Reuters Insider - Trading at Noon: Investors push for AOL to buy Yahoo

Pacific Ventures

12/11/2014 18:54

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 Source:             Thomson Reuters                                   
                                                                       
 Description:        A Reuters exclusive. Yahoo investors ask AOL CEO  
                     Tim Armstrong to buy Yahoo and take over.         
 
 
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Transcript (May be auto-generated)

 A Reuters exclusive: unhappy Yahoo! shareholders going not to Marissa Mayer but 
going over to Tim Armstrong at AOL. Nadia Damouni is all over this story today. 
How unusual is this that the Yahoo! shareholders, who want a merger with AOL, 
are going right to Tim Armstrong? That's right. So as we reported, Tim Armstrong
is obviously the Chief Executive Officer of AOL and now he- there's no talks 
between AOL and Yahoo! right now yet Yahoo! shareholders are highly frustrated 
that Marissa Mayer, who's been at the helm at Yahoo! for two years, is running 
this company so she wants to compete with Google, she wants to compete with 
Facebook, she's running it as a technology startup/growth company. Investors are
like, "Okay, Marissa. You know, you've had two years. Why are you not listening 
to us? We're done. We're going to take this- our arguments to Tim Armstrong." 
And now, what they are asking Tim Armstrong to do is, "Okay, what do you think 
about a merger between AOL and Yahoo!? This would be core Yahoo!" and 
shareholders- Right, so like the website, the email, right? 

Exactly. Okay. Exactly, the kind of the business that you remember Yahoo! for 
owning. Now, Yahoo! also owns stakes in Alibaba, which obviously just IPO'd and 
it has about 16% stake in Alibaba, and also owns a very large stake in Yahoo! 
Japan. And that is where the huge value lies. Sure. And that's what investors 
are asking for – let's break this company, let's spin out core Yahoo!, let's 
put those other assets in an operating company, and just unlock value. So this 
comes on the heels of Starboard Value back in September, disclosing a big stake,
and they were the first ones that originally said, "Hey, we'd like to see a 
merger between AOL and Yahoo!", right? That's right. Exactly. Okay. Now, 
obviously, shareholders have always asked for this. This is not a new theory. 
And apparently what shareholders are telling us is they've been asked- they've 
actually been approaching Marissa Mayer for about seven months now pushing for 
this strategy. So Starboard has come out publicly and has publicized this. And 
there're also, your story reports, AOL shareholders that have also gone directly
to Tim Armstrong. So is there overlap between – because there're a lot of 
common shareholders here – is there an overlap between the shareholders at 
Yahoo! and at AOL who are both pushing for this merger? It's a great question. 
It is a great question because I think, depending on where you sit – if you're
just an AOL shareholder or cross-holder between the two, or just a Yahoo! holder
– you do want different things. But at the end of the day, they want one thing
which is we think Yahoo! needs to spin out the core business. That's a 
definitely a consensus we're hearing whether it's cross-holders or not. And we 
do think perhaps Tim might be the right person to lead the combined company. So 
Marissa Mayer- a combined company would probably mean she's out, is what it 
would look like elegantly? They would- elegantly try to think of a way to frame 
it, and then obviously Yahoo! last night acquired- announced that it had 
acquired BrightRoll and that obviously irked a lot of Yahoo! investors who were 
like, okay, there's a lot of technology that BrightRoll has that AOL has through
Adap. TV. So this is kind of like a slap in the face for her own investors. 
Okay. Just very quickly before we let you go here, Rob Cyran of Breakingviews, 
who covers tech, was on the show and he said a merger between the two companies 
would be like two drunks propping each other up. So for investors, is this 
really then about the value of the stake in Alibaba and Yahoo! Japan as one sort
of rich company? It's a great question and that is a huge part of the answer. 
And of course, the other thing that we're missing here is AOL and Yahoo!, the 
cost savings we've been told are about $1.2 billion to $1.5 billion. Investors 
would love to get those types of synergies. So it's definitely the synergies 
that are provoking a lot of investors to talk to Tim, and said let's get this 
thing going and also monetizing the Asian assets. Alright. Great stuff, Nadia 
Damouni, thank you so much. Thanks, Lisa. I'll just mention very quickly 
Yahoo!'s up 2% and AOL's up about 0.5% today. 

