Tag Archives: YHOO

Buy before the rumor, sell before the news?

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One of the really intriguing aspects of the blogOspheric chatterfest is how the big markets tend to react to rumors from key business related blogs.    When TechCrunch reported yesterday that talks between Microsoft and Yahoo had resumed Yahoo stock increased, only to fall after several other blogs reported the rumors as false or weak.

Although I have no reason to believe that Mike Arrington or Henry Blodget are trading options based on their market-moving blog reporting, I’m not at all clear it would be illegal for them to do so as long as they were reporting “real” rumors.

Henry answered at his blog that posting a false rumor to manipulate for investment purposes would likely be seen by SEC as a violation but this leaves a lot of gray areas open for an aggressive options trader/journalist. 

Here’s what I just asked Mike Arrington over at TechCrunch:
Mike just to set the record straight the ValleyWag poster “Mike Arrington”, who claims to have made 10k trading on Yahoo rumors, is fake … right?

More importantly I’m very interested in your views on legality/ethics of trading Yahoo options based on the rumor mill. Let’s say you heard a solid rumor that MS was about to offer $37 for Yahoo and Yahoo was going to sell. Could you legally trade on that before you posted it? One second after?

What if you emailed *me* right before you posted, I think I could legally trade based on current SEC rules, right?

P.S. What kind of Single Malt Scotch do you like? : )

Although I have no plans to manipulate any markets, it is reasonable to assume that if a market can be legally manipulated it *will be* manipulated, and soon. 

Carl Icahn: Blogger

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There’s a new guy in blog town and he’s shooting from the hip about the defects of the corporate governance models we’ve all come to know and hate over the past decades. His name is Carl Icahn and his blog offers great insight into the mind of one of the most successful corporate raiders in history.

Although it is obviously favorable to Icahn’s bottom line to maintain how incompetent boards are leading to the decline of western economic civilization as we know it, I’m hardly going to disagree with the notion that corporate governance, especially in the technology sector, often seems out of whack with shareholder interests.

It is important not to confuse Icahn’s critiques with the whacky ones of many who suggest the corporation itself is a bad model and should be replaced by outmoded socialistic and centralized approaches that brought economic ruin on an entire generation of eastern Europeans and helped bring genocidal regimes into power in asia.    On the contrary Icahn’s point is more that we need to make sure the corporation model can thrive by insisting on better governance for struggling companies.

In the case of Yahoo, Biz Doctor Icahn’s prescription is to buy up a huge share, then throw the corporate board bums out and sell the company to Microsoft.  The stakes here are so high for Icahn (he could see over a billion in profit if his plan works), that he’s hardly in a position to entertain alternatives that might be better for Yahoo, but I think most shareholders already are rooting him on in the hopes of salvaging the $11+ per share lost when Microsoft withdrew from the bidding for Yahoo last month.

Disclosure:  Long on YHOO

Microsoft Yahoo misquoting, stock quoting, and blog quotas

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Silicon Valley Insider appears to be manufacturing some news with their misquote of Microsoft Johnson as stating that if Yahoo fires Yang, Microsoft may bid again. It appears that Johnson did not say that or even anything approaching that in the interview, not to mention that Microsoft has stated that nothing has changed.   Of *course* Microsoft will consider bidding again for Yahoo if circumstances change, but there is a big difference between that state of affairs and Microsoft openly starting to talk about that,  which would be a sort of shot over Yahoo’s bow.   That does not appear to have happened at all, though now Silicon Valley Insider has nabbed another few thousand in advertising impressions for promoting the bogus story.

I assume what’s going on here is the blogOsphere’s normal nonsense where even major blogs write attention grabbing, inaccurate headlines to get the advertising eyeballs, and then mold the facts to support the headline, usually with some miinor disclaimer that, if read between the lines, explains that the story is near -meaningless.

This trend in blogging is pretty interesting and one of the many reasons blogging is only slowly gaining the journalistic credibility it probably already deserves.

Why O’Reilly’s wrong about Arrington being wrong about Yahoo being wrong about Microsoft

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What did the normally very insightful Tim O’Reilly and Fred Wilson have for lunch, some free hallucinogenic deserts over at Google?

