Snap’s Valuation, Yahoo’s Compromise, and Salesforce’s Activists

It’s a day of financial reckoning in the technology industry. From multiple perspectives, investors are checking their exuberance on tech. These are tweaks more than corrections, and very likely a good sign. Elsewhere the world is a crazy place; who would have guessed the tech world would provide a dose of sanity?


* The Wall Street Journal was the first to report that Snap, the “camera” company parent of messaging service Snapchat, will price its initial public offering at the low end of its expected range. Snap confirmed it will seek a valuation of merely $19.5 billion to $22.2 billion, compared to the high of up to $25 billion it had originally indicated. My “merely” was intended to be humorous. Snap has Twitter-like user growth—not a good thing—and faces fierce competition from Facebook. More, prospective investors in Snap’s IPO have done a remarkable job of talking down its valuation prior to the offering. Whatever happens, Snap is an extraordinary company. Soon we’ll find out what it’s worth.

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* Multiple news outlets report that Yahoo will shave approximately $300 million from the $4.8 billion it agreed to accept from Verizon for its core business. Getting this deal done is a high priority for Yahoo (YHOO), whose data leaks have become more embarrassing with passing time. That Verizon (VZ) wants to complete the deal is a testament to Yahoo’s business. It’s like a homebuyer who discovers mold in a fixer-upper and still wants to take ownership anyway—just not at the agreed-upon price.

* Finally, as Jen Wieczner writes on, three activist hedge funds have accumulated a small position in San Francisco software company These firms specialize in buying shares of companies whose stock prices are down on the hopes their influence or sometimes merely their presence will encourage companies to shake things up. (One of the funds, Jana Partners, took a stake in Time Inc., parent of Fortune.) Wall Street has been kind to Salesforce (CRM) in the past, but its patience isn’t unlimited. Salesforce hasn’t earned a full-year profit since 2011. That, obviously, can’t stand.


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