After a meteoric rise, Yahoo!
Yahoo! -- a well-known brand -- comes complete with a steady stream of revenue and prodigious cash flow from advertising, making it a juicy pick for a private equity firm or a consortium of firms. The benefits to both are obvious. First on the agenda would be a new long-term plan, disregarding the short-term whims of Wall Street. With a market capitalization higher than $36 billion, it won't be cheap. The stock is already trading at a P/E of 53 times trailing earnings. I think this is already frothy, and buyout firms are very price-sensitive, so this may preclude a deal or much of a premium.
What about an acquisition? Given its market cap, very few could afford the price tag. Microsoft
Yahoo! may well decide to stay an independent public company. But should it decide to enter a marriage with someone else, I think a private equity deal is most likely. Providing, of course, it can be done at an attractive price.
Fool contributor Larry Rothman is happy to receive feedback, and promises to read it when not being wrestled by his three children. He doesn't have any positions in the companies mentioned. The Fool has a disclosure policy.