$36 Breakup Value for Yahoo
I've been long on Yahoo for the past couple of years. So far, all that's gotten me is the opportunity to buy more on dips.
Today's BreakingViews takes a look at a potential breakup of Yahoo, suggesting it could add $15 per share in value; a $36 price would be roughly 65% higher than the current stock price. The key components of the breakup:
- Outsource search. Shut down their search operations and license search from Google or Microsoft. This would trample on some egos, but should have a solid business impact ($3 billion per year according to Sanford Bernstein)
- Sell off their stakes in Asian sites Ali Baba and Yahoo Japan (together worth more than $13 billion). The post suggests creative ways to spin this out without tax implications.
Jerry Yang proposed a 100 day plan for his turnaround when he returned to the CEO role last spring. More than six months later, the stock is still floundering. If Yahoo doesn't get acquired by Microsoft, then the breakup plan makes a lot of sense.
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