Investing

Jerry Yang: Worth $1.75 Billion or -$600 Million to Yahoo!????

Stock Tickers: YHOO, GOOG, MSFT, TWX, DJ, DELL

In today’s pre-market trading activity in Yahoo! (YHOO-NASDAQ), shares were up 5% and the company would have had an implied $39.5 Billion Market Cap.  At yesterday’s close the market cap $37.75 Billion, yet the stock closed down 1.7% today at $27.63 with an implied market cap of $37.13 Billion.

So as recent as early this morning the Semel resignation and appointment of Jerry Yang as CEO was worth an extra $1.75 Billion in market cap to Yahoo! stock.  But at the close today compared to yesterday’s closing price the Semel-out Yang-in trade made the stock worth close to $600 Million less.  Before you go pick that apart for exact numbers, please keep in mind that these figures were rounded for simplicity purposes.  But you can see where we are going with this.

There are some that question how effective Yang can be, some wanted to have Sue Decker in, some want Semel out entirely, some think the model needs to be altered, and some will just NEVER be happy no matter what happens.  Some even want to believe the company should have to go recapture all the lost ground given up to Google (GOOG-NASDAQ), and some want it to merge with Microsoft (MSFT-NASDAQ) or even do some deal with Time Warner’s (TWX) AOL unit.  I have even seen some that want it in a deal of sorts going after Dow Jones (DJ-NYSE) or going after Asian search and Internet players….. I am sure if I read even more and more than the 30 or 40 blurbs that I’d find even more wants.

So what gives?  Yang may be here for a year, two years, maybe even longer.  But this is still better than where the stock was just last week when it looked like Semel was trying to stay dug in.  When I think about the market cap differentials between this +$1.75 Billion and -$600 Million it almost seems silly.  Yours truly thinks the company is better off for the move, even if this turns out to be a bandage for an axe wound rather than a surgical cure. 

If you use the Dell (DELL-NASDAQ) model, which isn’t even an entirely fair comparison, you should be reminded that it too gapped up and closed lower the following day and in fact shares had slipped another 10% more within 6-weeks.  Roughly 3 months from the Dell lows, its shares are now up almost 11% from the close before the announcement that Rollins was out and Dell was coming back in.  You can’t use one comparison as a predictor for the other because these cases are not the same, but this sure looks familiar.

Jon C. Ogg
June 19, 2007

Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.

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