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Yahoo Has Been In ‘Free Fall,’ Says Report; Bid Deadline Looms?

With initial bids reportedly due Monday, Yahoo ’s ( YHOO ) revenue and earnings are expected to decline this year, according to a report by tech news site Re/code on Wednesday. Re/code said it based its report on financial information being distributed by Yahoo’s bankers to help possible buyers figure out how much they might bid. Yahoo has reportedly gotten interest from as many as 40 groups who have until Monday to submit preliminary bids for Yahoo’s core business and Asian operations. The book of disclosure documents “shows a company in what has been a serious free fall,” said Re/code, citing sources interviewed. That “has many nervous about bidding.” A Yahoo spokesperson told IBD via email that the company had no comment about the report. Re/code said that, according to the documents, Yahoo estimates that 2016 revenue “is dropping close to 15% and earnings by over 20%. Those revenues, backing out traffic acquisition costs (TAC), are expected to decline from $4.4 billion in 2014 and $4.1 billion in 2015 — already down from previous years — to $3.5 billion in 2016; meanwhile, earnings before depreciation, taxes and amortization are moving from $1.4 billion in 2014 and just below $1 billion in 2015 to $750 million in 2016.” TAC refers to payments that Yahoo makes to other websites to carry its ads. Yahoo expects to have about 9,000 employees at the end of 2016 — down from 12,500 in 2014 and 10,500 in 2015 — while stock-based compensation remains “steady,” Re/code said. That could indicate that “CEO Marissa Mayer is loading up valued employees with outsize share grants to get them to stay,” the report said. Yahoo confirmed last week that Senior Vice President of Talent Acquisition and Development Sandy Gould will become the latest high-profile executive to leave the struggling Internet firm. Yahoo has recently implemented layoffs and begun the process of selling itself and spinning off its hefty stake in China e-commerce giant Alibaba Group ( BABA ), and is also in the midst of a proxy fight seeking to oust its entire board. Yahoo’s revenue growth has stalled for nearly a decade as ad dollars continue to slip away to rivals including Facebook ( FB ), Netflix ( NFLX ), Alphabet ( GOOGL )-subsidiary Google, and others that include high-profile startups Snapchat and Pinterest. Expressions of interest are pouring in from dozens of groups that are eyeing buying the struggling Web portal, with Verizon ( VZ ) rumored to be the most likely acquirer, said Monness Crespi Hardt analyst James Cakmak in an industry research report early last month. Yahoo stock lifted 0.7% in the stock market today , closing at 36.66. Sale or not, Yahoo is facing rough waters. In a letter charging the current board of Yahoo with failing to deliver results for its shareholders, activist investor Starboard Value announced that it wants to sweep out all of the ailing Web company’s nine directors and replace them with its own slate during Yahoo’s 2016 shareholder meeting later this year. The letter — from Starboard Value managing member Jeffrey Smith, one of Starboard’s slate of Yahoo board nominees — indicates that Starboard also doesn’t trust Yahoo’s current directors to perform in terms of either the strategic review of Yahoo’s core search and display-ad business or with the eventual fate of Yahoo’s 15% stake in Alibaba and Yahoo’s holdings in Yahoo Japan. Yahoo’s Asian assets — comprised of its Alibaba holdings and a 35.5% stake in Yahoo Japan — represent the vast majority of Yahoo’s $34.69 billion market value. Yahoo owns a 15% stake in Alibaba, or about 384 million shares. Last month, Monness Crespi estimated the value of Yahoo’s core assets at $3 billion to $4 billion. Alibaba stock closed up 1.8% Wednesday at 78.68. Verizon stock was about flat, closing at 53.52.

Weibo Stock Soars As Alibaba Is Rumored Ready To Boost Its Stake

Weibo ( WB ), the “ Twitter ( TWTR ) of China,” saw its stock surge Wednesday on speculation that China e-commerce titan Alibaba Group ( BABA ) might boost its stake in the rising social media service. Weibo stock was up 11% in afternoon trading in the stock market today , near 20. Weibo was spun off in 2014 by Shanghai-based Web portal Sina ( SINA ) which still owns the majority of Weibo’s stock. Alibaba also has a strong stake in the company. With about a 20% ownership of Weibo as of now, “investors naturally believe Alibaba has interest (in) Weibo ultimately,” ITG Investment Research analyst Henry Guo told IBD via email on Wednesday. In May 2015, Summit Research had downgraded Weibo on concerns of increasing competition from other social networks, including from China Internet giant Tencent Holdings ( TCEHY )-owned WeChat. Summit also pointed to Weibo’s sluggish efforts to monetize and the China microblog’s too-pricey valuation back then. Weibo owes much of its current success to a surge in mobile users. Monthly active users rose 34% year over year to 236 million in December, with 83% of those users connecting with mobile devices. Weibo last month reported Q4 earnings that beat expectations. Weibo’s Q4 beat came with light Q1 sales guidance of $111 million to $116 million, up 15% to 20% year over year but below Wall Street’s expectations of $118.2 million, almost a 23% rise. The stock is forming a cup-type base with a potential buy point at 20.66. The pattern is within a much longer consolidation. Weibo stock has traded below its all-time peak of 26.08 since September 2014. Weibo still carries a strong IBD Composite Rating of 96 out of a possible 99. The company went public in April 2014 at 17 a share. After spiking on the initial public offering, shares flattened out, eventually sliding to an all-time low of 8.78 in August 2015, during China’s stock market crash . Sina stock was up 3%, near 49 in afternoon trading on Wednesday. Alibaba stock was up 2%, near 79 and Twitter stock was up 2%, near 17.

Amazon.com Expands Same-Day Delivery To 11 New Metro Markets

E-commerce leader Amazon.com ( AMZN ) announced Wednesday that it was expanding its free same-day delivery to 11 additional metro areas and expanding coverage in several other major markets. Free same-day delivery is a perk for Amazon Prime subscribers, the company’s loyalty program. Prime costs $99 a year, for which users get such other perks as free video streaming and free two-day shipping where same-day delivery isn’t available. With same-day delivery, orders placed before noon arrive before 9 p.m. the same day. Afternoon orders will arrive the next day, the company said in a press release Wednesday . Prime has more than 50 million members, some analysts say, and is a key driver in the e-commerce giant’s explosive growth. Amazon hasn’t disclosed its Prime membership numbers. Amazon says that its same-day delivery option is now available in more than 1,000 cities and towns in the U.S. “Prime was developed to make shopping on Amazon fast and convenient, and millions of members have used Prime free same-day delivery to make their lives even easier,” Greg Greeley, vice president of Prime, said in the release. “We keep making Prime better, and as our operational capabilities grow, we will continue to invent and expand delivery options that customers love.” The new markets are Cincinnati; Milwaukee; the North Carolina cities of Charlotte and Raleigh; the California cities of Fresno, Sacramento and Stockton; Richmond, Va.; Louisville, Ky.; Nashville, Tenn.; and Tucson, Ariz. Amazon stock was up nearly 2%, near 597, in afternoon trading on the stock market today . The company has an IBD Composite Rating of 77, where 99 is the highest. Amazon and its dominant position in the market have left other e-tailers such as eBay ( EBAY ) and Wal-Mart ’ s ( WMT ) Walmart.com struggling to gain traction. EBay announced Tuesday that it was launching a new shipping supplies store that will provide eBay-branded packaging to sellers using the site. Startups such as Jet.com and Alibaba ( BABA )-backed ShopRunner are also taking aim at Amazon’s dominance.