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Yahoo Prepping To Auction Off Its Core Internet Business: Report

Yahoo ( YHOO ) is about to hold a traditional auction for its core Internet search business and has begun sending nondisclosure agreements to prospective bidders, according to a media report. Rather than talking with buyers individually, “Yahoo is holding a traditional auction for the sale with formal bids,” according to an item carried by CTFN late Wednesday. Yahoo CEO Marissa Mayer is under intensified pressure from major investor Starboard Value, which has urged the exit of Mayer and some directors, as well as the spinoff of Yahoo’s core search business. Yahoo directors are close to offering at least two board seats to the activist hedge fund in order to avert a proxy fight, according to a report on Friday in the New York Post. Analysts say Yahoo is poised to lose more ad dollars to Facebook ( FB ), Alphabet ( GOOGL )-owned Google and high-profile startups such as Snapchat and Pinterest. On Monday, Yahoo said that it may have to write down the goodwill value of Tumblr , more than two years after the Web pioneer spent $1.1 billion to buy the microblogging site. Bloomberg reported last week that Yahoo was preparing to meet with potential suitors. Among the companies rumored to be interested in Yahoo are Comcast ( CMCSA ), Verizon Communications ( VZ ),  AT&T ( T ) and Time ( TIME ). Rumors re-emerged this week that e-commerce giant Alibaba Group ( BABA ) might buy back a valuable stake that Yahoo now holds in the Chinese company. Yahoo’s Asian assets — comprised of its Alibaba holdings and a 35.5% stake in Yahoo Japan — represent the vast majority of Yahoo’s $3.8 billion market value. Yahoo owns a 15% stake in Alibaba, or about 384 million shares. But some observers say such a transaction is unlikely because of high tax implications for Alibaba. On Monday, Alibaba senior executives Jack Ma and Joe Tsai said they will spend a combined $500 million to buy company stock. It will be part of a $4 billion stock-buyback plan that Alibaba announced in August. Alibaba’s recent financial moves have some investors wondering if the Chinese conglomerate is ready to make a play for Yahoo , according to a report in Variety. Yahoo stock was down 0.5% in midday trading in the stock market today , near 32.75. Yahoo stock had risen in 11 of the previous 12 trading days, gaining 25% since early February, amid the buyout expectations. But shares still are down 25% over the past 12 months.

Yahoo Stock Keeps Climbing On Sale Talk, Alibaba Buyback Chatter

Yahoo ( YHOO ) stock climbed for the fifth straight trading day on Tuesday amid chatter that China e-commerce giant Alibaba Group ( BABA ) might buy back the valuable stake Yahoo now holds in it, according to a media report. Rumors that Alibaba might buy back its stake from Yahoo have emerged before, although some observers say such a transaction is unlikely because of high tax implications for Alibaba. Yahoo has said it is approaching buyers potentially interested in all or part of the company — and Alibaba’s recent financial moves have some investors wondering if the Chinese conglomerate is ready to make a play for Yahoo , according to a report in Variety. Alibaba senior executives Jack Ma and Joe Tsai said on Monday that they will spend a combined $500 million to buy company stock. It will be part of a $4 billion stock-buyback plan that Alibaba announced in August. Comcast ( CMCSA ), Verizon ( VZ ) and AT&T ( T ) “remain the leading candidates to acquire Yahoo,” said Mizuho analyst Neil Doshi in an industry note this week, adding that those companies could offer a higher price than private equity groups, wield huge subscriber bases across Internet and TV, and operate leading mobile services. Time ( TIME ) has also been mentioned as a possible Yahoo acquirer. Yahoo stock was up just over 3% ahead of the closing bell in the  stock market today , near 33, while Alibaba was up nearly 3%. Yahoo has gained 25% since early February, but is down 26% from where it was trading this time last year. Yahoo shares also climbed more than 3% on Monday. Yahoo’s Asian assets — comprised of its Alibaba holdings and a 35.5% stake in Yahoo Japan — represent the vast majority of Yahoo’s $3.8 billion market value. Yahoo owns a 15% stake in Alibaba, or about 384 million shares. Asked about Alibaba’s interest in buying back its shares from Yahoo, Alibaba Executive Vice Chairman Joe Tsai said during an October call with analysts that Alibaba would buy back its shares “if it is very significantly accretive to our shareholders and that’s the principal we operate on.” Scott Rostan, founder and CEO of Training the Street, a group teaching corporate valuation and merger and acquisition skills, told IBD this week that Alibaba’s buyback of its shares from Yahoo “is definitely possible.” He added: “They could buy back 15% of their own stock and then (effectively) own Yahoo, which would be a very ironic twist.” In 2012, Alibaba bought about half of Yahoo’s then-40% stake in a deal valued at about $7.6 billion with the backing of China’s sovereign-wealth fund, China Investment Corp., and a clutch of private-equity firms. Because Alibaba’s purchase of the remainder could result in a huge tax bill on Yahoo’s gains from the Alibaba, “I think they have no interest,” Shanghai-based 86Research analyst Sean Zhang told the Wall Street Journal in December. “They will continue to focus on growth, focus on building a more competitive company,” Zhang said. Alibaba said that it had $18.2 billion in cash, cash equivalents and short-term investments as of December 2015. Yahoo’s directors are close to offering at least two board seats to activist hedge fund Starboard Value in order to avert a proxy fight, according to a report on Friday in the New York Post. Starboard founder Jeff Smith is looking to oust Yahoo CEO Marissa Mayer and force a sale of the company’s core Internet business. Analysts say Yahoo is likely to lose advertising dollars to Facebook ( FB ), Alphabet ( GOOGL )-owned Google and high-profile startups like Snapchat and Pinterest. On Monday, Yahoo also said that it may have to write-down the goodwill value of Tumblr , more than two years after the Web pioneer spent $1.1 billion to buy the microblogging site. Yahoo said earlier that it took a $230 million impairment charge related to Tumblr and was considering strategic alternatives for its core Internet business.

