WEBVTT - Bloomberg's Sherman on the Favored Bidders for Yahoo (Audio)

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<v Speaker 1>Broadcasting live to New York, Bloomberg even to Washington, d C,

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<v Speaker 1>Bloomber to Boston, Bloomberg twelve, to San Francisco, Bloomberg ninety

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<v Speaker 1>to the country Channel one, and around the globe the

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<v Speaker 1>Bloomberg Radio plus David Bloomberg dot com. This is taking Stock.

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<v Speaker 1>Coming up on taking stock, will take stock of Yahoo

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<v Speaker 1>the company posts another loss, right down an investment in Tumbler,

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<v Speaker 1>and we'll find out what's left of the assets of

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<v Speaker 1>Yahoo and who will purchase him. That's all coming up

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<v Speaker 1>next on taking stock. But right now, let's go to

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<v Speaker 1>Charlie Kellton and the the Bloomberg Looser or Bloomberg Business Flag,

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<v Speaker 1>and I thank you pim Fox. Just getting word of

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<v Speaker 1>a change in the location of the September twenty six

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<v Speaker 1>presidential debate. It is being moved to Hofstra on Long

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<v Speaker 1>Island outside of New York from Right State. Right State

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<v Speaker 1>pulling out of hosting the debate after security costs rose

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<v Speaker 1>from three and a half million dollars to over eight

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<v Speaker 1>million dollars, so that September twenty six presidential debate will

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<v Speaker 1>be held on Long Island. SMP five hundred index is

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<v Speaker 1>lower than dal higher NESDAK is lower as well, following

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<v Speaker 1>a mix of corporate earnings reports, the recent run up

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<v Speaker 1>for equities hitting some headwinds. Today, Netflix tumbling UH thirteen

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<v Speaker 1>point five percent after subscriber growth disappointed. Also Johnson and

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<v Speaker 1>Johnson providing some offset. It shares higher now by one

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<v Speaker 1>point four percent after quarterly profit beat estimates. John Mantley

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<v Speaker 1>is chief executive chief equity strategist, I should say at

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<v Speaker 1>Wells Fargo Funds Management. He was interviewed about the big

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<v Speaker 1>picture for earnings and markets this morning on Bloomberg Television.

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<v Speaker 1>I think we're moving higher now. Again. I tend to

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<v Speaker 1>be too optimistic. It's my nature, so I should come

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<v Speaker 1>with a warning tag. But I think what's happening. He's

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<v Speaker 1>earnings are starting. Earning has been flat to earnings are

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<v Speaker 1>starting to get better. I think after you call it

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<v Speaker 1>an intercession, I think it was just sideways are in

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<v Speaker 1>slightly down, not particularly great, not particularly bad. But I

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<v Speaker 1>think that's starting to get better. And if that does

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<v Speaker 1>get better, if earnings get better and we see new

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<v Speaker 1>highs and earnings, I think the market can finally get

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<v Speaker 1>excited about something. A person familiar where the matter says

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<v Speaker 1>us Anti Trust officials are poised to follow lawsuits to

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<v Speaker 1>block Anthems takeover of rival health insurer Signa and Etna

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<v Speaker 1>d ETNAS deal to buy Humana again. According to a

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<v Speaker 1>person familiar with the matter, we will have more on

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<v Speaker 1>the story coming up. On taking Stock the now up

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<v Speaker 1>six points now a gain of less than point one percent,

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<v Speaker 1>SMP down three tenths of long percent, Gold up three

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<v Speaker 1>dollars the ounce, the thirteen thirty two a gain of

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<v Speaker 1>point two percent, and two thirty two on Wall Street

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<v Speaker 1>to look at the other stories making news. Thank you

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<v Speaker 1>Charlie from the Bloomberg newsroom. I'm Jill Schneider. This news

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<v Speaker 1>update is brought to you by Audie. Is it a

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<v Speaker 1>force of nature or a sales event? Visit a Try

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<v Speaker 1>State Audie dealer to see the exceptional offers on select

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<v Speaker 1>models during the summer of Audi sales event. Republic Can

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<v Speaker 1>leaders say Melania Trump is not to blame for her

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<v Speaker 1>speech is parallels last night with a convention speech Michelle

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<v Speaker 1>Obama gave eight years ago. Bloomberg's Bob Moon has more.

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<v Speaker 1>This is as far as the Trump camp will go.

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<v Speaker 1>There are similarities between the speeches. That your word is

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<v Speaker 1>your bond, that you do what you say You're gonna

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<v Speaker 1>do that. Your word is your bonds, and you do

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<v Speaker 1>what you say. Governor Chris Christie declared not a three

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<v Speaker 1>percent of the speech is completely different, while GEO pe

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<v Speaker 1>Chrman Bryant's previous tells Bloomberg that can be explained. These

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<v Speaker 1>are basic seems commonly used. On CNN, Trump campaign manager

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<v Speaker 1>Paul Metaphort goes further blaming the Clinton campaign. This is

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<v Speaker 1>once again an example of when a woman threatened Hillary

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<v Speaker 1>Clinton chie's six octors demeanor and take her down. Democratic

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<v Speaker 1>cheer woman de Wie Wasson Schultz, also on CNN, calls

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<v Speaker 1>that part of a pattern with Trump's campaign. Anytime they

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<v Speaker 1>are caught red handed, they blame someone else, Moon Bloomberg Radio.

