How A Leveraged Recap of Yahoo! Could Actually Work

It's more complex, but there many ways to create value for Yahoo! shareholders should they go down the minority stake leveraged recap path.

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Yahoo!'s Board Can Run But They Can't Hide from Shareholders

The Silver Lake low-ball offer is making many Yahoo! investors despair. This isn't over yet though.

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Microsoft, Silver Lake, THL: Where to Yahoo!?

By Eric Jackson11/29/11 - 12:00 PM EST
NEW YORK (TheStreet) -- Last night, we learned that Microsoft(MSFT_) is likely to team up with Silver Lake on a leveraged recapitalization bid for 20% of Yahoo!(YHOO_). Also, THL(formerly known as TH Lee) is thinking of making an outright bid for the company.

There have been a lot of rumors floating around regarding what will happen with Yahoo! Let's review the key players and the possible outcomes.

The key stakeholders in this drama are:

Jerry Yang and David Filo. The two co-founders of Yahoo! still own about 9% of the company. Although Yang is the public face of the pair, Filo actually has a much bigger stake in Yahoo! But they typically vote together. They don't want to see their baby dismembered. So their optimal outcome would be to see Yahoo!'s core business undergo a renaissance in the years ahead and returned to its place of prominence in the Silicon Valley hierarchy. Many have guessed that Jerry didn't want to sell the company to Microsoft and wants to be aligned with private equity in order to retain control of his baby.

Capital Research. This big mutual fund headed up by famed media investor Gordy Crawford has been a large investor in Yahoo! for a while. They've also been a public critic at times. Remember when Gordy called for a recount of the 2008 shareholders' vote and we learned that the votes cast against Chairman Roy Bostock and other directors was much higher than what was initially reported. They own 6.8% of the company and would like to see the highest price possible -- even if they have to wait six months instead of two months.

Third Point. Dan Loeb is the newest large shareholder in Yahoo! He's now the second largest shareholder giving him a big voice with the board. He's also gone "activist" with Yahoo!, telling them he intends to push for change if he doesn't see the board acting in his (and other shareholders') best interests. He's already asked for two board seats. It's likely he'd launch a proxy contest in the spring if he didn't think the board was moving fast enough.

...

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Should You Buy Zynga? No Way

Zynga starts its IPO Roadshow Monday. The company's not worth more than $5 billion fair value - nowhere near $20 billion.

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The Story Behind Today's Earlier Bogus Sina Rumor

Today's wild false rumor about Sina and Muddy Waters sent the stock into a tailspin.

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I'm Sick of Single or Childless People Complaining About Kids On Planes

Childless people who complain insufferably about having to travel with kids on planes would have their heads explode if they ever had to babysit a kid for more than 24 hours.

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Did Jeff Jordan Know Something When He Quit OpenTable?

The stock is down 72% since Jordan left.

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We've Become a Nation of Bubbleheads

Why We've Become a Nation of Bubbleheads

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What's Craig Mundie Been Smoking?

Microsoft thinks Siri is just a function of good Apple Marketing.

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What If Facebook's IPO Dreams Are Built On As Much Hype As Groupon's?

Bankers hyped up Groupon to get the deal done fast. Beware Facebook's banker who do the same for their IPO. Test the key assumptions built into the business model.

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Why Yahoo!'s Board Wants A Deal Before January 7th

Why Yahoo!'s board is working hard to ensure they do something with the company before January 7th.

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The Difference Between a Tech "Greenfield Gorilla" and a "Nichey Nancy"

Is Your Tech Company a Greenfield Gorilla or a Nichey Nancy?

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Asking Al Gore About Apple's Board & How They Pick Talent

My two-part question to Al Gore from last month in Hong Kong.

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Good News: Even When They're Given Inside Information, Politicians Are Hapless Traders

Frustrated that politicians can trade on inside information and you can't? Take heart: they're so hapless, they can't make money from it.

