Featured Content

TRIPLE YOUR MONEY IN A MONTH!

TRIPLE YOUR MONEY IN A MONTH!

Still worried about the economy? Become an elite charter member of George's DAILY PROFITS and you could... TRIPLE YOUR MONEY IN A MONTH! George gave us the $2.8-billion IT infrastructure provider, up 4,745.20%; the $1.8-billion advertising agency, up 1,295.44%; and the $762 million business software company, up 1,213.19%. Only charter members can follow George daily. Learn how here!

Will Microsoft Attempt to Buy Yahoo Again?

By

Microsoft Attempt to Buy YahooLong-term investors in Yahoo! Inc. (NASDAQ/YHOO) are not shedding a tear for founder Jerry Yang on the news that he has resigned from the Board of Directors and all other positions with the firm. They bitterly remember the news on February 1, 2008, that Microsoft Corporation (NASDAQ/MSFT) had announced an offer to buy Yahoo! for $31.00 a share, valuing the company at $44.6 billion, which Yahoo! later rejected. Since then, shares of Yahoo! have never come close to the offer price.

At the time, it was discussed extensively that Yang was the hold-out against Microsoft’s offer. In the area of Internet-related stocks, Yang thought Yahoo! could go it alone and succeed. He was wrong. But since he’s now gone, does this represent a buying opportunity in Yahoo! or one of the other Internet-related stocks?

Let’s take a look at some recent developments in Yahoo!, what the company’s pieces are worth, and what the most likely scenario will be. Yahoo! has recently added a new CEO, Scott Thompson, who was formerly the president of PayPal, part of eBay Inc. (NASDAQ/EBAY). He has extensive knowledge of online payment systems and international development. Although he does not have direct experience with search and advertising, he does have knowledge of Internet-related stocks working with a firm that is a global leader in payment processing.

But as good as Thompson is as an executive, he might not be able to generate enough of an increase in revenue to justify Yahoo! as a buying opportunity. Don’t forget; prior to Thompson, the Board brought in Carol Bartz, former CEO of Autodesk, Inc. (NASDAQ/ADSK). She ran a very successful firm, but also was not directly involved in Internet search and online advertising. Her reign was definitely not a buying opportunity.

The pieces of Yahoo! are very interesting. Yahoo! has a 40% stake in Alibaba Group Holding Ltd. and a 35% stake in Yahoo! Japan. These are very valuable entities. Some estimates have these as a buying opportunity, valued together in the $18.0-billion range. The current market value of Yahoo! itself is $20.0 billion, which includes these pieces and $2.0 billion in cash on hand.

At a $20.0-billion value for Yahoo!, the core business is valued at zero. While it’s not a top-notch Internet firm like Google Inc. (NASDAQ/GOOG), there is some value in having 700 hundred million users. A firm like Microsoft might want to buy some of the pieces, especially Yahoo! Japan. Microsoft search engines have a market share in Japan of approximately 1.7%, compared to over 51% for Yahoo! Japan. Microsoft has a ton of cash on hand and needs to find growth somewhere. Adding Yahoo! Japan might be a great fit and a current buying opportunity. Even the U.S. share of searches for Yahoo!, approximately 14.9%, would be a nice addition to Microsoft’s search engine market share of six percent.

The Yahoo! stake in Alibaba is thought to be sought by the parent company itself. Rumors have been swirling that Alibaba might buy Yahoo! outright. One thought to consider: Thompson the CEO of Yahoo, comes from PayPal. Online payment processing is his specialty, not web search. Perhaps he will work to combine his skills with a partnership between Yahoo! and Alibaba. Alibaba is a global Web-based firm that provides a business-to-business marketplace.

No matter how you slice it, Internet-related stocks will be sure to have some sort of shake-up within the next year. It’s very hard to predict the future of any industry, but if you thought that Yahoo! might sell off pieces or itself as a whole, then I would step in and see this as a buying opportunity. Until then, I would be cautious, as Yahoo! continues to lose market share in its core operations.

Something has to be done. This is why new management was brought in and I don’t think Thompson will stand and watch the company slide into oblivion without some drastic action. The year 2012 should be an interesting year for Internet-related stocks!

Premium Content

Secret "New Swiss Bank Account" Safest Way to 44% Returns

Secret

It's the safest—but, until now, completely ignored—place for your money. Because these elite "bank accounts" pay guaranteed 5% cash payments per annum on top of returns on capital exceeding 44%... Learn all about them here.

About the Author, Browse Sasha's Articles

Sasha Cekerevac, BA Economics with Finance specialization, is a Senior Editor at Lombardi Financial. He worked for CIBC World Markets for several years before moving to a top hedge fund, with assets under management of over $1.0 billion. He has comprehensive knowledge of institutional money flow; how the big funds analyze and execute their trades in the market. With a thorough understanding of both fundamental and technical subjects, Sasha offers a roadmap into how the markets really function and what... Read Full Bio »

Exclusive profit Confidential Presentation

Secret Retirement Plan Pays Up to $12,160 a Month?

Secret Retirement Plan Pays Up to $12,160 a Month?

A select group of Americans are retiring with a little-known retirement plan whose advertisement by its issuers is censored by Congress... Yet this plan enables Americans to potentially collect up to $12,160 in monthly income that's sponsored entirely by large-cap American companies. These secret Sponsored Retirement Plans are trumping social security by up to 10 times. And unlike mainstream retirement plans like 401(k)s or IRAs, SRPs are ideal for people who want to start with very little money. You could begin your SRP with as little as $10, $50, $100 or $400. To see real-life stories of folks who've built hundred-thousand-dollar portfolios thanks to SRPs and how to get your own plan started today, click here now!

×