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<v Speaker 1>Cleveland Police Chief Calvin Williams says, although there are a

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<v Speaker 1>few rowdy protesters outside the Republican National Convention, most of

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<v Speaker 1>the demonstrations have been peaceful. We want to make sure

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<v Speaker 1>that people understand peaceful, non violent, which is what we've

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<v Speaker 1>had so far, and we want to keep it that way.

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<v Speaker 1>Governor Andrew Cuomo is unveiling designs for New York City

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<v Speaker 1>subway cars with wider doors, WiFi and phone charging stations.

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<v Speaker 1>The twenty seven billion dollar plan calls for new and

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<v Speaker 1>upgraded subway cars and busses, better control technology, and redesigned

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<v Speaker 1>subway stations. Global News twenty four hours a day, powered

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<v Speaker 1>by more than twenty journalists and analysts in more than

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<v Speaker 1>one twenty countries. I'm Jill Schneider. This is Bloomberg, Charlie,

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<v Speaker 1>and again we thank you and recapping what's happening on

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<v Speaker 1>Wall Street. We've got the Dow up six points, little change,

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<v Speaker 1>their SMP down five, a drop of three tenths of

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<v Speaker 1>one percent. I'm Charlie Pellaton. That's a Bloomberg business flash.

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<v Speaker 1>You're listening to taking stock with Kathleen Hays and Pim

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<v Speaker 1>Box on Bloomberg Radio. Yahoo. Yahoo said that its revenue

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<v Speaker 1>in the second quarter fell fifteen percent. It's operating profit

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<v Speaker 1>fell sixtent. The company also acknowledge that Tumbler, this is

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<v Speaker 1>the biggest acquisition under its current chief executive Marissa Mayram,

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<v Speaker 1>was now worth only a third of the one point

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<v Speaker 1>one billion dollars that Yahoo paid for it in twent thirteen.

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<v Speaker 1>For more on Yahoo, I want to bring It. Alex Sherman,

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<v Speaker 1>Bloomberg News, m and a reporter focusing on technology, media,

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<v Speaker 1>and telecoms. He can be followed on Twitter at Sherman

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<v Speaker 1>four nine four nine all right, Sherman four nine for

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<v Speaker 1>nine tell us about the numbers when it comes to Yahoo,

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<v Speaker 1>like no one, No one really cares about the numbers anymore, PIM.

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<v Speaker 1>Because this company is for sale. This will be Marrissa

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<v Speaker 1>Meyer's last earnings call where Yahoo is an independent company. UH,

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<v Speaker 1>at least in terms of you know, it'll be announced

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<v Speaker 1>that the deal'll have to close, so she she may

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<v Speaker 1>stick around for one or two more, but this will

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<v Speaker 1>be the last one where there's no buyer for Yahoo.

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<v Speaker 1>Unless something really, really surprising happens. We should have UH

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<v Speaker 1>an idea or or in fact, an announcement of who

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<v Speaker 1>buys Yahoo within the next week or so. Final bids

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<v Speaker 1>were due yesterday. Verizon is a likely buyer of Yahoo. UH.

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<v Speaker 1>Dan Gilbert's Quicken loans as a possible buyer. UH. A

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<v Speaker 1>private equity firm called Vector Capital is still in the mix. UH,

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<v Speaker 1>TPG and a t T also made bids. Those are

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<v Speaker 1>the five. They're a little less likely UH to win

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<v Speaker 1>as far as the sources that I have spoken to,

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<v Speaker 1>But Yahoo is UH is not a good business these days. Him. Uh,

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<v Speaker 1>it's it took a four eight two million dollar uh

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<v Speaker 1>impairment charge for Tumbler, as you alluded to. That was

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<v Speaker 1>Marissa Meyers, really her biggest deal, and during her tenure

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<v Speaker 1>that yeah, who acquired that in Uh. You know, revenue

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<v Speaker 1>continues to sort of bump along. The Yahoo posted revenue

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<v Speaker 1>of one point three billion, that's up five percent year

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<v Speaker 1>over year, but earnings are down. They're down about forty

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<v Speaker 1>three percent per share from a year ago. And it's

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<v Speaker 1>tough when a company is going through a very well

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<v Speaker 1>publicized sale process us to motivate employees and to keep

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<v Speaker 1>customers happy. And Yahoo has struggled. Yahoo has struggled. I

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<v Speaker 1>wonder if you just go back to that Tumbler acquisition

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<v Speaker 1>just for a moment. One point one billion dollars of

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<v Speaker 1>shareholder money, right, this is not this is shareholder money.

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<v Speaker 1>This is this is money that is owed to the shareholders.

