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PayPal Venmo Stacks Up Well Vs. Apple Pay, Google’s Android Pay

Based on a survey of 1,000 PayPal ( PYPL ) customers, an analyst says that the company isn’t getting enough credit for the potential impact of its peer-to-peer payments app, Venmo. According to Jefferies analyst Jason Kupferberg, investor concerns over the Apple ( AAPL ) Pay competitor are exaggerated — PayPal’s mobile sales continue to grow and have, in fact, accelerated since Apple released its payments app, he says in a research note. Venmo is a mobile app that enables friends and family to share expenses such as rent, meals and cab fare. Google, a unit of Alphabet ( GOOGL ), also competes in the payments game with its Android Pay. Though PayPal executives continue to emphasize the firm’s “platform agnostic” approach — it isn’t tied to an operating system or platform — and say that neither Apple nor Google is a real threat, some industry watchers disagree. Alex Rampell, a general partner at noted VC firm Andreesseen Horowitz, likened the prospects of either Apple or Google taking a bigger interest in payments to the Death Star — the planet-destroying battle station in “Star Wars” — approaching for all other rivals. “This isn’t the ‘Empire Strikes Back,’ ” Rampell has told IBD in the past. “This is the Death Star coming.” Kupferberg wrote in a research note Monday that PayPal earnings will accelerate due to transactions conducted with the Venmo app. Venmo is free for now, but PayPal executives say that they plan to monetize the app, which is popular with millennials. They say that PayPal plans to allow selected PayPal merchants to accept payment via the Venmo app — and PayPal would charge its typical transaction fee (2.9%, according to Fortune magazine) in the process. According to Kupferberg, 67% of Venmo users would use the Pay With Venmo feature one or twice a month, with 44% using it three to five times a month, and 19% using it six to 10 times per month. Kupferberg says that Pay With Venmo transactions will yield larger profit margins because Venmo customers typically fund their accounts with debit cards, bank accounts and stored balances — the result of others sending cash. PayPal stock was up more than 2%, near 38, in afternoon trading on the stock market today . The San Jose-based company has an IBD Composite Rating of 91, where 99 is the highest. The stock has had a choppy few months since its spin-off from eBay ( EBAY ) in July. It hit its high of 42.55 during its first trading session on Nasdaq and has plunged to as low as about 30 on several occasions. At least one analyst says that the sell-off has been too hasty . Kupferberg’s price target for PayPal stock is 44. PayPal has recently settled a lawsuit over a perennial issue that the company faces: locked accounts.

Google, Alphabet Could Be Big Winners From Intel-IRS Tax Dispute

Alphabet ( GOOGL ), which owns search leader Google, could collect least $3.5 billion in new tax benefits if Intel ( INTC ) succeeds in its longstanding international tax dispute with the Internal Revenue Service, according to the Wall Street Journal. The speculated amount exceeds Google’s entire 2015 tax cost, according to a report Monday by the Journal. Alphabet, Intel and the IRS all declined to comment. “If Google is $3.5 billion, there must be many other companies that have billions of dollars at stake on this issue,” Reuven Avi-Yonah, a tax law professor at the University of Michigan, told the Journal. Alphabet is “paying a huge amount of attention to this case, because this is probably the largest unresolved tax issue that high technology companies now have,” Eric Ryan, a partner at the law firm DLA Piper, told the newspaper. The broader tech industry is also watching the case, which the IRS appealed to the 9th U.S. Circuit Court of Appeals last week. At least 20 companies, including Microsoft ( MSFT ) and eBay ( EBAY ), have disclosed that they also are monitoring the outcome of the case involving share-based compensation, according to the report. The dispute has been brewing since 2003, part of a battle between the IRS and companies over what are known as cost-sharing arrangements between U.S. corporations and their low-taxed foreign subsidiaries. In its annual report, Alphabet recorded a potential $3.5 billion benefit, citing a lower court’s ruling. That was offset by a $3.5 billion deferred tax liability, meaning it didn’t result in a major one-time boost to the company’s earnings, the Wall Street Journal said. In its 10-K, Alphabet said it couldn’t take the whole tax benefit because it hasn’t decided whether it can and would put any gains, should Intel win, into its own offshore subsidiaries — keeping its money outside the reach of the U.S. The company could record the benefit after the court case concludes. Intel inherited the case from Altera, which it acquired last year. That case involved about $80 million in corporate expenses from 2004 to 2007, according to the U.S. Tax Court decision. Altera’s dispute was about whether share-based compensation — but not salaries — should be included in those costs. Altera challenged an IRS regulation stating that share-based compensation must be included in the cost-sharing pool. The IRS regulation meant that the foreign company had to pay for this and deduct the amount from its lower-taxed income, said the Journal. Alphabet stock was up a fraction in early afternoon trading in the stock market today , near 728. This month, Alphabet posted a Q4 earnings beat , but revenue from the company’s stable of speculative, non-search-related “other bets” missed analyst expectations. Image provided by Shutterstock .

