Verizon Goes for the Core in Yahoo Purchase - transforming itself in the process

Verizon Communications has purchased Yahoo's operating business for 4.83 billion in cash.Yahoo Japan and Yahoo's stake in Alibaba Group Holding are excluded from the deal.Verizon had agreed to raise its bid last week.Believed to be strongly behind the move was Verizon AOL CEO and Chairman Tim Armstrong,who has long sought Yahoo for its digital advertising business-even before the Verizon offer came along.Verizon had made a major transformative move when it purchased AOL last year for 4.4 billion.*
By purchasing the assets,Verizon gains access to Yahoo's advertising technology tools,BrightRoll and Flurry,as well as its email,search and messenger platforms;and content such as Yahoo News and Yahoo Sports.Verizon is looking to enhance its mobile video and advertising portfolios so as to make up for the slowing wireless business now at a saturation point.They also want Yahoo's scale,which will then drive the company's audience from millions to billions.*
The remainder Yahoo will become a publicly traded holding company with a different name.It will keep its Alibaba Group Holding Ltd 15% stake and 35% of Yahoo Japan,plus its convertible notes and some minority investments.The new Yahoo will be permanently structured to hold these legacy assets.Yahoo had been pressured by activist investor Starboard Value LP to jettison the core business.*
On Verizon's side,its head of product innovation and new business,Marni Walden,will become CEO of the combined firm.*
Verizon Communications Inc (VZ),Yahoo Inc (YHOO)

Market Briefs:Morgan Stanley,IBM,Intel

On Morgan Stanley,I think the Citigroup number has emboldened the analysts to get a little more bullish on this sector,noted CNBC's popular host Jim Cramer.It's a real strong story that has just sold off.People want Morgan Stanley and that nice,smooth Gorman uptrend,and these guys at Goldman Sachs didn't give it to you.*
IBM was downgraded at Citi.Enough is Enough.This company is gonna have a better 2015 than 2014.They are motivated because they screwed up.It's been a great value play since December.*
Yahoo-there's tax issues.I don't think Yahoo's worth nothing.I think there have been some changes,but that's not why people want to own it.They want to own it because of Yahoo's stake in Alibaba.*
Mastercard and Visa-I like these companies because the transition from paper to plastic isn't done,belive it or not.There are countries still doing that.*
These guys in my class are retiring left and right.Ballmer got tired,but I'm still with it.*
Whirlpool is a nice turnaround story.I like the management-they're very good,the Maytag acquisition.*
Intel's profit exceeded estimates.I like the quarter.The company's finally spending less money;expenses are coming down;"We're not afraid of the 200.00 PC." I think you buy Intel here.You could get a dividend increase."We don't fear the low end of the market." I like that,said Jim Cramer,who has a law degree and indeed shows no signs of tiring out.*
Intel(INTC),Mastercard(MC),Visa(V),Morgan Stanley(MS),Whirlpool(WHR)

Inside the Deal:Should Yahoo Buy Tumblr

Yahoo is purchasing blog site Tumblr for 1.1 billion dollars.Should it be spending so much on a site that has made so little money?Tumblr is a platform that has revenue of only 13 million dollars.Is Yahoo crazy or something?
CNBC's Jim Cramer says Yahoo is buying relevance.Tumblr has the demographic 18-34,which Yahoo lacks now.Yahoo could use anything that shows it has a pulse.It's TV of the future.Budweiser,McDonalds and Procter and Gamble will advertise on Tumblr.
This is about mobile.They're getting an immediate plug-in into mobile,as 50% of Tumblr connections are on mobile.It gives Yahoo a massive footprint.It's a very smart move.
This is a new generation of leaders at Yahoo.You can't look at the past;this makes a lot of sense,according to Chris Cunningham,CEO of Appsavvy.We're talking about Yahoo.I predict a richer,more appropriate,user-centric vision.
Tumblr is not a tradtitional tech company,but a user compant that has a huge adult audience.Tumblr is cool,it's edgy.It makes sense.They're gonna work on the inappropriate content.Tumblr is a phenomenal company.Their road map,their vision stays on tap.
Yahoo CEO Marissa Mayer said we have a global audience of more than a billion people with the addition of Tumblr.They get 24 billion user minutes a month.As we promised,we are not gonna screw this up.
Yahoo is increasing its New York presence,leasing four floors of the former New York Times headquarters building.
Yahoo,Inc(YHOO)

Should You Invest in Yahoo

Yahoo beat Wall Street expectations for both profit and overall sales in Q4,with a roughly 4% gain in sales.Display ads alone brought in 520 million dollars in revenue,which was down 10% on the year;but search revenue was 427 million,up from 376 million a year ago.
Eric Jackson of Ironfire Capital said Yahoo is gonna be the AOL of 2013.I think Yahoo has really been trucking along nicely.This year,there is a possible sale of Yahoo's stake in China's Alibaba.com,plus the monetisation of Yahoo Japan.
Marissa Mayer,Yahoo's fifth CEO in four years,is clearly focused on mobile,but it will take years.They're gonna focus on small acquisitions-companies with 50 employees or less whom they can partner with.Yahoo can actually partner with anyone-even Apple or Google.
Ms.Mayer,37,who had been one of Google's founding employees, is a genuine star of the business world.She's injected some dynamism into a company Wall Street had all but given up on.
Yahoo shares are at a three year high.Stifel Nicolaus raised the stock from a hold to a buy Monday.Yahoo closed flat at 19.34 in Monday after hours trading.
Yahoo Inc(YHOO)

