Photo by Matt Winkelmeyer/Getty Images for Glamour
Late last week, an executive vice president with Verizon, Marni Walden, stated that she “can’t say with confidence one way or the other” whether the Yahoo takeover gets done. Just last month, Yahoo finally fessed up and admitted that more than a billion user accounts were hacked into in 2013. In 2014, an additional 500 million accounts had also been breached.
Verizon is supposedly trying to gauge the impact of the two user data breaches. This past Thursday Tim Armstrong, CEO of AOL (owned by Verizon) said that he is monitoring the outcomes of the Yahoo investigation into the two breaches.
As most of you know, Verizon has emerged as the winner in the $4.8 billion takeover of so-called “core” Yahoo which includes everything except for Yahoo’s stakes in Alibaba, Yahoo Japan and intellectual property owned by Yahoo.
Everyone knows that Verizon is getting a massive bargain if the billion active users of Yahoo is accurate. Paying less than $5 per active Yahoo user is a bargain that Verizon will never ever find anywhere. The fact that the deal was done at such a throwaway price, one that totally shafted shareholders, is testimony to how badly Marissa Mayer, CEO of Yahoo, has botched things up.
Check out the following statistics:
Twitter is currently worth $12.2 billion and has slightly over 300 million users which gives us a value per user of just under $40 compared to the less than $5 per user Verizon is paying.
In addition, what most investors do not know or seemingly are overlooking is that the actual price Verizon is paying is $4.83 billion for core Yahoo and a whopping $1.1 billion in employee compensation costs. Most of those compensation costs include the immediate vesting of Yahoo employees’ restricted stock units.
Marissa Mayer herself stands to make a couple of hundred million once the Verizon deal closes. A lot of investors completely incorrectly point to the 150% rise in Yahoo stock under Mayer’s stewardship. What most don’t get is that almost 100% of that rise was due top the rise in price of Alibaba which doubled in the same time frame and the 75% rise in Yahoo Japan simultaneously. Yahoo owns 15% of Alibaba and 35.5% of Yahoo Japan. Factor those two stakes out and the value of core Yahoo is down just under $3 billion while she has been the CEO.
So for 4 years of stumbling and bumbling and totally messing up a once-great internet giant, Mayer will walk away with a little over $200 million in that time frame.
Talk about insane CEO compensation and for what?
Money for nothing comes straight to my mind.
Something to think about.
As a shareholder in Yahoo, I would love to see the deal pushed through even if I feel shafted as well however, if Verizon asks for a discount (totally justified since the breaches were hidden by Mayer from users and Verizon as well), Yahoo shares could retreat even more which means downside protection could make a lot of sense.
(Long baba, yhoo, long and short, yhoo, baba options)