Yahoo (YHOO) Increases Stock Buyback Plan, To Offer $1 billion of Convertible Notes

Yahoo (YHOO) announced today that they would be offering $1 billion of convertible notes due 2018 and are also increasing their buyback plan. YHOO has been aggressive in buying back shares recently, and has only $300 million left on their current plan. Management showed that they clearly feel Yahoo is still undervalued at current levels and would continue buying, announcing a $5 billion repurchase plan today, an amount that would account for nearly 1/7th of their outstanding shares at yesterday’s closing price. Yahoo currently has $3.2 billion in cash on their balance sheet and extremely valuable stakes in Alibaba and Yahoo Japan. They will be required to sell a significant percentage of their Alibaba stake in the event of an Alibaba IPO. Last week I highlighted numerous charts of YHOO, they have been a strong performer as of late and we expect shares to respond favorably to this news. I believe YHOO stock is a buy and will reach $40 within the next couple of months.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I have no business relationship with any company whose stock is mentioned in this article.