Yahoo to spin off Alibaba stake

Discussion in 'Stock Market Forum' started by Onionman, Jan 28, 2015.

  1. Onionman

    Onionman Senior Investor

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    Yahoo has announced that it is to spin off its 15.4% stake in Alibaba into a separate company. It sounds like a good move because investors will immediately reap a cash reward from the spin off. But I'm just wondering whether it strips out a big growth engine in Yahoo's earnings by doing that.

    Short term gains at the expense of longer term benefits? What do people think?
     
  2. downloads

    downloads Well-Known Member

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    I think it's just Marissa Mayer trying to appease shareholders. The more influential shareholders have been pressuring her for some time to liquidate the Alibaba shares and just take the money and run. I guess this way the shareholders have some tax-free benefits from this.

    Yahoo was up 7-8% after hours, so obviously Wall Street likes it.
     
  3. petesede

    petesede Guest

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    I think it is a good move, because I am not long on Alibaba. I think their best days are behind them and they are going to have a rough time cracking western markets and they are going to waste a lot of money doing it.
     
  4. troutski

    troutski Guest

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    I wish Yahoo! would set sail into the night once and for all. That company is pretty much garbage, considering all of the companies and services they've acquired and then squandered. I think Alibaba has plenty of room to grow, and the company's performance says as much so far. This move benefits the shareholders and reveals Yahoo! as the company we all know: one that's slowly, slowly dying.
     
  5. Onionman

    Onionman Senior Investor

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    Hopefully the spin off will allow Yahoo to get back to focusing on its own core businesses (which aren't as robust as they have been), while also appeasing shareholders at the same time. I can't remember the figure but Alibaba was accounting for a crazy large percentage of Yahoo's value. So if we really are going to see Yahoo remain relevant in the internet space, now is the time.
     
  6. Allison2021

    Allison2021 Well-Known Member

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    I can understand if Yahoo was frightened by tax liability because then the purchase would not have been worth it. But then why begin accumulating Alibaba in the first place? Yahoo must have had legions of attorneys who warned them not to accumulate any tax liabilities.
     
  7. Fredrick Jones

    Fredrick Jones Well-Known Member

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    Yahoo had a lot of potential, but pretty much every good thing going they managed to somehow screw up. They had a fairly large percentage of the search engine market, somehow they messed that up. They somehow managed to screw up their messenger and email. I have no idea how they do it :)
     
  8. JR Ewing

    JR Ewing Super Moderator Staff Member

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    I was long a bit of yahoo most recently because of the stake in baba. I have recently gotten out of that position in yahoo in the last few days or so.

    I also recently bought a little baba then a bit more in the last couple of days when it sold off pretty hard. Not a big position though.
     
  9. petesede

    petesede Guest

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    they still have one of the best investment centers, I use them for a lot of my test portfolios. They aggregate financial news about a single company really well, makes it easy to do some homework.

    I do think people give them a hard time. The thing to remember is that when Yahoo was a big search engine, there were about 6 others, all with pretty equal shares of the overall market ( lycos, alta vista, excite, webcrawler etc). While yahoo has not done great, it survived a lot stronger than its contemporaries. I imagine most people have never heard of some of the search engines that used to compete with Yahoo
     
  10. Colebra

    Colebra Well-Known Member

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    Alibaba's advantage is the fact that their good are manufactured in China, right? That is what blows every competitor away.
    How can Yahoo create a company that will be competitive?
    Their move might be great for investors, but for the company, isn't this totally nuts?
     

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