Tuesday, October 28, 2008


That's right Yahoo! (YHOO)has prime real estate, no not sky scrapers or waterfront properties but Internet real estate presence. They rank #1 and #2 respectively for Top Global and U.S. sights. Yahoo's finance page called "finance.yahoo.com" is also the most visited site in investing.
You would think with all their Internet presence they would be trading much higher, but like the market in general they are trading well off their highs. So what is this Internet behemoth worth anyway? Earlier in the year Microsoft(MSFT) made a bid of $33 per share which Mr. Jerry Yang Yahoo's Co-Founder and current CEO turned down. Yahoo is currently trading at $11.50 per share. In 1998 Yahoo's sales were 203 million with a book value of 38 cents per share and 435 million in cash with a stock price of $16.35 per share. Today in 2008 Yahoo does over 7 billion in sales with a book value of $8.33 per share and 3.6 billion in cash with a stock price of $11.50 per share. Book value has increased over 2000% since 1998 while revenues have increased over 35 fold. With its stock trading at 7x cash flow and 10x free cash flow it wouldn't be to surprising to see Microsoft or another suitor to come back into play. Shareholder activist Carl Icahn has a vested interest while management still has 20% itself. Even if no takeover or merger materializes these shares still look under valued. With 3.6 billion in cash Yahoo might do a little hunting itself and acquire some smaller players on the Internet landscape.


Author currently long MSFT, no positions in YHOO