Sunday, July 24, 2016

Watch the Stock

Verizon it seems has decided to buy Yahoo for some $5 billion per the BBC. They state:

US internet firm Yahoo announced in February that it was looking at "strategic alternatives" for its core internet business. Verizon declined to comment on the reports. A formal announcement is expected on Monday before US markets open for trading. Over the last few years Yahoo has struggled to keep up with the changing internet advertising landscape, with some analysts arguing that it has failed to remain relevant in many of its core markets.

The key question the shareholders should ask is what is the basis of this valuation. Verizon has value because it owns licenses to spectrum. That is an asset and one can value that. Really.

However what does Yahoo own? Customers? No, they can disappear in a heart beat. Then what is the basis for this valuation? Good question.  Let's see how they spin this one.

Now look at the Balance Sheet.

In Millions of USD (except for per share items)  As of 2016-06-30
Cash & Equivalents  1,325.40
Short Term Investments  5,055.68
Cash and Short Term Investments  6,381.09
Accounts Receivable - Trade, Net  991.18
Receivables - Other  -
Total Receivables, Net  991.18
Total Inventory  -
Prepaid Expenses  224.73
Other Current Assets, Total  -
Total Current Assets  7,597.00
Property/Plant/Equipment, Total - Gross  -
Accumulated Depreciation, Total  -
Goodwill, Net  431.37
 Intangibles, Net  202.12
Long Term Investments  34,412.45
Other Long Term Assets, Total  245.12
Total Assets  44,214.29
Accounts Payable  171.62
Accrued Expenses  982.86
Notes Payable/Short Term Debt  -
Current Port. of LT Debt/Capital Leases  -
Other Current liabilities, Total  122.03
Total Current Liabilities  1,276.51
Long Term Debt  1,266.28
Capital Lease Obligations  -
Total Long Term Debt  1,266.28
Total Debt  1,266.28
Deferred Income Tax  13,115.82
Minority Interest  32.41
Other Liabilities, Total  159.38
Total Liabilities & Shareholders' Equity  15,850.40
Redeemable Preferred Stock, Total  -
Preferred Stock - Non Redeemable, Net  -
Common Stock, Total  -
Additional Paid-In Capital  -
Retained Earnings (Accumulated Deficit)  -
Treasury Stock - Common  -
Other Equity, Total  28,363.89
Total Equity  28,363.89
Total Liabilities & Shareholders' Equity  44,214.29
Shares Outs - Common Stock Primary Issue  -
Total Common Shares Outstanding  948.25