23.7 C
New York
Monday, September 26, 2022

Subscribe

Friday Morning – Yipee for Yahoo!

This will be a short post because we have a lot of work to do today!

The jobs report was TERRIBLE, down 17,000 in January.  December, however was revised UP 64,000 jobs, from 18,000 to 82,000 jobs so that's a 355% margin of error in government reporting of what is considered a VITAL economic statistic.  Like I said, I'll take those ADP reports anytime.

Asia did some stuff, Europe did some stuff – who cares – MSFT just offered $44.6Bn for YHOO!  This is so fantastic for us I can't begin to tell you.  Anyone who's been following the $10KP and $25KP on the free site knows that YHOO was one of our key positions and yesterday we followed our trading rules and took out the $20 caller for just .42, a very nice profit off the $1.85 we sold them for just a week earler!

There is no better way to start the year over at PSW than to double up our smaller players in the first month.  Thanks to our very aggressive moves yesterday, the STP is also close to a double and should be well over as there was plenty of YHOO in there as well.  This is just way too much fun.

On the dark side, Google was going to be our focus play of the morning but this news should put a damper on their recovery off what were actually fantastic earnings by any rational measure.  We are still in Google of course and will take out our caller, roll down our longs to $520 or lower and give sanity a chance to reassert itself as Microsoft just told us Yahoo was 60% undervalued and Google is certainly better than Yahoo and was, even yesterday, trading at a significantly lower multiple.

Wake up people, do you really think the creators of Zune will suddenly blow Google out of the water by buying the competitor Google has been tearing to shreds for 5 years?  I'm not saying it's a bad deal for Microsoft, they need to do something on the Web and Yahoo is a totally underperforming asset but it's no Google killer.  Also, this bid is HOSTILE, which means it's possible Google themselves could turn around and make an offer (Microsoft's is cash and stock), which is why Ballmer waited for Google to be at a low value to make the offer – it's a lot harder for GOOG to match now than it would have been when they had an extra $60Bn in market cap.

Did MSFT work behind the scenes to tank the markets in order to close a deal they've been desperately after for almost a year or did things just align perfectly for them and they siezed the opportunity?  We may never know but we do know one thing – who will Steve Ballmer lay off to pay for this aquistion after spending over $1Bn in R&D to make MSN competitive?  Click here for the answer.

Our play on all this is TWX, who still have a small asset called AOL that Google already owns 5% of (probably with options for more) that company is way down from last year's high of $22 so we're going to grab the Jul $15s for $2 and wait for the rumors to start flying.

The jobs numbers destroyed a 150-point rally in pre-markets and dropped our indexes back to flat but I put no faith in those numbers and will consider this a great opportunity to get out of those QQQQ puts we picked up after hours.  The dollar is hitting new lows so gold is back up and oil will fly and it's going to be back to $500Bn for XOM as that company made $11.66Bn in Q4.  That should give us a nice rally to short into as it's probably the last hurrah for XOM as OPEC left oil production unchanged, which will add downward pressure to oil prices. 

Busy, busy, busy today.  Europe is holding up well and I expect our markets to recover.  Those DIA $125s we picked up yesterday need to be sold if we can't break 12,700 but they are already more than a double so let's hope XOM gets the Dow moving early on.  They should get help from BA, who may also get bought out if they don't get back over $100 soon – what a bargain!

Have a great weekend.

 

653 COMMENTS

Subscribe
Notify of
653 Comments
Inline Feedbacks
View all comments

U.S. equity futures point to higher opening, helped by Microsoft’s bid for Yahoo
U.S. equity futures are pointing to a higher opening, thanks to Microsoft’s (MSFT) unsolicited offer to buy Yahoo (YHOO) for $31.00 a share, or $44.6B. This represents a 62% premium over last night’s closing price. On the industrial front, Alcoa (AA) and Aluminum Corp. of China (ACH) jointly acquired 12% of the shares of Rio Tinto (RTP) in a deal believed to be worth about $14.5B. Investors will also be looking to the Labor Department’s January employment report, due out at 8:30 am ET, for clues about the state of the economy. :theflyonthewall.com

VCLK – way up on the MSFT-YHOO announcement

YHOO!!!!!

Thanks to you Phil I took off my covers earlier in the week!

YHOO – thanks Phil!!!

