Gilbert and Buffet Tag Team

[SDCC]

Local Detroit business magnate Dan Gilbert has allegedly team up with a consortium of individuals including, no other than Warren Buffet – the oracle of Omaha – to purchase the struggling internet company Yahoo. Everyone is mum on the subject. Buffet who is CEO, Chairman, and single largest shareholder of Berkshire Hilton, is one of the wealthiest men in the world, and when Buffet speaks. people listen.
I wasn’t aware Gilbert was even acquainted with Buffet, the second round of bidding is underway. The Yahoo campus is located in Sunnyvale, California. I could only hope if this bidding comes to fruition, that a Yahoo Detroit location would be on the horizon.
Other than IBM, Berkshire Hathaway is lacking in technology, and perhaps Gilbert and Buffet are looking to expand their reach and grasp.

Berkshire Hathaway is a multinational conglomerate holding company that outright owns: Geico, BNSF Railroad, Dairy Queen, Fruit of the Loom, Lubrizol, Helzberg Diamonds, and NetJets. Additionally, the company owns ~ 25% of the Kraft – Heinz Company, and is the single largest shareholder in the Coca-Cola Company. Buffet also has interests in Mars Chocolate, American Express, Wells Fargo, IBM, and Restaurant Brands. Restaurants Brands is KFC, Burger King, Pizza Hut, Big Boy, Olive Garden, Red Lobster, Outback Steakhouse, Taco Bell.
Berkshire Hathaway stock is $212,000.00 per share, and has a market capitalization of $171 billion.

[Jimaz]

Exclusive: Warren Buffett, Quicken Loans founder in Yahoo bid - sources

[gameguy56]

Exclusive: Warren Buffett, Quicken Loans founder in Yahoo bid - sources

what if he brings yahoo to detroit?

[davewindsor]

what if he brings yahoo to detroit?

How exactly would Warren Buffett and other investors benefit from moving Yahoo from Silicon Valley to Detroit? The stock would plummet even faster as a lot of advertisers would drop Yahoo from such a move. There's a good reason why a lot of tech companies are HQ'd in Silicon Valley. If Buffett's plan is to outsource a large chunk of the organization, it's probably going to India or China with what's left of the HQ remaining in Silicon Valley.

[SDCC]

what if he brings yahoo to detroit?

A small piece of Yahoo in Detroit is more likely; abandoning the Sunnyvale Yahoo campus isn’t in the cards. However, I would hope since Gilbert is part of this offer, a Yahoo Detroit division could pop up in one of many buildings that bear the Gilbert name.

[davewindsor]

A small piece of Yahoo in Detroit is more likely; abandoning the Sunnyvale Yahoo campus isn’t in the cards. However, I would hope since Gilbert is part of this offer, a Yahoo Detroit division could pop up in one of many buildings that bear the Gilbert name.

There won't be any Yahoo jobs relocating to Detroit from this buyout [period]. Yahoo's earnings per share was almost NEGATIVE $5 a share last year. Yahoo is bleeding money. It simply can't afford such a move. Relocating costs money and there's no money for relocating to Detroit. Plus, Buffett didn't get to where he is today by recklessly wasting money, so why would Buffett do it?

Gilbert also has businesses in other states, so Gilbert is not Michigan exclusive.

Buffett lost over $2Billion last year on his large share position in IBM. Birkshire shares declined 13% last year because of all the bad positions. All I could see for Yahoo, if Buffett picks it up, is a merger between IBM and Yahoo with a lot of downsizing and outsourcing to IBM India like what Buffett did with the Kraft and Heinz merger last year [[which saw a lot of downsizing and outsourcing like Heinz shutting down and selling off one of their largest tomato processing factories in Leamington--which was reopened after Highbury-Canco bought it, rehiring plant workers at half the Heinz union rate).

[SDCC]

There won't be any Yahoo jobs relocating to Detroit from this buyout [period]. Yahoo's earnings per share was almost NEGATIVE $5 a share last year. Yahoo is bleeding money. It simply can't afford such a move. Relocating costs money and there's no money for relocating to Detroit. Plus, Buffett didn't get to where he is today by recklessly wasting money, so why would Buffett do it?

Gilbert also has businesses in other states, so Gilbert is not Michigan exclusive.

Buffett lost over $2 Billion last year on his large share position in IBM. Berkshire shares declined 13% last year because of all the bad positions. All I could see for Yahoo, if Buffett picks it up, is a merger between IBM and Yahoo with a lot of downsizing and outsourcing to IBM India like what Buffett did with the Kraft and Heinz merger last year [[which saw a lot of downsizing and outsourcing like Heinz shutting down and selling off one of their largest tomato processing factories in Leamington--which was reopened after Highbury-Canco bought it, rehiring plant workers at half the Heinz union rate).