Shop Talk:New Year 2013

Happy 2013,dear readers.Bonne annee.In observance of the holiday,the normal business post will not be published.
New York just welcomed 2013 with Train,backed by a children's choir, performing John Lennon's "Imagine" in Times Square just before the famous ball descended.
The well-behaved crowd in blue Mad Hatter hats by Nivea lotion was showered with confetti as the massive object,lit by LED lights for the first time,gently reached the ground and there was a lot of kissing all around.Recordings of Frank Sinatra,Ray Charles and Louis Armstrong were played as the NYPD watched over the million-strong gathering.
In a Yahoo poll asking how was the year 2012 for you,34% of the 334,678 respondents said it was great.I'm lucky;while 66% said it was rough.I'm ready for a new start.
Thank you for being my readers and starting the New Year here at this blog.May it be worthy of your aspirations.
Andrew Taylor
Publisher

Asia This Day:Growth and a Sale

China's 2012 growth is expected to expand at the slowest pace in 13 years,a recent survey predicts.People have got to expect Chinese growth in the low 7s,said currency expert Chris Gothard of Brown Brothers Harriman.Responding to this,China's outgoing President,Wen Jiabao,called for a proactive fiscal and a prudent monetary policy,while giving more priority to maintaining growth.For its part,Thailand is recovering nicely from last year's devastating flooding around the capital,Bangkok.The nation grew 11% on the quarter,with both domestic spending and tourism gaining momentum.On the year,Thai growth was up 0.3%,beating the estimate of a -0.5% loss.Back in China,Internet titan Alibaba is buying back 20% of a stake in it held by Yahoo for 7.1 billion dollars-6.8 billion of that will be in cash.Yahoo will still own more than 50% of Alibaba with Softbank.Yahoo is considering a massive share buyback with the proceeds of the sale.The MSCI Asia Pacific Index rose 0.2% this morning,Monday. Yahoo(YHOO)

Focus On Tech:Google and Yahoo

Hudson Square Research has a buy rating on Google,with a price target of 750 dollars.Google has a very strong core business,says Rory Maher of Hudson Square-plus mobile and display assets.They have a lot of cash to buy fast-growing Inet companies.
Mobile search is starting to boost Google's sales.Hudson Square is excited about Google's Android operating system.They think it's gonna gain a majority share in mobile search.
Yahoo also has a buy rating.Hudson Square is pretty bullish on Inet media overall.Yahoo owns a bunch of ecommerce companies in China that are about to be profitable.Hudson Square is also pretty excited about Yahoo as a stand-alone company,and is pretty confident in the shift of traditional ad dollars to online,which will benefit both Google and Yahoo.
The biggest risk for both is Facebook stealing ad dollars.All will benefit from the shift to online;it's a question of who steals ad dollars from within the sector,Rory Maher believes.
Hudson Square Research is an institutional equity research boutique focused on the tech,media,telecom and consumer sectors.They provide institutional investors with fundamnetal equity research to assess valuation,risk and opportunity.
Google(GOOG),Yahoo(YHOO)

The Paring Knife,Part 2:Yahoo Cuts Cell Phones

While Wal-Mart is cutting jobs and closing stores,Yahoo is responding to its situation by no longer serving lower end cell phones.Yahoo Mobile,its cell phone hub,has posted an apology to some pay-as-you-go phone owners.When these customers try to access Yahoo email or other services,they are met by the frustrating message.Yahoo Mobile says that if you own a higher end phone that got swept up in the change,you should let them know.Some AT&T customers with Motorola GoPhones are being impacted by the abrupt move.Windows Live Hotmail is still available to them.
GoPhone owners might consider complaining to the Federal Communications Commission about Yahoo's action.In the course of the financial crisis,many consumers are turning to the pay-as-you go model from the more expensive plans.Lack of access to their Yahoo account will hardly be helpful to them as they themselves navigate the difficulties of a damaged economy.

Inside Intel:The Widget Channel

The long-sought integration of the Web with TV may soon become reality.Yahoo(YHOO) and Intel(INTC) have partnered to promote an offering called The Widget Channel.It consists of icons of widgets that scroll across the bottom of a TV screen.If you click on an icon,you will see Web content such as eBay auctions or weather reports on the left side of the screen.This service is enabled by a new Intel chip and Yahoo software.It is expected to be avilable by early next year.Even if your TV provider hasn't endorsed the service,you will be able to purchase a device that connects to a cable box and use it anyway,Intel says.