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Valuation of Yahoo’s Alibaba stake

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Yahoo buys US$1 billion stake in Alibaba (2005-8-11, China Daily): $1 billion for 40% stake of Alibaba Group (parent company of Alibaba, Taobao and Alipay). Taotao and Alipay is Chinese equivalent of eBay and Paypal, repectively.

Yahoo sells direct stake in (cnet, 2009-9-14). Quote:
Yahoo has sold 1 percent of its stake in the Chinese-based business-to-business trading site, the company said on Monday. Reuters first reported on the story.

In November 2007, Yahoo invested approximately $100 million in when it went public on the Hong Kong Exchange. Writing in an e-mail, a company representative said that Yahoo’s “sale of its shares in is expected to generate pre-tax proceeds of approximately $150 million.”
According to Yahoo, it maintains approximately 40 percent interest in the Alibaba Group. “Alibaba Group owns approximately 70 percent of,” Yahoo wrote in the e-mail, “and as such, Yahoo continues to own an approximately 28 percent indirect interest in”

1% of (1688.HK) = $150 m
28% of = $150 m * 28 = $4,200 m = $4.2 billion

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Buffett bets on Wells, US Bancorp

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From Yahoo Tech-ticker.

I don’t know about Wells, but I have US Bancorp shares (NYSE: USB). The stock appears expensive if you look at the price book ratio, which is a common metric to measure bank stocks. But USB is a very different bank compared to others, it’s a conservative lender. Since I opened my checking account with USB a few weeks ago, I had opportunity to visit the branch, it’s clean, and looks much sharp then the Bank of America branches I visited. Maybe, USB could get some deposit base from B of A, amid all the controversies around B of A. The USB stock was obviously knocked down last week due to secondary offering (raise money to repay TARP, or to get out of TRAP to be more precise). Today it got a nice bump from Buffett endorsement.

Reference: gurufocus Buffett buy.

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Weekend review w/e 080208

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What recession?
Last Friday evening we went to local Red Lobster restaurant at around 6:30, and we were told there could be 25 min wait as we saw a large crowd. Being impatient as I was, we decided to try Olive garden. When we went there, same thing: we were told the wait time is 25 to 30 min. It seems to me the mid range restaurants, because people still eat in this economy recession. So buy Darden Restaurant (parent company of Red Lobster & Olive Garden) stock (NYSE: DRI)?

Software glitches
AA baggage handling system broke down on Monday, and the problem persisted more than 1 day. Read this ABC news. How could this happen?

AA baggages handling system break down JFK pic

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Got some Yahoo YHOO today

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(Update July 7) Microsoft and Carl Icahn appeared to team up and will try to ouster the current board, esp. CEO Jerry Yang. I don’t think the current board and management is toasted because:

1) Two co-founders Jerry Yang, David Falio, along with their friends Softbank, Alibaba have more shares than Carl Icahn and his friends;

2) They will fight for the support for institutional shareholders, such as Legg Mason Bill Miller etc. Some of the institutional shareholders bought the YHOO shares much higher than the price Carl Icahn bought recently. Unless there is a liquidity problem, those “higher cost” YHOO share holders will hold on it and try to get a higher exit price.

(Original) Yahoo (Nasdaq: YHOO) shares are back to pre-Microsoft bid days today. So I went ahead of grab some shares.

The buzz on merger and proxy fight aside, I think the business and the brand of Yahoo worth more than the stock price today. Interestingly Yahoo board and management put up this power point presentation at SEC web site, to persude stock holders not to side with Carl Icahn’s proxy fight.

Yahoo headquarter Santa Clara pic
(Source: business week)

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Carl Icahn and activist investor movement

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Carl Icahn is again in the news. This time is about the Yahoo (Nasdaq:YHOO) shareholder proxy fight. Basically Carl bought a bunch Yahoo shares after the Microsoft deal fell through, and he is trying to remove the current Yahoo board, and make the sale to Microsoft. Intelligent observers may say did not Microsoft walked away already? What if MSFT do not take the bait? Well, I think Mr. Icahn has plan B when he has this in mind. If the MSFT deal do not work, and it looks like Google is neither interested nor in a position to buy the whole piece of Yahoo (anti trust issue), Carl can cut Yahoo in pieces and sell it to different companies. So for instance, sell Alibaba stake to eBay (I use this just as an example, not that I know eBay is interested in Alibaba), sell Yahoo Finance to Sina,…anyway you got the idea.

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Don’t Count eBay and Yahoo out

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Google is doing everything to become the king of the Internet. The holiday promotion of Google Check out is targeted towards eBay’s Paypal; in the search market it’s continuing gaining market share from Yahoo, although I still like Yahoo Mail better than GMail 🙂

eBay is not standing still, it’s raising the listing fees. As a seller on eBay I certainlly don’t like them raising fees. But if I am eBay share holder, I will love it 🙂 Seriously, in today’s world, raising fees without losing customer is always a good sign of competitive edge. Not many companies, online or offline, can do that easily because customers are expecting more while paying less. Remember the Oracle’s 50% off Linux support (vs. Redhat)?   

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