20 June 2007

Bad Maths

"Yahoo is currently worth $37bn, meaning that News Corp would need to pay in the region of $12bn for a 25% stake"

BBC News - The Business Pages - can't count won't count.


  1. As sloppy as that statement is, it's possible it's true and the reporter just hasn't understood why.

    Attempting to buy 25% of Yahoo would probably cause a large spike in the share price. To complete the deal, they'd have to chase that price all the way up...

  2. The variation means that the analysts expect the share price to rise quite a lot: by about $11Bn.

    Which is probably more than the (arguably correct) valuation of Yahoo in the first place. Considering Yahoo's rapid decline, I'd be more willing to listen if the price increase was in the few million region, not a bunch of billions.

    (It's an American billion, by the way. The British billion is a million million, the American one is a thousand million. Still, at those stratospheric levels, what's a few millions between friends?)

    Personally, I'd expect Yahoo to decline slightly; it's lost a lot of value compared to Google. But as a news portal, it's still pretty decent. (Better than Google, I think.)

    The last of the dot-coms? Still around, still over-priced.

    Carolyn Ann

  3. "The British billion is a million million, the American one is a thousand million."

    Patronising a tad?

    Actually the "American billion" is pretty much in common use in the UK now.

  4. No, no patronizing intended! Apologies for any offense; it was unintentional.

    I've found when discussing these quantities that the misconception/confusion about the two definitions can get in the way. So rather than assume that everyone knows what the definitions are, I always state it. Maybe I should stop doing that, if it comes across as patronizing. Sorry. (I'm quite mortified!)

    Carolyn Ann

  5. Actualy, if News Corp pump in an additional $12bn, then Y! will be worth $49bn. So News Corp's stake will indeed be just a bit less than 25%.