Susquehanna analyst Marianne Wolk is suggesting that the meandering online portal could sell its stake in privately held Alibaba Group -- the Chinese juggernaut behind the Alibaba.com B2B exchange and the consumer-oriented Taobao -- for as much as $11 billion.
Yahoo! CEO Carol Bartz is shooting down the chatter this morning, but you know it's going to gain some serious traction. Yahoo! has failed to gets its share price anywhere near what Microsoft
And $11 billion is a lot of money, especially for a company currently fetching a mere $16 billion in enterprise value. A chunky one-time distribution to shareholders could be substantial. Yahoo! could also deploy the after-tax proceeds into the mother of all shopping sprees, with more than enough money left over for an aggressive share repurchase and perhaps initiating a quarterly dividend.
Why isn't Yahoo! paying a dividend these days, anyway? Isn't that the fate of slow-cooking tech giants in Mr. Market's Crock-Pot? Even Cisco Systems
Then again, what if Bartz is right in holding on? Yahoo! paid roughly $1 billion for a 39% stake in Alibaba Group. The dot-com traffic magnet hasn't been able to generate that kind of return on any of its stateside endeavors, so why cash out on one of the few things that it's doing right?
Yahoo!'s Asian investments have always been its strong suit. It teamed up with SoftBank on Yahoo! Japan, one of the few geographical turfs where the Yahoo! brand managed to challenge Google
I like Bartz's thinking here. Google sold off its stake in Baidu
Yahoo! already has billions in the bank. Why pad its coffers, when it will only make desperate shareholders expect rapid deployment of the greenery? Holding on to Alibaba is the right call -- at least until a meaty acquisition comes around that forces it to raise some serious dough.
Should Yahoo! sell its Asian investments? Share your thoughts in the comment box below.
Google and Microsoft are Motley Fool Inside Value recommendations. Baidu and Google are Motley Fool Rule Breakers selections. The Fool has written calls (bull call spread) on Cisco Systems. Motley Fool Options has recommended a diagonal call position on Microsoft. The Fool owns shares of China Mobile, Google, and Microsoft. Try any of our Foolish newsletter services free for 30 days. True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community.
Longtime Fool contributor Rick Munarriz wonders if it's time for Yahoo! to shed the exclamation point. He does not own shares in any of the stocks in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.