Alright, we're going to look at some individual movers right now starting with 
SeaWorld – down 11% this morning. Reporting results that profit fell 28% in 
the quarter due to weak attendance, and this is continuing the downward trend 
from the second quarter. Lots of negative publicity of course about how they're 
treating killer whales over there at SeaWorld thanks to the documentary 
Blackfish. And the- I don't know. Is this the beginning of the end for SeaWorld?
You see so many celebrities, who were supposed to perform there, that are 
cancelling gigs at SeaWorld because they don't like what's being done there. 
Although the company says they are addressing those concerns so it'll be 
interesting to see if they can fix those very serious problems at SeaWorld. 
Alright, J.M. Smucker - with a name like Smucker it has to be good, right? 
Wasn't that the slogan when we were kids, Andrew, right? Yes? 

He's nodding his head yes. Not so good today though, stocks down about 3%. In 
addition to the J.M.s and the jellies and those sweet things, also coffee comes 
out of Smucker as in Folgers and Dunkin' Donuts packaged coffees. So they're 
seeing really a lack of volume in sales at packaged coffee because coffee prices
have been very high and, as a result, Smucker's has had to up the price of its 
packaged coffee. So, the stock's down today. Moving on to retail, teen retail; 
American Eagle - one of the ones that has been struggling so much as of late –
up 7% today, raising its earnings forecast for the third quarter due to lower 
promotion costs and improving margins. And here's kind of side- a fun side note 
over at American Eagle. It had a promotion back on April Fools' Day that it 
called American Beagle where it's- take a look, this way, over my shoulder, 
there you go. Get down - where it had fashion for dogs and was part of a fund 
raising effort for the ASPCA. Consumers weren't sure if it was real or not but 
really want it to be real so American Eagle said, "Okay, we'll make it real." 
American Beagle, fashion line for pets, is being introduced this holiday season.
So for you, dog lovers, out there – I'm one of them. I'm not sure what's going
to fit my golden retriever but you can buy something from American Eagle. 
Alright, let's take a look and see what the markets are doing today. We've got- 
we're roughly flat, not a lot going on today after the Dow and S&P 500 closed 
again at record highs yesterday for a fifth straight session. 

Some of the financials being hit today after regulators slapped fines on five 
big banks related to the foreign exchange manipulation scandals. That's kind of 
happening. Alright. Finally, finally, JPMorgan, Target, and – see right behind
me – JPMorgan, Target, and Home Deport, what do they have in common? They were
all hacked. If you were a victim, starting today, you may be able to get your 
revenge. Ashley Lau is here to tell us all about that. She covers ETFs. A new 
ETF that starts trading today, tell us about it. So it's called HACK, or that's 
the ticker which is appropriate. Right. So basically it's trying to find the 
silver lining in all of these data breaches because they're investing in 
companies that protect or seek to protect computers, network systems - the idea 
is that as these concerns grow, the industry that's trying to protect these 
companies will benefit. Right. So we're taking a look at it right now – HACK 
– so, right, all these big corporations now have to hire these firms to 
protect all their data. 

So what are- what individual holders it has and how have they been performing? 
So it's sort of interesting. Right now, there're about 30 companies. We have 
Qualys, Fortinet which are actually doing quite well this year. Okay. And they 
actually- it's interesting because it attracts both the long- There's Qualys 
right there. There's Qualys- yes. So it's interesting because it attracts both 
long-term investors who believe in the cyber security industry but also 
investors who might be driven by events. So when you have the US Post Office 
this past Monday just announced a data breach. So you're kind of playing long 
term and that companies are going to- these companies are going to be hired or 
are you going to play the news essentially? Right, right. Good stuff. HACK 
begins trading today, ETF actually. Ashley Lau thanks so much. Thank you. 
Alright. That does it for us here at Trading at Noon. Follow us on Twitter: 
@ReutersInsider and check out more videos at Reuters.com. I'm Lisa Bernhard. 
This is Reuters