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Summary:

[qi:109] Carl Icahn, a hedge fund investor and corporate rabble-rouser, has bought 7 million shares of Yahoo for $67 million. That works out to about $9.92 a share. With that, his stake in Yahoo is now 75.6 million shares, or nearly 5.5 percent of the company, […]

[qi:109] Carl Icahn, a hedge fund investor and corporate rabble-rouser, has bought 7 million shares of Yahoo for $67 million. That works out to about $9.92 a share. With that, his stake in Yahoo is now 75.6 million shares, or nearly 5.5 percent of the company, according to the AP. So how should we read into his move? After all, Icahn previously bought 70 million shares for about $25 a share and has lost $900 million on that investment. In other words, his track record thus far hasn’t exactly been awe-inspiring. His investments in Motorola, another company he lobbied to restructure, have taken a heavy pounding as well. Kara Swisher thinks that this recent Yahoo stock purchase is a sign that Yahoo is about to make a CEO choice “sooner than later and much more Icahn-friendly.” What do you guys think: Is Yahoo a bargain?

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  1. Bargain if a leader is brought in who can

    1) focus all resources on mail, search, ads, and 3 content plays (news, sports, and finance) and kill or sell the rest really fast.
    2) 100% product focused, stop the dealing and focus on what got us into this mess— way too much product compromise and no Yahoo! application experience.
    3) change the culture— raise expectations from employees, top-down decision making, kill consensus decision making.
    4) brings in new engineering talent

    if the new yahoo leader does these 4 things the stock price will take care of itself.

  2. Yahoo still has an amazing property and has a lot of opportunity to continue making it better. I’d say the stocks are a bargain…but then again, I don’t do stocks. :)

  3. Sure, Yahoo is cheap here. Consensus for 2010 is $0.46, but I think a good CEO could triple that number in five years pretty easily.

  4. To say Icahn has a bad track record based on these two purchases isn’t saying much. Anyone who has bought into a company over the past year — Warren Buffet included — has lost money. But I would guess this is a good sign.

  5. Yahoo’s a great company, as long as they stop trying to compare themselves to Google. If Icahn’s thinking of a new CEO that’ll cure their Google-obsession, then this is a brilliant move. But if it’s more of the same, the stock will go down to 4 or 5 and be stuck there like Sun has been for so long.

  6. @austinandrew

    Fair enough. I guess we would have to see how he does in the future before making a final judgement. I am not buying his “expertise” on Yahoo for now. I think both in case of Motorola and Yahoo, he over paid and had clearly not seen how bad things were for these two companies. I think like many investors, they rely on advise from analysts who are really removed from the on-the-ground problems. Yahoo has a structural and cultural problem.

  7. from a standpoint of assets it is a bargain. Yahoo has $11billion in assets (after deducting for liabilities). At $10 a share with 1.29 billion outstanding shares you’d be paying only $900M over asset valuation. They still are making over $1 billion in annual profits so I don’t see the Icahn’s risk.
    But, my viewpoint is one as a trader of it’s stock. And I’d have been out Friday with a 15% gain in a week. It’ll like spike higher with trader activity. (There were some 250K chucks sold Friday near the end of the session for $11.45- which has certainly NOT a retail trader).
    Notice that the volume has been decreasing steadily (I know Friday was only a half-section) as the price has been spiking.
    That’s usually a sign the stock is moving due to amateur trading– not the major institutional holders disposing or acquiring that accounts for 70% of Yahoo’s stock.
    So that said if Icahn is “trading” he is smart. If he’s “investing” he’s not so smart.

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