YHOO – Would anyone be crazy to bid more than $31? Own shares and am thinking of setting a limit order to sell it for $30.90 as I will be unable to trade during regular hours…

Wow a snow storm and a yahoo buyout!

Phil,

Thanks so much for rescuing my account!!! YHOOOOOOOO……….

Microsoft-MSFT volatility Flat into proposed $31 acquisition of YHOO
MSFT proposed the acquisition of YHOO for $31 per share. The transaction is valued at approximately $44.6 billion in cash and stock. MSFT offer is payable in $31 cash or 0.9509 per share of MSFT. MSFT is recently trading down 85c to $31.75 in pre-open trading. MSFT over all option implied volatility of 27 is near its 26-week average of 26 according to Track Data, suggesting non-directional risk. :theflyonthewall

Phil,

Great Call on YHOO…SO SAD for me as I didn’t have a chance to take off the covers…Have equal amounts of Feb/July 20’s. Any way to get decent profits…Obviously a big miss on the big dollars.

Thanks,

Congrats to all the YHOO players!!! I didnt get in on that one 🙁
But I do have plenty of ISRG’s 🙂

ISRG ride is just beginning!

Apple-AAPL checks in Asia suggest increasing Mac production, reiterate Buy@BOFA
Banc of America’s Asian checks indicate recent production levels are increasing for Macs, iPod production is being cut, and iPhone is volatile. They continue to believe that desktops and notebooks are the key driver of the story.

I was 2/3 covered on yhoo but i’m still happy 😀

Phil–whats the call on YHOO? Sell into initial excitement? Glad I took covers off (got lucky for once!)

Phil,
HOV:
You suggested y’day “to roll the caller from Feb 7.5 to Mar10 but not roll our own calls (Apr 5s) if we are not strapped for cash” – Can I ask why you would not want to take some $ off the table in this case and reduce your downside risk?

Congrats on YHOO! Too bad that was one of the 25KP plays I missed.

BKX is up quite a bit, I think XLF is a winner today

When:

Friday, February 1, 2008

8:30 AM Eastern / 5:30 AM Pacific

Press Conference Call

To participate in the teleconference please call: (866) 610-1072 and reference the conference ID number: 33470390

For individuals outside of the US, please call: (706) 634-9230

Wow, that’s a CRAPPY payroll.
Nobody mention the “R” word….

N O B O D Y.

MSFT Conference Call # live now

There is the “R” word.

Stock futures dropping hard…
Jobs report

U.S. payrolls down 17,000 in January, unemployment rate dips to 4.9%, Dow Jones reports.

Yahooooo! I got 40 uncovered at 17.50. THANKS PHIL, YOU ROCK!!

So does it make sense to buy some yahoo at $29 since I am going to get $31/sh from MSFT?

Must be a ton of people on the call, just get a fast busy signal.

More rate cuts coming. Calls into question a positive GDP in Q1.

Highlights:
————
Microsoft views offer as “next major milestone in Microsoft’s transformation”
Kevin Johnson “Advertising market due to grow from $40Bn to $80Bn in next 3 years….”
Advertising has scale economics (capex etc)
Software: growing capacity critical to achieving scale
Servers and Infrastructure required to achieve Advertising

Google (not mentioned) dominates….MSFT believes industry will be better served by having alternative to search and advertising.

Synergy: combining engineering talents…enhance user experience…enable search innovation… — expanded R&D capacity can assist in mobile…. — better value proposition for publishers…. — eliminate redundant operating expenses….will drive value for customers and companies….

Yahoo has tremendous community and content….can accelerate transformation to a more social web….

Headline numbers: offer $44.6Bn….$31 per share….50% cash, 50% equity.
Target close: 2nd half calendar year 08
Yahoo shareholders: 62% premium to closing price yesterday
MSFT shareholders: potential to drive $1Bn in synergies. EPS breakeven, possibly accretive in year post-closing. Will drive long-term economic value.

Was 2/3 covered on YHOO as well (but still quite happy) – great call Phil.

mrl
it’s an offer, it’s not accepted so anything can happen. it can be rejected, or someone else can bid higher, or whatever. the point being is that it’s not a done deal.

Google downgraded at Jefferies
8:07 AM EST
Google downgraded to Hold rating from Buy at Jefferies. Price target slashed to $600 from $725 and FY 2008 eps estimates lowered to $19.19 from $21.37.

Windywheel…who can outbid MSFT? Huge premium and MSFT can offer cash. No one can offer that.