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<v Speaker 1>And it seems nobody cares that they're going to write

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<v Speaker 1>off like two thirds of the entire purchase. Yeah. The

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<v Speaker 1>reason I think no one cares is that Yahoo has

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<v Speaker 1>traded as basically a stub for Ali Baba uh for

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<v Speaker 1>years now. So yeah. In other words, if you look

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<v Speaker 1>at Yahoo, whether it goes up or down on a

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<v Speaker 1>given day with the market, it is almost always in

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<v Speaker 1>line with whether Ali Baba moves up or down. So

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<v Speaker 1>the Yahoo business in fact is actually worth zero uh.

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<v Speaker 1>If you calculate sort of the some of the parts analysis,

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<v Speaker 1>the market gives Yahoo business no worth whatsoever, which is

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<v Speaker 1>part of the reason why Yahoo is actually selling its

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<v Speaker 1>core business right now. Marissa Mayer realized is that if

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<v Speaker 1>you want to maximize share holder value, we have to

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<v Speaker 1>sell this thing for at least a few billion dollars

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<v Speaker 1>because we're not getting credit for any of it right now.

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<v Speaker 1>So Yahoo is made up of a steak in Ali Baba,

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<v Speaker 1>a minority steak in Ali Baba, a steak in Yahoo Japan.

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<v Speaker 1>Uh soft Bank owns the majority of the rest of

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<v Speaker 1>Yahoo Japan, and then the Yahoo core business. So these

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<v Speaker 1>three parts of make up Yahoo total. The Yahoo core

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<v Speaker 1>business is only worth about four billion dollars or so uh.

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<v Speaker 1>You know, the Yahoo steak in and Yahoo Japan is

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<v Speaker 1>worth about seven and nine billion dollars depending on when

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<v Speaker 1>you look. Uh. And then the rest of Yahoo's worth

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<v Speaker 1>is all in Ali Baba, which is a lot more alright,

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<v Speaker 1>So just one one last point question for you here,

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<v Speaker 1>Alex Sherman. Um the longer that this all takes to

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<v Speaker 1>resolve itself, what happens those businesses? Do they just die

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<v Speaker 1>on the vine? It's not like there's not a lot

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<v Speaker 1>of competition that's out there doing what they're supposed to

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<v Speaker 1>be doing every day. Yeah, it's a great question, and

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<v Speaker 1>I think it will depend on who the buyer is here,

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<v Speaker 1>so soon we get an announcement within the next week

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<v Speaker 1>or so. Each buyer has its own plan for Yahoo.

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<v Speaker 1>So you know, if TPG, which is a private equity firm,

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<v Speaker 1>buys Yahoo, you can expect some of those businesses to

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<v Speaker 1>die on the vine. Uh. They they will, you know,

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<v Speaker 1>do what a typical private equity firm does. They'll slash

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<v Speaker 1>and burn, they'll fire people, they'll shut down businesses. Uh

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<v Speaker 1>and and they'll sell off parts that they don't want.

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<v Speaker 1>If Verizon buys it, some of those businesses may stick

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<v Speaker 1>around for a little while longer because you can just

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<v Speaker 1>merge Yahoo in a o L uh in a o

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<v Speaker 1>L provides some uh that run by Tim Armstrong, still

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<v Speaker 1>within Verizon, run some businesses that are sort of symbiotic

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<v Speaker 1>to Yahoo. So some of that, some of the content plays,

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<v Speaker 1>and some of the ad technology that Yahoo has can

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<v Speaker 1>theoretically be merged with a O L And so some

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<v Speaker 1>of the employees there may live to see another day.

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<v Speaker 1>Tell us about soft Bank and the deal to buy

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<v Speaker 1>ARM Holdings. So this one is a little bit of

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<v Speaker 1>a surprise in terms of who the buyer is. Uh

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<v Speaker 1>uh arm You know, is this chip licensing their chip designer,

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<v Speaker 1>chip designer exactly. They don't actually make intellectual intellectual property,

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<v Speaker 1>so Softing is not a semi connector company. So in

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<v Speaker 1>terms of a buyer, you might think, oh, that's a

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<v Speaker 1>little weird Softing because this Japanese wireless provider that owns

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<v Speaker 1>or so of sprint in this country. So the idea

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<v Speaker 1>that they want to buy a chip designer is a

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<v Speaker 1>little out of the box. That's it. For regulatory reasons,

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<v Speaker 1>it's a little harder for someone in the game to

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<v Speaker 1>actually buy ARMED that the deal would likely be nixed

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<v Speaker 1>by regulators. So if someone wanted to do this, it

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<v Speaker 1>might have to be somebody out of the box. And

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<v Speaker 1>Masasan is a three year plan for soft Bank. It's

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<v Speaker 1>a bet on the Internet of things. That's really why

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<v Speaker 1>he did this, thanks very much. Alex Sherman Technology media, telecom,

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<v Speaker 1>mergers and acquisitions reporter for Bloomberg News. You can follow

0:10:49.280 --> 0:10:53.520
<v Speaker 1>him on Twitter at Sherman for nine for nine, this

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<v Speaker 1>is Bloomberg, coming up on taking stock. Steve Hefner, chief

0:11:04.360 --> 0:11:08.480
<v Speaker 1>executive co founder of the travel site Kayak, gives us

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<v Speaker 1>his thoughts on Ezeka and the Olympics in Brazil.