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Yahoo! Inc (YHOO): Money Won’t Bring Happiness

By means of blunt arithmetic one can prove that Yahoo! Inc. (NASDAQ:YHOO) is worth -$3.7 billion. Eric Schatzker showed on Blooomberg how this could be done, however, he further explained that taking taxes into account makes the company’s value look more realistic, about $8 billion.

Yahoo! Inc. (NASDAQ:YHOO)

“$8 billion in the land of tech giants, it’s not a lot of money, so you might say: we often talk about Yahoo! in the same sentence as Facebook, Google, Twitter, it doesn’t belong in that conversation. […] And secondly, what kind of tech company is Yahoo! if it isn’t generating any growth,” uttered Mr. Schatzker.

 Yahoo! Inc. (NASDAQ:YHOO)’s stock price rallied ahead of Alibaba Group Holding Limited (BABA)’s Initial Public Offering (IPO) and seems to finally stopped, to little more than $42.5 about 0.2% less than yesterday’s closing value. The company’s stock price grew almost 30% for the last two months (starting with July 18th). So we’re currently at a crossroads for Yahoo! Inc. (NASDAQ:YHOO) as there’s little time till the Chinese e-commerce firm goes public. This will be the particular case in which money won’t bring happiness, not for the tech company at least.

In their press release, Yahoo! Inc. (NASDAQ:YHOO) did not have much to highlight, most of the values followed by the percentage sign had a minus in front. GAAP revenue dropped 4%, from $1.14 billion to $1.08 billion, GAAP income from operations declined 72%, from $137 million to $38 million and GAAP net earnings per diluted share diminished by 15%, from $0.30 in second quarter 2013 to $0.26. There are some certain strengths like their mobile branch of activity, which collectively with social, video and native areas grew about 90%. Marissa Mayer, Yahoo! Inc. (NASDAQ:YHOO)’s CEO, stated that the company can do better and has to focus on ameliorating the negative trend.

Yahoo! Inc. (NASDAQ:YHOO) has some cash and investments in marketable securities, around $4.3 billion, and it has repurchased about $719 million worth of shares from the investors. It’s obvious that the company will pursue this same strategy until the post-IPO cash flow, but will that be enough to solve its problems?

Disclosure: none

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