Instant Gratification A Hit For Amazon.com With Prime Now

With the lofty goal of delivering vast swaths of his mighty e-commerce firm’s sprawling inventory within one hour, Amazon.com ( AMZN ) CEO Jeff Bezos has struck cybergold — shoppers have flocked to the latest iteration of his Amazon Prime loyalty program, Prime Now. Amazon executives have described rapid delivery as both difficult and expensive — and have acknowledged that customers love it. And Amazon loves its customers, so much that Bezos repeatedly has said the company will forego profits to please them. Cowen & Co. Tuesday released results of its survey of 1,200 Amazon Prime customers that it says shows one in four already have adopted Prime Now. It’s basically free. With order via a mobile app, Prime Now will deliver a large number of Amazon-bought goods within two hours in areas of the nation where the service is available. Customers can use the app for one-hour delivery as well, but there’s a $7.99 charge for that. Prime Now is one Amazon salvo in a multiyear campaign to snatch more of the household budget. Amazon.com stock was up more than 3.5%, near 573, in afternoon trading on the stock market today . The company carries an IBD Composite Rating of 78, where 99 is the highest. Cowen analyst John Blackledge, in the research report, says that Bezos’ approach with Prime Now complements Amazon’s same-day and two-day services, and adds more value to its grocery operations Pantry and Fresh. Wal-Mart Vs. Amazon Heating Up Wal-Mart ( WMT ) — by far the largest brick-and-mortar retailer — makes bank on its grocery business, which accounts for about half of its top line, according to ChannelAdvisor ( ECOM ) Executive Chairman Scot Wingo. But Amazon is encroaching on Wal-Mart’s business. “We view Prime Now as one of the pathways Amazon is using to gain share in the $1 trillion grocery market,” Blackledge wrote. “Our early survey work suggests the strategy is working.” The survey indicated that 70% of those responding bought goods via Prime Now multiple times a month — and about a third of shoppers bought groceries from a local store that elected to list its items on Prime Now. The service is available in 24 markets that account for nearly half of the U.S. gross domestic product, says Blackledge. Food delivery is available in seven markets. Prime Now’s success is also a blow to eBay ( EBAY ), which continues to struggle to maintain relevancy for shoppers. Plagued by problems such as a significant data breach and SEO challenges following a change in Alphabet ( GOOGL ) subsidiary Google’s search engine algorithm, eBay has been unable to match Amazon’s double-digital growth rate. Disagreeing with recent investor sentiment — eBay stock has had a choppy beginning to 2016 — Wells Fargo analyst Matt Nemer says that eBay has potential, albeit as a hedge against a potentially slowing global economy. And for its part, eBay has been making significant bets on restructuring the way it lists items. But as Amazon continues to innovate its way to riches, some say that its position as the dominant e-tailer is impenetrable . That hasn’t stopped rivals, however. Privately held Jet.com is making a stab, also offering two-day shipping, and Alibaba ( BABA )-backed ShopRunner is also taking aim at Amazon. ShopRunner executives have told IBD that the company plans to take on Amazon in categories where the Seattle-based company doesn’t have a strong foothold, such as fashion.