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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.

AT&T Aims To Outdo Verizon, Dish With Streaming-Video Offensive

Leveraging its acquisition of DirecTV, AT&T ( T ) announced today that it will roll out a national Internet-video service by year-end, a national video-streaming service tailored for mobile phone users, and a Web offering targeting millennials. AT&T says the “DirecTV Now,” “DirecTV Mobile” and “DirecTV Preview” products will be available in the fourth quarter. While Verizon Communications ( VZ ) has launched an ad-supported mobile video service, Go90, and Dish Networks ’ ( DISH ) “Sling” streaming service has some 500,000 subscribers, AT&T aims to set itself apart from rivals with a broad range of video offerings. AT&T surpassed Comcast ( CMCSA ) as the biggest pay-TV provider with the DirecTV purchase, which closed in July. AT&T had 25.4 million U.S. video subscribers as of Dec. 31 — 5.6 million fixed-line U-verse customers and 19.8 million satellite TV subscribers. AT&T has negotiated with content companies for digital streaming rights. AT&T says there will be limits on how many people can log onto the services via smartphones, tablets, smart TVs, PCs or other devices. It says consumers will have options to buy premium content for its online, or over-the-top, video services. “Having the largest number of pay-TV subs in the U.S. gives AT&T the scale it needs to compete in the OTT market, enabling it to acquire mobile and out-of-home rights,” said UBS analyst John Hodulik in a research report. “The ability to sell pay-TV subscriptions nationally is one of the keys to AT&T’s segmented mobile-video strategy.” AT&T in January announced a wireless product with unlimited data, but only for new or existing subscribers at DirecTV or its U-verse landline business in 22 states. AT&T did not say in its announcement today how many channels would be included in the new video-streaming products. “These new video subscription models reflect the flexible content choices, viewing options and simple, transparent pricing that consumers want,” John Stankey, CEO of AT&T Entertainment Group, said in the company’s news release. AT&T says its “DirecTV Now” product will be available via fixed-line broadband from any Internet service provider or AT&T’s wireless network, when bundled with a wireless plan. “Bundling OTT video with wireless should provide the stickiness that is missing from stand-alone OTT services,” said Hodulik. DirecTV Now will include on-demand and live programming as well as premium add-on options. The less expensive “DirecTV Mobile” package will be accessible from any wireless service provider. Some short-form content will be tailored for mobile devices. The ad-supported “DirecTV Preview” service will feature content for millennials, including video from Otter Media, a joint venture of AT&T and the Chernin Group. Verizon’s Go90 mobile video service is available as an app for any wireless network. Dish Network’s Sling is included in T-Mobile US ’ ( TMUS ) “Binge On” service, in which video does not count toward monthly data caps. Image provided by Shutterstock .

T-Mobile Sale On Back Burner Until Auction, Presidential Election

Deutsche Telekom ( DTEGY ) has shelved plans to put T-Mobile US ( TMUS ) up for sale, pending the outcome of a wireless spectrum auction and the U.S. presidential election, a Reuters report said Tuesday, citing unnamed sources. Deutsche Telekom, which owns two-thirds of T-Mobile, is also in no rush to seek a merger because T-Mobile has been gaining market share vs. AT&T ( T ), Verizon Communications ( VZ ) and struggling Sprint ( S ). The Obama administration’s Department of Justice signaled its opposition to a T-Mobile-Sprint merger in 2014, fearing less competition in the wireless services sector. Some observers speculate cable TV firm Comcast ( CMCSA ) could acquire T-Mobile. And satellite broadcaster Dish Network ( DISH ) has also been looking for a wireless network partner. Federal regulators appear set to go forward this spring with the much-anticipated auction of airwaves now owned by local TV broadcasters. The Federal Communications Commission plans to begin the “Broadcast Incentive Auction” on March 29. The auction, which could last five to six months, will free up an estimated 60 to 80 megahertz of prime, low-frequency radio spectrum for wireless services. In connection with the auction, the FCC will impose a quiet period that bans negotiations over spectrum and other matters. “During that period, there will be no M&A activity in the U.S. telecoms sector,” a source close to Deutsche Telekom told Reuters . T-Mobile has said it could spend up to $10 billion in the auction, with Verizon and AT&T among the other expected bidders. Comcast, too, is seen as likely to bid. If Comcast buys a large amount of spectrum in the auction and thus becomes another major provider of wireless services, that could be a precursor to a wireless acquisition that regulators would likely view favorably, analysts say.