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The Worst Tech Decision in the Last 10 years: Selling PayPal

While it's easy to take the money when it's flashed in front of you, PayPal's decision to not stay independent is the dumbest one in tech from the last 10 years.

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6 Things Jeff Bezos Knew Back in 1997 That Made Amazon a Gorilla

If you're building a company today, here are 6 things Jeff Bezos knew back in 1997 that made Amazon (and will make you) so successful.

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How to Get More Technical Graduates in the U.S.

NEW YORK (TheStreet) -- I was watching the season finale of Bill Maher's Real-Time last Friday, when he threw out a statistic that shocked me: in 2009, the U.S. graduated 39,000 people with computer science and engineering degrees and 82,000 with visual arts degrees.

Maher argued that this is a big problem for us as a country. He suggested we're not being tough enough with kids pursuing a visual arts education. We need to tell them to be more realistic and we need more technically qualified people to fill those jobs if our country is going to compete with China and others.

He's right.

But his panel flatly disagreed with him. It seemed to unite those on the right and the left that the government should try and steer how individuals decide to pursue their educational goals.

Many on the right want the government to have less influence on education -- not more. Rick Perry -- if you believe him -- even wants the Department of Education disbanded. If these conservatives had their way, as many students could pursue degrees in visual arts as wanted. They could find a good private institution that would give them a degree, in exchange for a costly amount of tuition.

For those of the left, most would believe the government should be able to provide an education but it's up to individuals to have the free choice to select their education.

The power of the individual is sacrosanct in America. We have an innate belief that the guy next to us on the subway could be the next Steve Jobs from Apple(AAPL_). Jobs was a hippie. He dropped out of Reed College after freshman year. How can we try and restrict the next individual genius that might bubble up from the bottom of our system.

Look, I happen to be a guy who was an English major in college. I should probably be living in my mother's basement by now, but I actually think a liberal arts training is a great foundation for anyone in life pursuing a variety of later technical professions. So, I'm sympathetic to those who say let the kids decide if they want to be dance, philosophy or social studies' majors.

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What Is Next For Apple's iAd?

Apple has to decide whether it wants to play in the ad world or not.  Eddy Cue will now make that decision.

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How a "Cash-Rich Split" Could Take Yahoo! to $41/Share

The best option for Yahoo! shareholders is the company disposing of its Asian assets in a structure called a "cash-rich split."  Here's how it could work and turn Yahoo! into a $41/share stock.

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Steve Jobs Had No Business Being Successful When He Returned to Apple

Steve Jobs -- according to his track record to that point in his life -- had no business making Apple successful when he came back in 1997. That he did makes him all the more remarkable.

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Key Apple Executive Off Stock Grant List

By Eric Jackson, Senior Contributor11/09/11 - 06:00 AM EST


NEW YORK (TheStreet) -- Last week, Apple(AAPL_) granted several key executives -- including Phil Schiller, Scott Forstall, Peter Oppenheimer, and Bob Mansfield -- large Restricted Stock Unit (RSU) grants that vest over five years.

They are essentially golden handcuffs that highly motivate these men to stick around in this post-Steve Jobs era.

One senior executive notably absent from the list is Jony Ive. I hope it doesn't portend Ive's departure. We'll see some SEC filing in the coming days or weeks about a similar grant to him.

Jony Ive is the key product and design person at Apple.

In Walter Isaacson's book on Steve Jobs, it's clear how important Jony is at Apple. Jobs' wife, Laurene Powell Jobs, said of the special bond between Steve and Jony: "A lot of people in Steve's are replaceable. Not Jony."

Jobs held Jony in very high regard. He rescued Jony from the old Apple and convinced him to stay after Jobs came back to the company in 1997. Even though no one outside of Apple had heard of Jony then, the two men formed a special bond and collaborated together on the iMacs, iPods, iPhones, and iPads.