Both are criticizing Mike Arrington for stating the obvious – Yahoo’s not acting in the best interest of shareholders or Yahoo or anybody except Google, who clearly is the big winner in Yahoo’s squandered megadeal with Microsoft.

Fred very correctly notes that Yahoo’s has faced leadership challenges for a long time, but he says he likes the one option that keeps the current Yahoo board intact and very much on track for much more of the same company crushing behavior. Yes, a clean house is needed and that is certainly less likely to happen *now*.

It seems to me there are two issues and they have it wrong on both counts where Arrington’s got it right.

First, Yahoo’s Google move proved that in terms of shareholder obligations it should have sold to MS. Yahoo cannot reasonably make a case that they will come out of the monetization hole using core values while immediately outsourcing their most potentially lucrative biz to Google. Sure this will make more than Yahoo alone, but nothing like what the MS deal would have offered Yahoo in terms of ad cash plus money to develop the search biz. MS offered a shot at glory. Yahoo took Google’s money so they could keep sitting back and watching the really big search money pass them by.

Is Fred saying there is a Googley path back to $34+ per share? Even if yes, it is nonsense to think it’ll happen fast enough to justify turning down MS’s offer of $34 and their subsequent offer of $35 for 1 in 6 of Yahoo’s outstanding shares.

Second, this just gives Google even more of a near monopoly on monetization. As Mike suggests competiton is lacking and needed in the search space. This is a big step in the wrong direction.

Disclosure: Long on YHOO

Yahoo Google Agree to Thwart Microsoft and Icahn

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The Yahoo Microsoft Merger saga continues as Yahoo and Google have signed an advertising pact in the face of mounting new pressure on Yahoo to sell to Microsoft.     Carl Icahn, corporate mega-investor, has purchased a large stake in Yahoo and was preparing to force changes on the Yahoo board that have led to a Microsoft takeover.   Today’s announcement appears to leave the Microsoft deal in the lurch, though I’m not clear yet why Icahn can’t fight a proxy battle to get control of the company and then back out of the agreement.    Based on today’s news that is not part of his plan, though anything is possible in the rapid fire take no Microsoft prisoners battle where the Yahoo board appears more interested in thwarting Microsoft than doing good for Yahoo’s shareholders who today saw a drop of 10% in shares as another potential Microsoft deal crumbled.    Last year Yahoo rejected $40 per share, and a few months back they rejected $34.   One does not have to have much imagination to wonder how long it’ll be before they are rejecting $25.

An interesting investment question right now is whether Yahoo is priced low or high given all the new information.  If, for example, a new board will come in within a year or so it’s very possible that MS will make another aquistion offer well above current prices.  A new board would probably view this favorably.   If true Yahoo’s a good buy now.   However if the stubborness will continue for years it’s not at all clear that Yahoo can dig itself out of the profit and morale busting hole it’s been digging for several years while Google was eating Yahoo’s lunch and serving it back – free – to Google investors and employees. 

Disclosure:  I have Yahoo.   Which means I have 90% of the value I had this morning.

Yahoo Microsoft – the Sequel?

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TechCrunch is reporting that Microsoft has “excused” the proposed slate of new Yahoo board members telling them that they won’t be needed anymore.    I don’t think this tells us much if anything about the status of a new deal which rumors suggest may come from the Yahoo board’s concern over losing…billions of dollars.

I think MS is just playing this very smart.  These little measures are designed to get the current Yahoo board to rethink their folly.   I think only Jerry was dead set against the merger and the rest of the board would have settled for 35 or even 34 per share.   Why wouldn’t they?   Yahoo has been languishing for years, and the chance of getting back to 34 *without Microsoft* is fairly slim in the coming lean advertising years, not to mention the fact that low morale, challenges at the company, and the declining prospects with Microsoft may take the stock even lower.

Yahoo should have sold at 33 and I think they will almost certainly sell at 35 due to pressure from Shareholders and (more importantly) heavily vested board members who are “losing”, collectively, several billion dollars by sticking to their guns in this.

Ballmer has left the Building

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Talks between Microsoft and Yahoo have stalled and may be over.   33 vs 37 per share.    I still think Microsoft is just calling what better be a bluff by Yahoo, because if they don’t take this MS offer the stock is going back to the sub 20’s and Yahoo is looking at a huge number of shareholder lawsuits asking why they sabotaged the offer of $33 when they are only worth $19 without Microsoft.

