This week we saw a lot a few key developments in the tech
section, primarily related to Yahoo! (
YHOO
) and Google (
GOOG
). We analyze a few such developments which could impact their
value in the coming years.
Yahoo!
Yahoo! announced that it has closed its deal to sell half its
stake in Alibaba, which will net the company approximately $4
billion in after tax proceeds. The company will be returning $3
billion in cash to investors from this sale, and will keep the
other $1 billion to invest in new projects.
The other half of the Alibaba stake will be monetized via an
IPO. After a customary lock-up period, Yahoo! will be able to sell
Alibaba shares in the open market. This is good news for Yahoo!
since the Alibaba stake has been a touchy subject for investors and
has caused a good amount of volatility in the stock. Reduction of
half of its stake will help stabilize the company's value.
We currently have a
$19 price estimate for Yahoo!
, which stands nearly 20% above its market price.
Check out our complete analysis of Yahoo!
Google
Google was affected by many news items this week. First, it lost
a patent battle with Apple (
AAPL
), which will lead to a ban of smartphones that use "overscroll"
technology, in Germany. While it will have to start recalling
phones and tablets which violate the patent, Google is
challenging the patent's validity in European court. We will be
watching this story closely, since a ruling against Google could
have implications throughout Europe.
On a more positive front, Google's social SVP Vic Gundotra
announced that Google+ has passed 100 million active users on its
site. This is a key metric which shows the increasing popularity of
the Google+ platform. Additionally, Mr. Gundotra announced that the
company had acquired Nik Software in an effort to improve Google+'s
photo offerings.
Lastly, Google signed a deal with Fox to bring shows such as
"Family Guy," "Glee," and "Modern Family" to Google Play and
Youtube.
We currently have a
$661 price estimate for Google
which stands 10% below its market price.
Check out our complete analysis of Google
Click here to Understand What Drives a Stock at
Trefis
The other half of the Alibaba stake will be monetized via an
IPO. After a customary lock-up period, Yahoo! will be able to
sell Alibaba shares in the open market. The Alibaba stake has
been a touchy subject for Yahoo! investors and has caused a good
amount of volatility in the stock. Reduction of half of its stake
will help stabilize the company's value