Tag Archives: technology

Yahoo Could Fetch Less Than Expected; Stock Falls

Yahoo ( YHOO ) stock fell Friday on speculation the Web portal’s buyout offers might be less than half of what most observers had been expecting, amid a second round of bidding. Yahoo stock fell 1.4% to 36.50 in the stock market today .  That gives it a market valuation of roughly $35 billion, but almost all of its value is comprised of big stakes in China e-commerce giant Alibaba ( BABA ) and in Tokyo-listed Yahoo Japan. Verizon Communications ( VZ ), which bought AOL last year, has been viewed as the front-runner to buy Yahoo, although private equity firms have also been kicking the tires. There’s been speculation that Microsoft ( MSFT ), which has a search partnership with Yahoo, could team with a private-equity firm, or that Warren Buffett’s Berkshire Hathaway ( BRKB ) might back a bid by Quicken Loans founder Dan Gilbert. Some early estimates put possible bids in the $5 billion to $8 billion range for the core Yahoo business, which excludes Alibaba and Yahoo Japan. As many as 10 bidders have taken part in presentations led by Yahoo CEO Marissa Mayer, according to reports. The Wall Street Journal, however, reported late Thursday that some PE firms might offer as little as $2 billion to $3 billion, or not bid at all. And Verizon, too, might offer a lower bid, says the report, citing unidentified people familiar with the matter. Yahoo has set a deadline in the first week of June for the next round of bids. Verizon, which bought AOL in 2015 for $4.4 billion, aims to morph into a digital media company that garners more advertising revenue, as wireless data competition mounts.

Qunar’s Airline Battle Won’t Slug No. 1 Chinese Agency Ctrip: ITG

Qunar ‘s ( QUNR ) ongoing dispute with China’s airlines won’t hurt China’s No. 1 online travel agent Ctrip.com ( CTRP ), which is expected to report March-quarter travel sales that doubled vs. last year, ITG analyst Henry Guo said. Ctrip and Qunar stocks split on the stock market today , with shares of Ctrip 1.7%, as Qunar fell 1.5%. IBD’s 11-company Leisure-Travel Booking industry group was up a fraction. For Q1, Guo expects Ctrip to report 4.19 billion to 4.29 billion yuan ($640 million to $650 million), topping the consensus view for 4.16 billion yuan. Ctrip hasn’t yet set a date for its Q1 earnings release. That outperformance would follow a months-long battle with flagship carrier Air China — along with some other local airlines including Hainan Airlines and its Hong Kong Airlines unit, as well as China Eastern’s Shanghai Airlines — over fees charged by booking agents such as Qunar. Ctrip acquired a stake in Qunar after the two formed a partnership last year. In the wake of airlines’ refusal to list on Qunar.com, the site now directs users to Ctrip.com or to airlines’ official websites, Guo wrote in a research note. “We believe this should help drive Ctrip’s organic transportation revenue growth and partially offset Qunar’s air-ticketing weakness,” he wrote. Hotel occupancy in China fell to 53.1% in Q1 from 53.6% in the prior quarter, Guo said, but revenue per available room surged 2.2% year over year, “suggesting improved monetization for the whole hotel industry.” At the same time, he says  InterContinental Hotels Group ( IHG ) and Hilton Worldwide ( HLT ) reported 8.3% and 8% year-over-year growth for their Chinese operations, respectively, and Marriott International ( MAR ) saw revenue per available room in Asia rise 6.8% vs. last year. Guo expects Ctrip to report a 76% to 86% jump in accommodations sales vs. the year-earlier quarter, topping the company’s guidance for 70%-80% growth. He sees Ctrip’s travel segment more than doubling revenue. Packaged tours — one of Ctrip’s growth engines — has benefited from outbound travel to high-demand destinations like Japan, South Korea and Southeast Asia, Guo wrote. Relaxed visa requirements have helped fuel outbound travel. He expects 52% year-over-year growth in this segment.

Verizon Pain From Strike Seen Growing; Wells Fargo Cuts Estimates

Verizon Communications ( VZ ) is starting to feel the pain from the ongoing strike by nearly 40,000 wireline workers, according to Wells Fargo, which on Friday lowered its Q2 and full-year profit-margin and revenue estimates for the telecom giant. Two unions representing about 39,000 Verizon landline workers, including those that work on its FiOS TV and broadband services, went on strike April 13. Verizon’s wireless workers, however, are not unionized, except for roughly 100 employees. Verizon has a total workforce of nearly 178,000. “While the striking employees are almost all wireline workers, we believe the strike has become a distraction to its wireless operations. VZ has been less promotional with its wireless offerings in Q2, and recent checks have shown some unfavorable (customer-switching) trends,” Wells Fargo analyst Jennifer Fritzsche said in a research report. Verizon and the two unions — the Communications Workers of America (CWA) and the International Brotherhood of Electrical Workers (IBEW) — have reopened talks, with a federal mediator involved. “While a federal mediator has the two sides back at the bargaining table, a near-term resolution is still unclear,” Fritzsche wrote. “Management recently indicated that install and order activity for FiOS has ‘significantly dropped’ as employees have been primarily focused on repair and maintenance. “Accordingly, we are cutting our Q2 and 2016 wireline revenue estimates by $343 million and $826 million. We are also lowering our Q2 and 2016 wireline margin estimates.” Verizon stock rose 3 cents to 49.66 in the stock market today , and it’s mostly been trading below the key 50-day line since touching a 16-year high of 54.49 on April 5. Verizon is widely regarded as the  front-runner to acquire Web portal Yahoo ( YHOO ).