2014

The Zacks Analyst Blog Highlights: Dell, Yahoo!, Facebook, Google and Microsoft

CHICAGO, July 5, 2013 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Dell Inc. (Nasdaq: DELL-Free Report), Yahoo! Inc. (Nasdaq: YHOO-Free Report), Facebook (Nasdaq: FB-Free Report), Google (Nasdaq: GOOG-Free Report) and Microsoft (Nasdaq: MSFT-Free Report).

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Here are highlights from Wednesday's Analyst Blog:

Will Icahn Offer Derail Dell LBO?

Dell Inc.'s (Nasdaq: DELL-Free Report) owner Michael Dell has yet to receive a lucrative offer from business tycoon Carl Icahn. In order to justify his alternative bid for Dell's privatization as against Michael Dell's leveraged buyout (LBO) offering of $24.4 billion, Icahn has now promised to fund $5.2 billion. The fund will help Dell to buy back 1.1 billion shares at $14.0 a share.

Icahn clarified that the $5.2 billion will comprise a $2.2 billion 6-year term loan and a $3.0 billion 3.5-year term loan. A few days back, Icahn approached Dell's special board with a proposal to buy back 1.1 billion shares at $14.0 per share compared to Dell's $13.65 per share offer.

According to Icahn's proposal, shareholders would be allowed to sell almost 72.0% of the total shares held, while rest would remain with the company. Icahn asserts that shareholders will benefit from a good return on investment and at the same time will continue to earn from the shares remaining with the company.

Initially, Icahn's proposal was turned down by the special committee citing concerns regarding the availability of funds and possible pressure on the company's liquidity. But the situation could be reversed as Icahn proposes to put in $7.5 billion cash and $2.9 billion from sales of receivables, which will be over and above the existing $5.2 billion offered.

Moreover, Icahn also proposes to arrange for an additional $2.0 billion (through its associates), if necessary. The arrangement would leave enough cash with Dell to maintain liquidity and smoothly run operations, even after returning cash to shareholders.

Even after the offer was communicated to Dell and his LBO partner Silver Lake Management LLC (a private equity firm), both declined to comment. Actually, Dell is yet to receive an approval for its buyout offer from the ISS (a shareholder advisory group).

Also, Dell is awaiting the outcome of the shareholder vote scheduled on Jul 18. Icahn's offer will stand a chance only if shareholders and the ISS feel a lack of confidence in the founder and therefore consider a change of hands better for the future of the company.

Yahoo Acquires Qwiki

Internet giant Yahoo! Inc. (Nasdaq: YHOO-Free Report) recently announced the acquisition of mobile app developer Qwiki Inc. for $50 million (reported by AllThingsD). Financial details of the deal were not disclosed.

New York-based, Qwiki Inc. was founded by Doug Imbruce and Louis Monier in 2011. It launched an app for iPhone wherein users could create movies from photos and videos stored on their phones. It also entered into a partnership with ABC News to create interactive stories for the news platform. After the closure of the deal, Qwiki's employees will join Yahoo's mobile engineering team at its California headquarters.

Qwiki's app is quite similar to Facebook's (Nasdaq: FB-Free Report) Instagram, an app used for photo capture and sharing. Yahoo also picked up GhostBird, a photography app-maker. The acquisitions of both GhostBird and Qwiki make sense as Yahoo wants to offer apps with new features to attract more users to its website.

After CEO Marissa Meyer took over the reins of the company, it has been quite active on the acquisition front. Some of its recent acquisitions include Astrid, a task-management app maker; Summly, a news-condenser app maker; Stamped, a mobile-review app maker; OnTheAir, which specializes in broadcasting video chats or interviews to online audiences; Snip.it, which is a kind of clipping service for the web; Propeld, a location-based apps maker; Jybe, a social recommendation site; Loki Studios, a mobile gaming start-up, PlayerScale, a gaming infrastructure company, photo app maker GhostBird Software; enterprise conference call service provider, Rondee and mobile app developer Bignoggins Productions.

Yahoo's attempts to strengthen its mobile offerings and upgrade pages have led to a 70% increase in mobile email usage and a 50% increase in Flickr photo uploads from mobile platforms.

We are positive about Yahoo as its search business continues to show signs of improvement, even in the face of tough competition from Facebook, Google (Nasdaq: GOOG-Free Report) and Microsoft (Nasdaq: MSFT-Free Report). Currently, Yahoo has a huge task at hand, which is to bring back its users and make them spend more time on its properties. If successful, Yahoo may reclaim some of its lost market share going forward. This would be crucial in bringing back advertisers as well.

In the first quarter of fiscal 2013, Yahoo generated revenues of $1.14 billion, which were down 15.3% sequentially and 6.6% year over year. Traffic acquisition cost (TAC) was down 42.3% sequentially and 49.9% year over year. Excluding these costs in all periods, net revenue was down 12.5% on a sequential basis and 0.8% from last year, short of the consensus estimate.

Yahoo has a Zacks Rank #1 (Strong Buy).

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.

 

 

SOURCE Zacks Investment Research, Inc.



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