Yahoo and other bubbles...when will they burst? Message Board

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Strategies & Market Trends : Yahoo and other bubbles...when will they burst?

YHOO 52.58

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Jun 26 5:00 PM EST

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To: marion (Hijacked) who wrote ()	1/31/1999 10:11:00 AM
From: marion (Hijacked)	Read Replies (1) of 139

There were two interesting developments last week. The GeoCitities deal, and Amazons convertible bond. Here are some thoughts on GeoCities, (from a prior post) The Geocities deal is incredibly bad for Yahoo's financial picture. Based on the information provided to date, here is how it will look. This deal will go through in the second quarter, so the impact on the financial statement won't hit until then. GeoCities has tangible assets of around 111 million. Yahoo is buying it for 3.56 billion. That means they have to write off the difference. When Yahoo bought Viaweb for 48 million, the difference between the assets and what the paid they called "research and development" that was worthless and tried to write it off as a one time charge. The SEC made Yahoo change this. Yahoo is now writing off part of the Viaweb acquisition over 3 years. Still.... Viaweb was only 48 million. Now do it with 3.56 billion. If it's a one time charge it's still a loss of a whopping 26.00 per share! Over 3 years it's a loss of 2.16 per share a quarter. Yahoo is still in the red. They still have an accumulated deficit. That means they haven't earned enough to cover their previous losses. With the 3 plus billion getting added to their deficit, I don't foresee how they would be out of the red for the next decade. Of course... Yahoo can continue to release press releases with their two financial statements each quarter ... one that shows they have a profit and one that conforms to GAAP (Generally Accepted Accounting Principals), but don't compare this to Microsoft. Microsoft's profits were GAAP. They really did make money. By the way.. why would a company pay 3.56 billion for a company that isn't making money, had revenues of less than 8 million last quarter and assets of around 111 million? In fact, had Yahoo owned GeoCities last quarter, it would have wiped out even their non-GAAP profit. Softbank is the largest holder of GeoCities.

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