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Microsoft Reportedly Among Those In Yahoo Acquisition Mix

The process of finding a buyer for struggling Web portal Yahoo ( YHOO ) is reportedly in the middle of its first round, and interest is high, according to a CNBC report , which cited sources close to the matter. This comes after a separate report said  Microsoft ( MSFT ) might put up “significant” financing in a bid for Yahoo. Microsoft executives are in talks with potential investors about providing funds to buy the troubled Internet company , Re/Code reported. A Reuters report said those talks are in the early stages. Microsoft and Yahoo have a longstanding search and ad partnership, and Microsoft is focused on preserving that relationship, it said. Private equity firms interested in Yahoo have approached Microsoft, Reuters said. Microsoft declined to comment. Microsoft has been meeting with private-equity firms and saying it might lend “significant” financing in a bid for Yahoo, according to Re/Code . In 2008, then-Microsoft CEO Steve Ballmer tried to buy Yahoo for about $45 billion. Yahoo’s overall market cap is now $33 billion, but that includes its its major stakes in China e-com leader  Alibaba Group ( BABA ) and in Yahoo Japan. Minus those holdings, analysts have pegged the price of Yahoo’s core business at $6 billion to $8 billion. Excluding its 15% stake in Alibaba, Rosenblatt analyst Martin Pyykkonen said in an industry note last week : “Yahoo’s current market cap implies $3.3 billion valuation for the core business and the Yahoo Japan stake. We think the fundamental outlook for Yahoo as a ‘growth’ stock is continuing to erode, especially in light of strong secular trends which are benefiting the likes of Facebook ( FB ) and Google owner Alphabet ( GOOGL ), both of which have more revenue concentration from mobile advertising.” Possible Yahoo Buyers Said To Include AT&T, Verizon Re/Code said that Yahoo started engaging with “strategic” bidders that include AT&T ( ATT ), Verizon ( VZ )and Comcast ( CMCSA ), with private equity and other investment firms to come next, the report’s sources said. Interested parties reportedly include Advent International, Vista Equity Partners, TPG and KKR ( KKR ). Verizon Chief Financial Officer Fran Shammo said in December that the U.S. wireless carrier could look at buying Yahoos’s core business if it were a good fit. Activist investor Starboard Value announced Thursday 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. This month, Yahoo appointed two members to its board: Catherine Friedman, a former managing director at Morgan Stanley ( MS ), and Eric Brandt, a former chief financial officer at  Broadcom ( AVGO ). “This is gearing up to be an epic proxy fight, and we believe that this will create a significant overhang on Yahoo shares,” said Mizuho analyst Neil Doshi in an industry note on Thursday. “It’s unusual to see an investor try to replace an entire board, but this clearly highlights to us that Starboard does not trust any of the existing board members will do what needs to be done to create value for Yahoo shareholders.” Yahoo Chief Executive Marissa Mayer has struggled to turn the company around in her nearly four years as Yahoo’s leader. Yahoo stock was up 1%, near 35, in afternoon trading in the stock market today .

Zendesk Attracting Larger Customers For Its Business Software

When you’re “a small player in a large market that is still new, fragmented and growing,” a key to success is “staying one step ahead of the competition,” and that’s what workplace software developer Zendesk ( ZEN ) is doing, said Summit Research analyst Jonathan Kees. Following the upbeat commentary in Kees’ research note, issued Sunday, Zendesk stock was up a fraction in early afternoon trading in the stock market today , but it’s still more than 25% below a 17-month high at 27.52, touched Dec. 4. Like other players in the infamous Software Sag of 2016, Zendesk fell hard in January and early February, hitting a 21-month low of 14.39 low on Feb. 9. Zendesk, which specializes in customer relationship management (CRM) software, went public in May 2014, priced at 9. Initiating coverage, Summit Research gave Zendesk a buy rating with a 25 price target. Zendesk is “executing on its growth strategy in a largely untapped $7.6 billion market, moving successfully toward positive (free cash flow) and profitability, and maintaining revenue growth in the 30%-plus (rate) over the next several years,” Kees said. “Most of Zendesk’s customers are SMBs (small to medium-size businesses), though the company has been moving upmarket, with customer deals with more than 100 seats now almost a third of monthly recurring revenues. Among other benefits, larger customers buy more, tend to purchase annual contracts and raise overall ARPU (average revenue per user). Founded in 2007, Zendesk is the oldest of the vendors targeting SMBs.” Big rivals such as  Microsoft ( MSFT ),   Salesforce.com ( CRM ) and Oracle ( ORCL ) also target midsize businesses. Shares of all three were down a fraction Monday afternoon. “As ZEN moves upmarket, (it) faces deep-pocketed competitors like Salesforce.com and Oracle that can easily bundle customer engagement functionality with their total offerings,” Kees warned. Zendesk is targeting positive free cash flow by 2017, profitability by 2020 and $1 billion in sales by 2020, he noted. For its Q1 ending Thursday, 12 analysts surveyed by Thomson Reuters expect a consensus 10-cent loss, flat with a year ago, on revenue up 56% to $66 million. Zendesk CFO Alan Black is expected to leave this year. Kees said, “We are always a little cautious and little worried when a CFO leaves a company. However, we are cautiously optimistic Zendesk will take appropriate steps to identify a CFO who can take the company to the next level ($1 billion in revenue by 2020).”

Apple Dividend Hike May Be Next Possible Catalyst For Stock

With Apple ‘s ( AAPL ) spring product launch out of the way, Wall Street’s attention has shifted to the company’s annual capital allocation plan, including an expected dividend increase. Apple CEO Tim Cook has committed to raising the company’s dividend annually. The question now is how much that is going to be. RBC Capital Markets analyst Amit Daryanani thinks Apple could raise its dividend by 10% to 15% to get its yield above 2%. Apple also could boost its stock buyback program to $40 billion to $50 billion a year, compared with $35 billion last year, he said in a report Sunday. The buyback would enable Apple to drive EPS growth of 4% or higher in fiscal 2016 and beyond, Daryanani said. He rates Apple stock as outperform, with a price target of 130. Apple was down a fraction to 105.50 in early afternoon trading on the stock market today . Apple is expected to announce its new capital allocation program when it reports March quarter results in late April. No date has been set for the fiscal-second-quarter earnings report. Apple has increased its dividend every year for the past three years, with an average increase of about 11%. Its current quarterly dividend is 52 cents a share. Earlier this month, Piper Jaffray analyst Gene Munster  predicted  Apple would raise its dividend by 5% to 10%. Last week at a media event at company headquarters in Cupertino, Calif., Apple announced a new 4-inch smartphone (iPhone SE), a 9.7-inch iPad Pro tablet, a lower starting price for the Apple Watch, new watch bands and several software updates. RELATED: Apple’s Product Launch: What The Stock Market Loved And Hated Apple’s Cheap iPhone SE Raises Profit Margin Concerns .