Q&A:
GS, Sarah Friar: Is this a final price? MSFT Response: We believe this is attractive price…

GS: Why MSFT versus other media companies Response: We made a compelling offer, this will create #2 in the marketplace….one company cannot compete (Google given its paid search market share domination) based on anti-trust.

–What do you think you can do to stop losing search market share? A: Combinination of engineering resources….

BSC: Why not expand R&D rather than integrate companies with vastly different cultures. Was risk of integration calculated? …A: Sure we could have hired but the market continues to grow and the leader continues to consolidate, nothing like having the chance to put together two large R&D teams. This should be an accelerant to progress.

morning everyone…hope you are all well!!! (I’m doing much better-thanks for all the good wishes) hope to post some over the weekend and get back up to speed still in catch up mode—

Don

Sage- did you ever consider putting something together on how you look at the fundamentals of particular companies you are interested in? I have been spending a lot of time reading about different emphasis on fundamental company evaluations and would like your thoughts (free cash flow etc) I read a downgrade from Jefferies vs. XYZ and SOMEONE has to be off. THe math is relatively simple it seems to be a matter of subjective interpretations and focus on differing factors. It would be nice to have a Buffett long term understanding of companies while trading the options (read your GOOG trade couple of days ago and liked it- think its even better now with the post earnings drop, do you?

Wow, futures continuing to drop…watch out…

jason
yes there is someone
hint: who reported earnings last night?

WW: Goog…makes no sense for them to buy Yhoo. Plus, I think very low chance they could get EU approval or even US approval.

Phil,

Congrats on taking out the YHOO callers at 11:56 A.M.

Unfortunately due to full-time job, I didn’t get a chance to do that. I wish you had your email alert service started by now. Lunch-time reading,…not enough time to catch-up with all these posts. I wish you had different section for all your posts only.

Anyway, I have 2-questions :

1) I bought 10 Jul. 17.5 @ 3.5 and sold 10 Feb. 20 @ 0.55 against my july position. Is there anyway to improve this position?

2) Just curious as to what triggered buying back the callers?,…just 2 weeks before expiration?

Thanks in advance,

Jack.

Sage…also on GOOG, Citigroup, Oppenheimer, Stifel Nicolaus maintaining buy/outperform ratings, although lowering target prices (775 to 650, 850 to 715, and 725 to 675 respectively).

Jobs report.

Article yesterday by John Crudele anticipated weak jobs report ?

Why ?

Gov’t Birth / Death model.

Historically, January is the ONLY month of the year where the model assumes that more companies went out of business in Jan than were created. Says it creates a negative bias for the jobs report; which he is always highly critical of anyway.

FWIW

jack
it’s super easy to read only phil’s posts because he’s in blue
you can just scroll down and look for the blue, and skip everything else

curious as to why QQQQ’s up (YHOO, ISRG vs. Goog) ?

also QLD up pretty large … what’s the weighting there ?

why is vclk up?

jack
what triggered buying back the callers was that it reported earnings and gapped down in the morning, effectively wiping out the callers. from there, they could only very likely bounce back.
see: http://finance.yahoo.com/charts#chart3:symbol=yhoo;range=5d;indicator=volume;charttype=candlestick;crosshair=on;logscale=on;source=undefined

Phil,

Since MSFT is in a hostile bid for Yahoo, the stock is already down $1.35 in the pre-market. We DD MSFT on Jan. 30th. What is our next move on MSFT?

Thanks.

Jobs Report.

Also in the detail was a negative revision of 2007 NFP’s by a pretty chunky 376,000.
And, FWIW, that has nothing to do with a January bias. 😉

MSFT – so does this tank MSFT in the short term?

Phil
congragulations on the YHOO trade. Unfotunately I missed te post yesterday to take out the caller (mtg at work). what shld I do with my spread? Thanx very much.

DD – I put together a looooooooooong reponse to your question but WordPress deleted it…in short…Goog definitely…I will have hedging…remember 70/30 bull/bear is 100% bullish…will look into fundies article…thanks!

Congrats on YHOO to all! I thought I read here WHAT FOOL WOULD PAY $30 for YHOO earlier this week.
KHANNNN! ISRG congrats

1 2 3 14

Stay Connected

160,723FansLike
408,526FollowersFollow
2,130SubscribersSubscribe

Latest Articles

653
0
Would love your thoughts, please comment.x
()
x