List Of Yahoo Suitors Gets Longer; Stock Up On Price-Target Boost

A takeout seems inevitable for troubled Web portal Yahoo ( YHOO ), which is seeing its core business continue to weaken, according to a report on Monday by Mizuho. The Japanese bank handed Yahoo a price-target boost in anticipation of an acquisition, and Yahoo stock rose. Mizuho raised its price target on Yahoo stock to 32 from 29, maintaining a neutral rating. Yahoo shares were up 3% in midday trading in the stock market today , above Mizuho’s 32 target. Still, Yahoo is down 28% over the past 12 months amid concerns about the company’s poor financial showing and its future, with some influential investors calling for Yahoo CEO Marissa Mayer to resign. Despite gains in its mobile business, Yahoo’s unique visitor count is sinking, down 7% year-over-year in January, after a 5% drop in December and a 6% fall in November, Mizuho analyst Neil Doshi said in Monday’s industry note, citing comScore data. “In fact, January 2016 was the worst monthly decline in unique visitors we have ever seen for the company,” wrote Doshi, with total time spent on Yahoo sites dropping for the first time, down 4%. “We expect Yahoo will be more vulnerable a year from now to losing users and ultimately ad dollars to larger platforms like Facebook ( FB ), Alphabet ( GOOGL )-owned Google and high-profile startups like Snapchat and Pinterest,” Doshi said. Will Yahoo Appoint Starboard Reps To Its Board? With news reports of Yahoo’s board looking to add two Starboard Value executives to its board, and Yahoo saying it will hire outside bankers, “it seems like the board (and maybe or maybe not Ms. Mayer) … (is) getting more aggressive with Yahoo and M&A,” Doshi wrote. Verizon Communications’ $4.4 billion acquisition of AOL last year “can be viewed as a floor” price for any potential Yahoo buyout, he said. Yahoo’s directors are close to offering at least two board seats to Starboard, an activist hedge fund, 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 Mayer and force a sale of the company’s core Internet business. Comcast ( CMCSA ), Verizon ( VZ ) and AT&T ( T ) “remain the leading candidates to acquire Yahoo,” said Doshi, adding that those companies could offer a higher price than private equity groups and that they have huge subscriber bases across Internet and TV and operate leading mobile services. “Each of these companies could easily absorb Yahoo , and with clear synergies to their businesses,” Doshi said. Scott Rostan, founder and CEO of Training the Street, a group teaching corporate valuation and merger and acquisition skills, agrees. “AT&T, Verizon and Comcast are such large companies that this would be almost just like a little, bite-sized morsel that they’d be gobbling up,” Rostan told IBD. “The ability to do the transaction would be pretty easy for those companies. It would be more of a question of do they want (it) from a strategic standpoint.” Time ( TIME ) could be another possible strategic suitor, Rostan said. “Imagine Yahoo Sports with Sports Illustrated somehow. Imagine Yahoo News with Time. Imagine Fortune with Yahoo Finance,” he said. “There could be some very interesting combinations that come out” of such a deal. On Monday, Yahoo estimated that its restructuring effort would result in pretax charges of $64 million to $78 million, mostly in the current quarter. Of the total, $40 million to $48 million would be for severance pay and related cash expenditures, the company said in a regulatory filing on Friday. Yahoo announced on Feb. 2 that it would reduce its workforce by 15% by the end of 2016 and close offices in Dubai, Mexico City, Buenos Aires, Madrid and Milan.