Halftime—Top Tech Analyst: Yahoo Takeover Unlikely
Although AOL and a group of private-equity firms are reportedly seeking to takeover Yahoo!, a top-rated technology analyst said Tuesday he doesn't think it'll happen.
Mark Mahaney, a highly regarded tech analyst at Citigroup, puts the odds of a Yahoo! takeover at 20 percent.
"It's a very large, very complicated deal," Mahaney explained. "We get the pitch that PEs would make on this—there's a lot of cash, you could sell some of the Asia assets, but it's a very large deal. Very few PE firms would really have the stomach or the capacity to pull that off."
When the Sunnyvale, Calif.-based company reports quarterly earnings after the closing bell Tuesday, Mahaney is interested to hear what, if anything, it says about guidance on a potential takeout. He doubts they will make any comment on the matter.
During Yahoo!'s conference call, Mahaney also wants to hear about display advertising. He's looking at 19 percent growth year over year. Any kind of a decline would tell Mahaney that Yahoo's losing market share to Google and Facebook.
"That's a real problem," Mahaney said. "There's real no fundamental story for Yahoo! if they can't execute on display advertising."
It does seem Mahaney knows a thing or two about tech stocks. For the third straight year, "Institutional Investor" magazine recognized Mahaney as their number one tech analyst in their annual "All-America Research Team."
Watch the video to see the full interview with Mark Mahaney.
What's the Trade?
If Patty Edwards was a Yahoo! shareholder, she would hope for a takeover. The chief investment officer at Trutina Financial doesn't own Yahoo! shares and isn't interested in the stock.
RiverTwice Research's Zachary Karabell agreed. He suggests playing IAC or AOL instead because unlike Yahoo!, they're competing on content instead of display advertising.
APPLE, IBM OFF LOWS OF THE DAY
After reporting quarterly earnings results after the closing bell Monday, two big cap tech stocks fell Tuesday: Apple and IBM.
During Apple's conference call, CEO Steve Jobs took a few swipes at Googleand that put a bad taste in Edwards' mouth. Usually when someone does that, they're feeling defensive, said Edwards. She still likes Apple's stock though and thinks it will go highe because it'll have "the best gadgets for Christmas."
Karabell is concerned about expectations for Apple's stock given the run it's had. A few years ago, he said, Google was in a similar spot. It went up and up, then failed to meet expectations. In the next six to 12 months, Karabell thinks Apple will have that same issue.
Brian Kelly, founder of Kanundrum Capital, would not get into IBM on this pullback. Kelly is not sure what the catalyst for IBM's stock is going to be. He would rather buy Apple, which has several catalysts and international exposure.
CALL TO THE FLOOR: AMERICAN ELECTRIC
Michael Morris, CEO of American Electric , appeared on Tuesday's "Fast Money Halftime Report." He spoke with CNBC's Melissa Lee about their latest quarterly earnings results, regulation and more. Watch the video to see the conversation.
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Trader disclosure: On Oct. 18, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Cortes is short oil; Cortes is short gold; Cortes is short the Euro; Cortes is short (RSX); Cortes owns the S&P 500; Karabell owns (AAPL), (C), (GS)
For Zach Karabell:
River Twice Capital owns (GS)
River Twice Capital owns (IBM)
River Twice Capital is short (QQQQ)
River Twice Capital is short (SPY)
River Twice Capital is short (XLK)
River Twice Capital is short (XLF)
For Patty Edwards
Edwards owns (MEE) for clients
Edwards owns (GLD) for clients
Edwards owns (SLV) for clients
Edwards owns (AAPL) for clients
Edwards owns (BAC) for clients
Edwards owns (MS) for clients
Edwards owns (JNJ) for clients
Edwards owns (KO) for clients
Edwards owns (PCL) for clients
For Brian Kelly
Accounts managed by Kanundrum Capital own (GLD)
Accounts managed by Kanundrum Capital own (GDXJ)
Accounts managed by Kanundrum Capital own (TIP)
Accounts managed by Kanundrum Capital own (SLV)
Accounts managed by Kanundrum Capital own (REE)
Accounts managed by Kanundrum Capital own (MCP)
Accounts managed by Kanundrum Capital own (JEF)
Accounts managed by Kanundrum Capital own (UUP)
Accounts managed by Kanundrum Capital own (PCL)
Accounts managed by Kanundrum Capital own the Swiss Franc
Accounts managed by Kanundrum Capital are short the UK Pound
Accounts managed by Kanundrum Capital are short the Mexican Peso
For Mark Mahaney
Citigroup is a market maker in (AMZN), (GOOG), (NFLX), (YHOO)
Citigroup owns 1% or more of (NFLX), (YHOO)
Citigroup received compensation for investment banking from (AMZN), (GOOG), (YHOO) in the past 12 months.
Citigroup has, or had within the past 12 months, the following as clients, and the services provided were non-investment-banking, securities-related: (AMZN), (GOOG), (YHOO)
Citigroup has, or had within the past 12 months, the following as clients, and the services provided were non-investment-banking, non-securities-related: (AMZN), (GOOG), (YHOO)
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