Menu
SpaceX and Boeing build manned NASA Spaceships

SpaceX and Boeing build manned NASA Spaceships

iOS 8 Download Release is Expected at 10 am PDT

iOS 8 Download Release is Expected at 10 am PDT

Matt Damon is Jason Bourne Again

Matt Damon is Jason Bourne Again

Galaxy Note 4 Screen is the World's Best

Galaxy Note 4 Screen is the World's Best

iPhone 6 Reviews are Glowing

iPhone 6 Reviews are Glowing

Yahoo Looks More Like Gannett Than Google After The Alibaba Stake Is Accounted For

Dec 26 2013, 8:41am CST | by , in News

 
 

You might think this is slightly harsh but an analysis of Yahoo by the Wall Street Journal suggests that underneath the hood, after we’ve accounted for the Alibaba stake, the company is more like Gannett than Google. And there is a good deal of truth to the point they’re making too:

Using this assumption, if Yahoo sold the remaining 60% of its stake at that price, its total after-tax proceeds could be $20.3 billion, or about $20 a share. Yahoo’s 35% stake in Yahoo Japan adds roughly another $7 a share after tax.

Taking that $27 and net cash of $3.11 a share on Yahoo’s books at the end of the third quarter off the current share price leaves $10.96 a share. That implies a $11.1 billion valuation for Yahoo’s core business, or 7.1 times 2014 Ebitda—pricey relative to analyst models. And that likely understates the multiple, since Alibaba’s high-margin royalty payments would need to be factored out of Yahoo’s Ebitda.

Investors can only guess at what Yahoo will look like underneath its designer wardrobe. But chances are it will look more like Gannett than Google.

The point being that Yahoo should perhaps be valued more as a print media asset than a whizzy high tech company. Implying that the valuation should be around 4 to 6 times Ebitda, which is what makes that 7.1 times look high. It’s entirely true that Yahoo gets traffic: several months last year it was the number one destination, beating out Google’s traffic figures for example. But it is rather a media business than a tech one.

What’s more Marissa Mayer’s declared business plan is to be more of a media player, not less of one. Things like the purchase of Tumblr are all pointing in that direction as well. Gain eyeballs and show them advertising and gain those eyeballs by serving up content that people want to read. There’s nothing wrong with it as a business plan, as a strategy, it’s just that it’s not one that is likely to lead to fast growth. Thus it seems reasonable, as the WSJ says, to assign it a low multiple as with other media properties that aren’t going to display outsized growth.

Still at least the WSJ did compare Yahoo to Gannett and not to, say, one of the newspaper companies that has already gone bust.

Source: Forbes

You Might Also Like

Updates

Shopping Deals

 
 
 

<a href="/latest_stories/all/all/31" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.

 

 

Comments

blog comments powered by Disqus

Latest stories

Derek Carr Agrees With Charles Woodson's 'We Suck' Statement
Derek Carr Agrees With Charles Woodson's 'We Suck' Statement
Oakland Raiders rookie quarterback Derek Carr agrees with his teammate and veteran free safety Charles Woodson, who said "We suck," in the aftermath of their 30-14 home loss to the Houston Texans on Sept. 14.
 
 
Jonathan Dwyer Arrested for Aggravated Assault
Jonathan Dwyer Arrested for Aggravated Assault
Arizona Cardinals running back Jonathan Dwyer was arrested on Wednesday evening on allegations of aggravated assault. He has been deactivated from all team activities.
 
 
Jameis Winston Suspended for First Half Vs. Clemson Tigers
Jameis Winston Suspended for First Half Vs. Clemson Tigers
Florida State Seminoles quarterback and 2013 Heisman Trophy winner Jameis Winston was suspended for the first half of the game against the Clemson Tigers on Sept. 20 for shouting an obscene sexual phrase on campus on Tuesday.
 
 
Tim Duncan to be Featured in Punisher Comic
Tim Duncan to be Featured in Punisher Comic
San Antonio Spurs forward Tim Duncan will be featured in an upcoming issue of The Punisher comic book series as announced by the Black Jack Speed Shop Facebook page on Sept. 17.
 
 
 

About the Geek Mind

The “geek mind” is concerned with more than just the latest iPhone rumors, or which company will win the gaming console wars. I4U is concerned with more than just the latest photo shoot or other celebrity gossip.

The “geek mind” is concerned with life, in all its different forms and facets. The geek mind wants to know about societal and financial issues, both abroad and at home. If a Fortune 500 decides to raise their minimum wage, or any high priority news, the geek mind wants to know. The geek mind wants to know the top teams in the National Football League, or who’s likely to win the NBA Finals this coming year. The geek mind wants to know who the hottest new models are, or whether the newest blockbuster movie is worth seeing. The geek mind wants to know. The geek mind wants—needs—knowledge.

Read more about The Geek Mind.