Yahoo! Inc. YHOO
Yahoo's Asian assets and cash alone cover its $14 price; with a new board and unlocked 40% Alibaba stake, intrinsic value is $20-32 per share — 40-122% upside.
Thesis
At $14.26, Yahoo trades at just 2.6x EV/EBITDA — net cash, Yahoo Japan, and the 40% Alibaba stake alone are worth $10.93 per share, leaving core Yahoo valued at a punitive $3.33. Third Point, which has re-established a 5.2% stake, argues the failed board under Chairman Roy Bostock and recently dismissed CEO Carol Bartz has squandered both existing and potential value across the 'Bostock & Bartz era,' with shares flat while Google and the indices compounded. The fix is to overhaul the board (keeping only Kenny, Smith, and Yang), block any dilutive PE 'sweetheart' transaction, and let Yahoo's real assets — especially a reappraised Alibaba stake worth up to $15.28 per share as Taobao's 2012 GMV target of $157bn laps eBay plus Amazon combined — take the spotlight, delivering 40% to 122% upside to $20-32 per share.
SCQA
Yahoo is a global digital media franchise with 678 million worldwide unique visitors, a 40% fully diluted stake in Alibaba Group, a stake in Yahoo Japan, and net cash — yet shares have languished at $14.26 for six years.
The 'Bostock & Bartz' board has destroyed value versus Google and the indices since 2005, masks $10.93 per share of Asian stakes and cash behind sideshow drama, and may now entertain dilutive private-equity sweetheart deals to entrench itself.
Overhaul the board except Kenny, Smith, and Yang, reject any non-pro-rata PE control transaction, install new senior management, and shift focus to revitalizing core Yahoo and monetizing the Alibaba stake, potentially via Jack Ma.
Intrinsic value is nearly $20 per share today (40% upside); over two to three years, Alibaba re-rating, a 7x core-Yahoo EBITDA multiple, and tax-efficient structures lift the sum-of-parts to $25-32 per share — 77-122% upside.
The three reasons
- 1
Yahoo trades at $14.26 vs sum-of-parts intrinsic value of nearly $20 — 40% upside
- 2
Core Yahoo valued at just 2.6x EV/EBITDA vs a 7.0x intrinsic multiple
- 3
40% Alibaba stake could re-rate from $5.24 to $15.28 as Taobao laps eBay + Amazon
Primary demands
- Overhaul the Yahoo Board of Directors, retaining only David Kenny, Brad Smith, and Jerry Yang
- Reject 'sweetheart' private equity deals that give preferential control without pro-rata terms to all shareholders
- Do not dilute Yahoo shareholders to entrench the Board
- Unlock the value of the 40% Alibaba Group stake and Yahoo Japan holding
- Install reinvigorated senior management to revitalize the core Yahoo business
KPIs cited
Pattern membership
Where this document fits across the library's 12 rhetorical / structural patterns.
Notable slides (5)
Notes
Delivered at CNBC/II Delivering Alpha Conference on 2011-09-14 with subsequent updates before distribution. Signature/author is 'Third Point' as a firm — no individual signatory on the cover, so author_name is null (Daniel Loeb led the campaign but is not credited on this deck). Coins the 'Bostock & Bartz era' as a memorable value-destruction shorthand. Opens with a governance statement slide (p.2) rather than a thesis hook — classic activist framing demanding board change before valuation pivot. Pie chart on p.4 is the rhetorical workhorse: $3.33 core Yahoo is the punchline.