Yahoo (NASDAQ:YHOO) and its Stakes
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Yahoo (NASDAQ:YHOO) is one company that has made clever investments in the right places at the right time. Even though the business’s operations are not performing as well yet, its stock has been increasing for the last three months. It raised $8 till $41 after the Alibaba American depository receipts. The estimated ADR of Alibaba (NYSE:BABA) is $80, yet the company is trading at $90. After this valuation, the estimate for Yahoo (NASDAQ:YHOO) has grown from a previous of $34.38 to around $41.53 currently. The company’s valuation is as follows:
About 74% of the value of Yahoo (NASDAQ:YHOO) is from non-operating segments like its investment in Alibaba (NYSE:BABA). According to our estimates, nearly 74% of Yahoo!’s (NASDAQ:YHOO) value comes from non-operating segments, which constitute of the company’s stake in Alibaba (NYSE:BABA) and Yahoo! Japan (TYO: 4689), as well as cash. Its non-operating segments are as follows:
Alibaba: after the retailer’s IPO, Yahoo’s (NASDAQ:YHOO) stake has gradually decreased in the company to around 16.3%. This makes up to about 383.57 million of its shares. The stake in Alibaba (NYSE:BABA) makes up to about 47% of Yahoo’s (NASDAQ:YHOO) value. This shows that it is benefiting more from investments rather than its own operations. With this thought in mind, Yahoo’s (NASDAQ:YHOO) value is sure to increase with an increase in Alibaba’s (NYSE:BABA) valuation.
Yahoo!Japan: An estimate states that Yahoo! Japan (TYO:4689) is valued at around $23 billion. Yahoo (NASDAQ:YHOO) has a stake of around 35% in the company. Its worth is nearly $5.92 billion in amount after tax deductions. Yahoo! Japan (TYO: 4689) has 14% value in Yahoo (NASDAQ:YHOO).
Cash Position: ending the second quarter, Yahoo (NASDAQ:YHOO) had a cash amount of $2.74 billion with current marketable securities. Yahoo (NASDAQ:YHOO) increased in cash by the amount $5.9 billion after a 38% tax deduction on its $9.52 billion. This was because of the 140 million sales of its shares in Alibaba (NYSE:BABA).
Yahoo (NASDAQ:YHOO) has investments like Yahoo! Finance, Yahoo! Mail and Yahoo! Sports. The company had over 800 million new visitors each month in 2013 and it was among the top 5 of the internet websites globally as well as in the U.S. Users all over the globe uses the site which amount to 20% of all internet users. Its core business is valued at $10.9 billion with a $1 billion cash increase every year.
Yahoo’s (NASDAQ:YHOO) biggest operating sector is its display advertising segment. It makes up nearly 10.5% of the total value of the company. Its display adds over the last two years had a decreasing RPM from $1.53 to $1.10 from 2010 to 2013. Yahoo’s (NASDAQ:YHOO) search advertising consists of about 10.2% of the company.
Even considering the deal with Microsoft (NASDAQ:MSFT) somewhere in 2009 who agreed to power Yahoo’s (NASDAQ:YHOO) search as well as its search ads its revenue from these sources declined from $1.8 billion to $1.47 billion in the years 2009 to 2011. However, the company’s revenue has increased over the years due to improvements in search ads which is surely a relief.