHOO market cap : 42.3bn
      + liabilities : 3.7bn
      = 46bn (to own outright)
    

Meanwhile:

    
    
      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)
    

So simply by buying them, firing everyone and selling everything in a
firesale, without even cashing those checks from advertisers, you can make
$9.7bn. Seems like a sweet deal.

~~~
downandout
No need to fire everyone. Yahoo made $38M net profit on operations last
quarter. All they would have to do is maintain their current assets and
employees and the owners get $160m/year in free cash. Then, using their
effectively unlimited supply of capital in the form of Alibaba stock, they
could make some very smart acquisitions (think for example of buying an
instagram for $1b cash and growing it to what it is today) and they could
pretty quickly be a $100b company.

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.

~~~
skuhn
They do still have some smart people, but I don't think anyone or any amount
of money can turn things around for them in any meaningful way.

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.

~~~
toyg
_> Yahoo employees have to use Yahoo Mail for all of their work e-mail. The
web interface only, with ads._

That is... terrifying. No wonder smart people leave.

------
bane
Gosh....that's barely more than WhatsApp. Woulda done better selling it to
Facebook.

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.

[https://en.wikipedia.org/wiki/Alibaba_Group](https://en.wikipedia.org/wiki/Alibaba_Group)

~~~
xux
>It defies most conventional notions of a startup... It's unbelievably
unfocused, it does pretty much every kind of business you can do on the
Internet.

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.

~~~
samstave
It sells more product than both ebay and amazon combined.

~~~
adventured
While we're having fun with numbers that don't make much sense to compare
given the differences in businesses...

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

~~~
theklub
Crazy part is how much illegal stuff they sell. (knockoffs and fakes)

~~~
rebelidealist
Its not fair comparing Amazon's revenue vs Alibaba. Alibaba doesn't sell
products they take ad fees. Which means the product price itself isn't part of
the revenue. It is more fair comparison with Ebay's revenue numbers.

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piettro22
Well....you guys have to look at the bigger picture: Alibaba was rejected by
HK stock market the first time around, then Jack decided to take it to NYSE.
Of course 21B is nothing in comparison to the other big brothers like
Facebook, but ask yourself this question: what really is Alibaba doing in
China? For one, Alibaba is about trading on the international scene, and its
seed Taobao is like eBay China version; then they are into car manufacturing
as well, not to mention Alipay being the paypal of modern day
China....clearly, that 21B he raised can't even cover a lot of the
expenditures for development. What Jack really is doing is to get his company
that global recognition. Any of you can name ONE brand/company that based in
China on top of your head? Well, that's what Jack is trying to do. You think
he's unfocused? How about this: for someone who owns the e-commerce platform
of the world's 3rd biggest country, he is utterly focused on becoming "China's
international brand." Don't forget, China is the jumping board, and Jack is
the pioneer. Once he claimed first, who will remember the ones from the
subsequent ranks?

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pstrateman
This seems like a pretty bad deal for foreign investors.

[http://www.forbes.com/sites/investor/2014/09/15/four-
reasons...](http://www.forbes.com/sites/investor/2014/09/15/four-reasons-to-
avoid-the-alibaba-ipo/)

~~~
saym
I don't know why more people aren't talking about this. The Motley Fool guys
went over this in their podcast yesterday. I'm in full agreement.

[http://marketfoolery.libsyn.com/marketfoolery-09182014](http://marketfoolery.libsyn.com/marketfoolery-09182014)

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aresant
"[Yahoo] will have raised nearly $8.3 billion through the offering"

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.

(1)
[http://finance.yahoo.com/q/bs?s=yhoo](http://finance.yahoo.com/q/bs?s=yhoo)

~~~
RSASecure
You would have to consider the after-tax amount, which is going to be a bit
less...around $5-6 billion.

~~~
dmix
They could buy an Instagram or two.

~~~
subdane
They should buy Buzzfeed

~~~
BukhariH
This a pretty solid recommendation. Mayer has pivoted yahoo strongly towards
content and BuzzFeed is pretty much the most solid content start up out there
right now. It sounds like an obvious purchase.

~~~
cylinder
You judge a merger by how the combination will unlock new value. Just because
the business models are similar doesn't necessarily mean it's a good
acquisition. I don't see how BuzzFeed can benefit with Yahoo other than
perhaps accessing its ad sales network?

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dave1619
Here's a link to the Alibaba IPO Roadshow Presentation,
[https://www.youtube.com/watch?v=sa9R2SqZsHM](https://www.youtube.com/watch?v=sa9R2SqZsHM)

I highly recommend watching it. To save time, watch it on Chrome at 2x speed.

~~~
imjk
Sorry, how do you watch it at 2x speed on in Chrome?

~~~
karanbhangui
1\. Enable HTML5 at [http://youtube.com/html5](http://youtube.com/html5)

2\. Click the gear icon in the bottom right of the player and change selection
in the "Speed" dropdown

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jacoplane
Planet Money had a decent piece on Alibaba recently:
[http://www.npr.org/blogs/money/2014/09/03/345310125/episode-...](http://www.npr.org/blogs/money/2014/09/03/345310125/episode-565-the-
story-of-alibaba)

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baddox
> Though it did not claim the title of biggest initial public offering ever,
> Alibaba will still lay claim to having held one of the biggest stock sales
> on record, surpassing offerings from Facebook and General Motors.

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...](http://en.wikipedia.org/wiki/Initial_public_offering#Largest_IPOs)

~~~
marco1
Yet it was _America 's_ biggest IPO to date, right before Visa Inc. with
$19.7B. The other three went public in China (Hong Kong Stock Exchange).

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lurkylurk
A bit off topic: Is there a good site to keep track of all tech IPOs and
including historical data and upcoming/withdrawn IPOs?

~~~
e15ctr0n
Professor Jay Ritter of the University of Florida is a subject matter expert
in this area:

[http://bear.warrington.ufl.edu/ritter/ipodata.htm](http://bear.warrington.ufl.edu/ritter/ipodata.htm)

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vrama
Yahoo can buy 30 tumblrs with the alibaba money. That's neat.