Yahoo is a $25 billion [[market capitalization) company. From a shareholder's perspective, Yahoo stake in the Chinese e-commerce leader Alibaba is worth ~ $25 billion alone; meaning most of its other assets are worth a small fraction of that. Yahoo is still one of the top digital advertising businesses in the world, and is worth a great deal to potential buyers, particularly those in the telecom market who are looking to build out their ad tech portfolios. Yahoo’s portfolio consists of Gemini, the integrated pieces of Brightroll and Flurry, along with their $1 billion acquisition of Tumblr. Gemini, Brightroll and Flurry are used to deliver ads across the web and mobile devices, while as everyone knows Tumblr is a widely used blogging platform.
The question is how much [[or how little) is the Yahoo board willing to go to sell the business; and which parts of Yahoo are included in the sale. Does the price tag include Yahoo's core business, its cash on hand – $7 billion, its stakes in Alibaba, and Yahoo Japan? If Yahoo sells between $4 and $8 billion, it wouldn’t include the cash on hand. If the sale price is closer to $4 billion to $5 billion I would assume it would exclude real estate, cash, intellectual property, and its Asian assets.
I agree with you Buffet is frugal man- as much as a billionaire can be frugal. I’m not familiar with Gilbert, nor his specific interest in Yahoo, or any of its assets. I just returned to Michigan a little over a year ago.
AT&T and Verizon announced they would allow content providers to sponsor content on users' phones, meaning providers pay for the data consumers use to get their content, otherwise known as advertising, in front of users' eyeballs. Those types of initiatives create a market for Yahoo.

[davewindsor]

Yahoo is a $25 billion [[market capitalization) company. From a shareholder's perspective, Yahoo stake in the Chinese e-commerce leader Alibaba is worth ~ $25 billion alone; meaning most of its other assets are worth a small fraction of that. Yahoo is still one of the top digital advertising businesses in the world, and is worth a great deal to potential buyers, particularly those in the telecom market who are looking to build out their ad tech portfolios. Yahoo’s portfolio consists of Gemini, the integrated pieces of Brightroll and Flurry, along with their $1 billion acquisition of Tumblr. Gemini, Brightroll and Flurry are used to deliver ads across the web and mobile devices, while as everyone knows Tumblr is a widely used blogging platform.
The question is how much [[or how little) is the Yahoo board willing to go to sell the business; and which parts of Yahoo are included in the sale. Does the price tag include Yahoo's core business, its cash on hand – $7 billion, its stakes in Alibaba, and Yahoo Japan? If Yahoo sells between $4 and $8 billion, it wouldn’t include the cash on hand. If the sale price is closer to $4 billion to $5 billion I would assume it would exclude real estate, cash, intellectual property, and its Asian assets.

Ok, so we are in agreement that Buffett wouldn't buy a company unless he saw value in it. In Yahoo's case, it's losing money, but I have no doubt that Buffett has a realistic plan to make it profitable again.

AT&T and Verizon announced they would allow content providers to sponsor content on users' phones, meaning providers pay for the data consumers use to get their content, otherwise known as advertising, in front of users' eyeballs. Those types of initiatives create a market for Yahoo.

All this stuff can be done over the Internet from Silicon Valley or even India. I still don't see why Buffett's plan to turn around this company [[if his group of investors bought Yahoo or a segment of it) would include relocating jobs from Silicon Valley to Detroit.

[SDCC]

Ok, so we are in agreement that Buffett wouldn't buy a company unless he saw value in it. In Yahoo's case, it's losing money, but I have no doubt that Buffett has a realistic plan to make it profitable again.

All this stuff can be done over the Internet from Silicon Valley or even India. I still don't see why Buffett's plan to turn around this company [[if his group of investors bought Yahoo or a segment of it) would include relocating jobs from Silicon Valley to Detroit.

Oh, I agree with you, and I also think your right about Buffett; he will chop up Yahoo like a Benihana chef. Any opinions on Gilbert’s intentions or motive?

[douglasm]

Buffett tends to purchase companies that make money, not turn-around prospects. Yahoo is in some trouble so I have a little difficulty in seeing Buffett investing in a company that appears to have management problems.

[Lowell]

From my read the Buffet/Gilbert move is for Yahoo's internet assets. The $36 billion Yahoo owns of Alibaba shares is separate.