Here is my view at Webguild with the letter to Yang from Ballmer

Yahoo Microsoft: Is the fat lady almost singing at $34?

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Henry Blodget is whining that the Yahoo Microsoft deal is back to where it started, but I think Henry’s wrong … again!     

I’m glad Henry was wrong about the rumor that Yahoo’s Q4 would beat expectations because it was part of the reason I bought YHOO then, and even though the stock dipped due to a bad Q4, it surged on Microsoft’s offer of $31 per share so I’m well in the black.   But now he’s wrong to say the deal is not almost done.  I think this Yahoo Microsoft merger is coming very soon to an internet near you.

Citibank Analyst Maheney upgraded Yahoo this morning, anticipating a boost in the MS bid to $34.   Hey, maybe he read my blog post of about 6 weeks ago where I suggested Microsoft raise their bid to $34?    

Unlike Henry, I think this is not back to where it all started at all!

Yang didn’t want to merge, now he sees it as almost inevitable.  Yahoo board wanted more, now they know anything past initial offer is gravy.  Part of the show was probably the board protecting itself against lawsuits from the unlucky minions who bought their Yahoo at $35+, some at over $100.

Barring a Q1 miracle that would recalibrate Yahoo prices without help of MS bids, I think the fat lady is now almost done singing on this deal.

 Disclosure:  long on YHOO

Yang to Yahoos: Keep the Faith

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Blodget has a good summary of Jerry Yang’s Yahoo note to the troops articulating the reasons for the rejection of Microsoft’s offer and the company’s future plans.    He gives Yang an A- but I think this might be generous.  

I’m wondering if Yahoo didn’t fail recently, rather years ago when many lines of separation were drawn between technologists and most of the company management.  I assume there were official lines drawn, but I’m talking more in terms of culture here.     My bullishness about Yahoo has rested on the assumption that the technologists would eventually have their day and as with Google would create the tools necessary to keep Yahoo competitive and interface with the broader developer community as Google has done so effectively to bring more awareness and use of Yahoo tools, effectively widening their footprint over the internet landscape.  

I no longer thing there is enough technological empowerment at Yahoo to make this likely anytime soon.   It will take a LOT more than peppy emails and a combative stance here.  Recent defections from Yahoo suggest that even internally Yahoos are more bullish on Google than their own company.   

So, if we assume Yahoo’s got to do something really big is Microsoft or News Corp the best fit.    From Yahoo’s perspective clearly they’d love it if News Corp was willing to pony up as much as MS, and frankly this seems like a more likely winning combination than MS and Yahoo which would have a lot of initial, and perhaps long term, contentiousness.   Fox Interactive is run brilliantly, and applying these management principles to Yahoo could do a world of good to the bottom line of the combined company.    As a Yahoo shareholder I’m rooting for that option though I’d predict MS will win this battle because of the difficulties News Corp will have showing how valuing Yahoo at 50 billion+  is justified given how difficult it may be to make a lot more money from the combined company in anything short of many years.

disclosure:  Long on Yahoo

Yahoo Executives – kudos for true believing, but sell the place anyway!

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A lot of folks have been very hard on the Yahoo board and Jerry Yang in particular for fighting the Microsoft takeover bid, but it should be noted that almost more than anybody these folks are playing with their own money, and the stakes are huge.

As Fortune reports Jerry Yang’s got more than a few Yahoo shares, and this he’s effectively “gambling” with his own money as he powerfully resists the fat Microsoft offer.    If Yahoo stock tanks – as it certainly will if Microsoft backs out – I won’t be all that much worse for the wear but Jerry would be taking something like a *half billion* hit to his net worth.   That’s real money, and you’ve got to admire Jerry and the board for believing so strongly in their “new” vision for the company that they are willing to bet they can regain their former glory.  

Of course, maybe they *can* regain their former glory, but that’s a bird in the wild and wooly internet bush and Microsoft’s offer is *billions of birds* in the greedy little hands of investors.    This is not a tech issue – billions of Microsoft birds in hands are better than a few Yahoo birds in the bushes.   

Disclosure:  I have some YHOO, though fewer than Jerry Yang.