Jony's design lab in Apple's Cupertino headquarters is under lockdown from outside visitors. It's likely that today, in that lab, there are the products that will amaze us from Apple (in some form) for the next 15 years.

At the recent company-wide memorial for Jobs at Apple, Jony gave -- in my view -- the best speech about Steve.

Jony found it hard when Steve left the company before on his medical leaves. There's a story in Isaacson's book about how Jony met Steve at the airport in Silicon Valley after Steve returned from his liver transplant in Memphis. It's clear that Jony missed him, but was also bothered by the fact that many outside of Apple wondered if the company could be as "innovative" without Steve. Jony took it as a slight.

I hope that Jony now has his time to shine in the sun over the next several years at Apple -- along with all the other talented Apple executives.

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The Owner of Yahoo!'s Patents Could Cripple Facebook's IPO Aspirations

With 1,100 granted US patents, Yahoo! could choose at any moment to offensively go after Facebook, Microsoft, and other large Internet companies.  This IP portfolio could become one of the most hotly sought after jewels in the Yahoo! empire in the next two months.

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Eric Schmidt Doesn't Believe For A Second That Siri Is A Threat To Google

Despite making a big deal about it on Friday in his answers to the US Senate, you shouldn't think Eric Schmidt or any Google exec is fretting yet about Siri as a threat - even though they should.

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Daniel Loeb Wants Jerry Yang Off Yahoo! Board

NEW YORK (TheStreet) -- Daniel Loeb has been silent since announcing his $1 billion stake in Yahoo!(YHOO_) two months ago. That changed this afternoon.


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More Proof That Siri Is Intended to Be A Google Killer

More details on why Siri is a Google Killer.

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Why Apple Wants to Make TVs

Jobs' biography makes it clear why Apple wants to make its own TV sets

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Jackson Says Groupon Share Offering Has `Too Much Risk'

My take on the Groupon IPO: Too much risk

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My Question For Jerry Yang

My question for Jerry Yang about Yahoo!'s new/old mission statement.

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Thanks For Reading in October

I started writing in TheStreet on finance and technology back in 2008.  It's fun and helps me formulate my thinking on different topics.

In October, I had my biggest month yet in terms of readers of my Forbes posts since I started contributing there in March:

- 383k unique visitors
- 725k page views

Thanks for reading.

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Yahoo!: Digging Into So-Called Scoops

NEW YORK (TheStreet) -- Along with the broader market, Yahoo!(YHOO_) has been sacked this week.

It is now back to where it was trading in early October. Last week, Yahoo! was up more than 25% in the last month. It's now only up 13% for the last month. (Nasdaq is still up 7.6% for the last month.)

Don't get me wrong, I don't like that. It stinks, in fact.

However, let's take a step back from the ledge.

There were five things that were reported on with certainty last month that were not necessarily certain at all.

1. A couple of weeks ago, many media reports said that Jerry Yang told the AsiaD conference in Hong Kong that he wasn't going to sell the company. That was odd, as I was in the audience and don't recall him saying that at all. I forget his wording.

He might have said they weren't going to be a forced seller or they didn't have to sell if they didn't want to. He was saying they are playing from a strong hand. Maybe it was a bluff. Later on in the discussion, he said very clearly that they (the board) were going to do what was right for the shareholders. I took that to mean that -- just as everyone suspects -- this thing is still in the middle of a sales process.

2. A Wall Street Journal article a couple of weeks ago quoted some private equity bidders as saying they thought Yahoo! was only worth $16 to $18 a share in a buyout and was already over-priced at $15 as the stock was at $11 in August. Really? I think Apple(AAPL_) has a fair value of $25 a share. It's all hype and I'd really rather buy it at that price than $400.

3. A Bloomberg report on Friday night interrupted an otherwise pleasant dinner I was having. It quoted -- in its "scoop" - "5 unnamed sources" who said that Yahoo! was going to separate their Asian assets in a tax-free manner that would lead to a stock buyback or a dividend.

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