Yahoo Analysts: Jerry Yang's Departure Could Open Way to Deals
While most on Wall Street focus on a long-expected sale of the firm's Asian assets, one analyst says "this resignation increases the chances of an outright sale of the company."
NEW YORK - Co-founder Jerry Yang's exit from his roles at Yahoo is a positive for the online company and its shareholders, according to analysts.
With the board members also considering stepping down, Stifel, Nicolaus analyst Jordan Rohan said in a report on Wednesday: "This represents progress from the perspective of shareholders looking for a sale of the company, as the board reportedly had been pushing for alternative scenarios, including the sale of a minority stake to private equity."
He been suggested: "This resignation increases the chances of an outright sale of the company, even if it happens in two stages, with the cash-rich split-off of Asian assets first."
Yahoo shares, which rose in after-hours on Tuesday, opened higher on Wednesday. At 10:05am ET, the stock was up 2.3 percent at $15.78. The stock has traded between $11.09 and $18.84 over the past year.
Rohan estimated the possibility that Yahoo will be able to unlock the value of its Asian holdings tax efficiently or that the company is sold outright at 70 percent. "In a scenario where only the Asian assets are sold, Yahoo is likely left with $11.8 billion cash and a minority stake in Alibaba - around $12 per share combined - and new operating assets valued at $3.60 per share," he said.
Others also see Yang's departure as a potential positive, but focus mainly on Asian asset sales rather than a sale of the whole company given that Scott Thompson just joined as CEO. "The change clears the air a bit between the board and investors, which should help incoming CEO Scott Thompson gain some investor receptiveness," said Ken Sena, analyst at Evercore Partners.
But he also suggested that the exit could mean an Asian sale isn't likely to happen right away. "The move offers yet another signal that the monetization of certain holding, such as its Asian Assets, is less imminent than hoped, as the board appears to be pushing harder towards a turnaround," Sena said.