That would be mean a move to buy an essentially dwindling, but still significant, audience with the thought of re-energizing it. There are a lot of people still using Yahoo mail out of momentum. Tumblr is still huge and Yahoo sports and business get lots of eyeballs. And I hear some still use Yahoo search. This move is akin to Verizon buying the ruins of AOL.

From Gilbert's POV I could it offering opportunities of establishing Quicken as the bankers for that audience by taking advantage of the intimate data-mining they would gain. I thought the Gilbert/Buffet 'Win $10 million if you predicted the perfect March Madness bracket' was brilliant. Absolutely no chance of anyone winning it but all kinds of free targetable audience data gained. I entered it just to see what they were after and they got a lot.

[SDCC]

Hot off the presses on CNBC…From the Oracle of Omaha himself...Gilbert is looking to buy Yahoo, Buffett would be his banker – proper terms and protections. Buffett is uninterested in Yahoo himself. Buffett spoke very highly of Gilbert, and would be more than willing to assist Gilbert in this proposed transaction.
Whisper is...this information being released by the Yahoo board; simply trying to push up the bidding on the sale price.

[davewindsor]

Hot off the presses on CNBC…From the Oracle of Omaha himself...Gilbert is looking to buy Yahoo, Buffett would be his banker – proper terms and protections. Buffett is uninterested in Yahoo himself. Buffett spoke very highly of Gilbert, and would be more than willing to assist Gilbert in this proposed transaction.
Whisper is...this information being released by the Yahoo board; simply trying to push up the bidding on the sale price.

I think the Gilbert-Buffett team are playing a little game of misdirection to keep the stock price down and keep it undervalued. It's obviously not in their best interest to tell the public exactly what their plans are if it's gonna make the stock more expensive for them to buy.

What I read from the NY Times was Buffett can convert that debt he's lending to Gilbert into equity [[stock) at any time:

"Mr. Buffett has spoken of his aversion to technology companies, aside from an investment in IBM, but Berkshire would be playing a financial role and would collect interest from its financing with the opportunity to convert those holdings into an equity stake." http://news.blogs.nytimes.com/2016/0...pgtype=article

So, unofficially Buffett is as much an active player in this as Gilbert.

BTW, from the article above, it's interesting to note from the Kraft-Heinz deal the following general statement that was made, "The merger is a return to mega-deals for Mr. Buffett, who has maintained that he is hunting for “elephants,” large companies he can incorporate into the growing Berkshire conglomerate."

So, Buffett is hunting for large companies he can incorporate into the growing Berkshire conglomerate...

My guess is that they are leading a group of investors to pick up a majority control of Yahoo stock and put together a similar Kraft type deal like Buffett did when he got together with 3G Capital, a Brazilian Investment Firm, where together they bought a majority stake of Kraft and did a merger with Heinz followed by a series of cost saving cuts and sell offs. I'm guessing IBM is going to become part of this merger, but obviously they're not going to admit it to keep the stock prices down.

[Lowell]

I'd bet Jerry Yang wishes he could have a do over on Microsoft's 45 Bil unsolicited bid for Yahoo in 2008.

[bust]

I agree with those who say it would be very highly unlikely Yahoo will relocate to the Detroit area, even with Gilbert at the helm. But they'd be likely to expand their office, even if just to provide Gilbert the team and tools he'd need to work close to home. Yahoo already has a small sales office geared to the car makers. Facebook and Google do too. Amazon has a small but growing office of mostly engineers directly downtown.

It would be great to see non-auto-related tech employment continue to grow. There are reasons why it could. Tech workers in Detroit require lower salaries than in silicon valley, San Francisco, Seattle, Boston, and New York. Not nearly as low as in India, Eastern Europe, China, or the Philippines, of course. Cost of living is key. But without the language, time zone, and other difficulties companies encounter when they outsource over there.

My biggest worry if Gilbert were to succeed in his bid for Yahoo is that he'd be distracted from all the work he's already doing in Detroit. The man sure has a voracious appetite, but that would be a huge extra bite to chew.

[Jason]

It would be pretty cool if this was what was delaying the Hudson's site stuff. Having the Yahoo HQ there along with a Quicken building plus whatever else is planned for there would be pretty cool.

If it really is just Gilbert and not Buffet who's interested in Yahoo, moving the HQ seems plausible, but more realistically there'd just be a bigger-than-otherwise Detroit office. Either way it's good for us, and good for him if he can make buying Yahoo worthwhile.

I also sense that Yahoo's goofy dot com bubble era branding resonates with Gilbert...