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With Yahoo On The Ropes, Mayer can still Lead A Big Turnaround!

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With Yahoo On The Ropes, Mayer can still Lead A Big Turnaround!

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With Yahoo On The Ropes, Mayer can still Lead A Big Turnaround!

Yahoo! (YHOO) is very much on the ropes and its shares have suffered a shellacking after the Internet giant posted disappointing fourth quarter results, exacerbated by an even more uninspired guidance for the first-quarter of 2014. Predictably, that sent Yahoo’s stock tumbling 8.7%, to $34.89 a share yesterday, Jan. 29, 2014. Some analysts were quick to forecast the worst for one of the world’s largest providers of online content and services.   

Time to turn your back on Yahoo and dump its stock? Not so fast.

The promise of a turnaround isn’t lost and by some analysts’ account, it’s very much within reach. Skeptics easily forget that Yahoo CEO Marissa Mayer, formerly of Google, did the incredible task of not only re-energizing Yahoo’s slumping stock when she took over the helm but in fact drove it higher –  more than doubling its stock price — an almost impossible feat considering the dismal state the company was wallowing in.

So Mayer, who has been on the job for 18 months, deserves huge credit for that dream investors had been conjuring up, and should be allowed extra room to do what she must do: Elevate Yahoo to the high level it deserves to traverse the worldwide Web with its hundreds of millions of monthly users who visit Yahoo’s online properties, making it one of the world’s most popular Internet destinations.

Yesterday, S&P Capital IQ upgraded Yahoo to a buy from a hold rating, raising its stock price target to $45 a share from $36. “After the stock’s 7%-8% decline, we now see Yahoo as attractively valued,” says S&P Capital IQ analyst Scott Kessler.

“Our increased price target reflects what we see as significant value associated with minority stakes in China’s Alibaba Group and Yahoo Japan,” he adds. Additionally, Kessler believes Yahoo’s “newer offerings and monetization efforts coupled with an increased focus on mobile would help stabilize fundamentals.”

Kessler argues that there’s “notable value in the stock,” helped by Yahoo’s “strong and flexible balance sheet.” Part of Yahoo’s treasured assets are its 24%stake in privately held Chinese Internet conglomerate Alibaba and its 35% interest in Yahoo Japan.

Oppenheimer analyst Jason Helfstein increased his price target for Yahoo to $43 a share from $38 largely because of its stake in Alibaba. He notes that while Alibaba’s third-quarter results were weaker than expected, he believes Yahoo shares ”are the best way to play Chinese e-commerce.”

The analyst is maintaining his rating of outperform on the stock ”as the base-case target assumes 14% upside,” he says, “with limited downside risk due to Yahoo’s Asian assets.” He assumes that Alibaba will launch an IPO next year with an estimated valuation of $142 billion.

Investors should snap up shares of Yahoo “on any weakness,” advises Jordan E. Rohan, analyst at investment firm Stifel, as he expects Yahoo’s April earnings “will highlight Alibaba’s seasonally strong fourth quarter numbers.” He has reiterated his buy rating on Yahoo and price target of $49 a share, based on his sum-of-the-parts analysis. The estimated valuation, he says, is largely dependent on the pace of share repurchases and valuation of Yahoo’s stakes in Alibaba and Yahoo Japan.

Rohan expects Yahoo will sell its 24% stake in Alibaba in two tranches: 40% of the holdings which he values at $120 billion sometime on or before an IPO, and the remaining 60% that he estimates is worth $200 billion sometime after the IPO.

What about the promised Yahoo turnaround? Analyst Mark S. Mahaney of RBC Capital continues to rate Yahoo as outperform based largely on CEO Mayer executing a big turnaround.

“We Remain believers in a potential turnaround story at core Yahoo,” he asserts. History suggests that this will be a multi-year process built on important products and improved execution, says Mahaney. Although he notes that he hasn’t seen any positive fundamental impact from the accelerated pace of product innovation, “we believe and hope this could happen sometime in 2014,” he says.

In terms of the stock, Mahaney says the advantage of buying the stock at this point is that the “current valuation still implies modest expectations.” He notes that Yahoo continues to return cash to shareholders through share repurchases while still investing in the business and executing acquisitions.

His upside scenario: He expects an acceleration of the turnaround process, bumping up his estimated “three-year net revenue compounded annual growth rate to 4%, with EBITDA margins expanding close to 35% on this large base.”     

Source: Forbes


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Source: The Business Insider

Good morning! Welcome to the work week! It's going to be clear and sunny today in New York. Let's look at the tech news you need to know: Apple might name the 5.5-inch iPhone 6 the iPhone 6L. It's based on an unsubstantiated rumor from an Asian Apple site, so treat it skeptically, but the name makes some sense. Amazon is taking a less data-driven approach to its new original TV shows. It is trying to get proven talent to tell good stories. Ac ...
Source: The Business Insider   Full article at: The Business Insider 3 days ago, 5:33am CDT


Update: 10

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Source: Politics - The Huffington Post

The first photos of Darren Wilson, the Ferguson, Missouri cop who fatally shot black teen Michael Brown, emerged Saturday morning. Yahoo News first discovered the photo through the Facebook page of Wilson's parents, who congratulated him for receiving a commendation just months before the fatal shooting of Brown. His father writes: "Very proud of my son, Darren Wilson on his receiving a Commendation from his Poli ...
Source: Politics - The Huffington Post   Full article at: Politics - The Huffington Post 3 days ago, 2:36pm CDT

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Update: 9

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Source: WND

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Source: WND  Full article at: WND 3 days ago, 11:56am CDT

Update: 7

Marissa Mayer's Compensation And Stock Selling Not Linked To Performance

Source: Forbes Real Time

Marissa Mayer will make $200 million in total compensation for her first 5 years on the job. She's also been aggressively selling stock lately. Yet, the performance of Yahoo's core business has been dismal under her ...
Source: Forbes Real Time   Full article at: Forbes Real Time 4 days ago, 9:28am CDT

Update: 6

The moment Michael Brown was shot dead: New photographs emerge of the immediate aftermath of the Ferguson shooting and of the cop responsible as hundreds march ahead of midnight curfew

Source: Daily Mail

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Source: Daily Mail  Full article at: Daily Mail 4 days ago, 11:17pm CDT

Update: 5

Ex-employee defends Yahoo: Mayer is ignoring legacy ad business to focus on potential growth (Jeff Minich/Business Insider)

Source: Techmeme

Jeff Minich / Business Insider: Ex-employee defends Yahoo: Mayer is ignoring legacy ad business to focus on potential growth  —  A Former Yahoo Employee Defends Marissa Mayer From Her Biggest Critic  —  Eric Jackson has had a lot to say about Marissa Mayer and Yahoo lately.  He's a smart guy, I read his column and think he's generally an astute investor. ...
Source: Techmeme  Full article at: Techmeme 4 days ago, 5:25pm CDT

Update: 4

Investor Eric Jackson pesters Yahoo and its CEO, hoping to attract activist investor or buyer (Kara Swisher/Re/code)

Source: Techmeme

Kara Swisher / Re/code: Investor Eric Jackson pesters Yahoo and its CEO, hoping to attract activist investor or buyer  —  A Yahoo Fanboy Turns Critic: “I Am Committed to Remaining a Pest”  —  What exactly is investor and Forbes columnist Eric Jackson up to with his now month-old blog attack on Yahoo and, most pointedly, its ...
Source: Techmeme  Full article at: Techmeme 4 days ago, 5:20pm CDT

Update: 3

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Source: China Digital Times

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