Yahoo Inches Towards Sale Amid Leadership Squabbles

With Yahoo (NASDAQ:YHOO) signing confidentiality agreements with various private equity parties to go over its detailed finances, ^[1] the company has made some headway towards finalizing a sale. However, speculation over a possible conflict of interest and the stakes involved are hurting the company’s stock. To add to the problem, internal squabbles between Yahoo stakeholders would only serve to stretch this limbo phase even further.

See our full analysis for Yahoo’s stock here

“All Options Open” Strategy is Bringing Down the Stock

Yahoo’s stock has been consistently buoyant since Carol Bartz’s departure as CEO in September. However, since last week, doubts have risen again as to how much stakes and which assets Yahoo plans to sell-off.

Yahoo’s board, which had remained relatively silent until recently, has suddenly sprung out a number of “alternative” plans, which even includes a one-time dividend to shareholders by selling off Yahoo’s Asian assets while retaining the core business. Announcements such as these have only added to Yahoo’s woes with stakeholders Third Point LLC-CEO Daniel Loeb recently sending an open letter criticizing founder Jerry Yang over the possibility of a conflict of interest. ^[2]

These developments are bound to raise confusion and possibly even suspicion in the minds of investors. It might also bring back the skepticism over Yahoo’s leadership and commitment towards redeeming its business. Given these concerns, the need of the hour for Yahoo can probably be summarized in one word – Clarity.

We have a price estimate of $17 for Yahoo’s stock, which is about 12% above the current market price.

Understand How a Company’s Products Impact its Stock Price at Trefis.

1. Reuters: Yahoo Sales Process Heats Up as PE Firms Sign On [↩]
2. Reuters: Third Point Demands Resignation of Yahoo Founder [↩]