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Technology Stock Roundup: Yahoo Slides as Alibaba Files IPO

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The Alibaba IPO filing was the hottest news last week, but Facebook (FB - Free Report) , Intel (INTC - Free Report) , Google (GOOGL - Free Report) and Microsoft (MSFT - Free Report) also played their roles.

Alibaba IPO Raises Questions About Yahoo

Chinese ecommerce giant Alibaba, in which Yahoo has a sizeable stake, filed its IPO last week.  But although shares have been buoyant in anticipation of the filing, there was in fact a huge sell-off following the announcement.

The negative sentiment started off with the news that Yahoo’s estimated stake of 24% had in fact got diluted to 22.6%, meaning lower cash inflow to Yahoo when it sold the agreed-upon 40% of its holdings. The value of its remaining holdings would also therefore be lower.

Second, Alibaba priced its shares at $50, which values Yahoo’s stake at a little over $26 billion, or most of its current market capitalization. Taking out the value of its other Asian assets would indicate that the core business is worth next to nothing. Following the IPO, Yahoo will also lose out on some royalty income, which will make a difference considering the challenges. So what of Mayer’s turnaround efforts?

It is a fact that the company is much better-focused now and while the benefit of the numerous acquisitions is not evident yet, Yahoo’s progress can be tracked by the undeniable increase in traffic and engagement. Mayer and others at Yahoo are optimistic about the core business and Yahoo’s success, particularly in mobile and intend to use the windfall judiciously. But 2014 promises to be rocky, with monetization improving only gradually.

Privacy Concerns Hit Facebook

Last week, Facebook investors expressed concern regarding the repercussions of further intrusion into user privacy. When Facebook acquired Finnish app company Moves, it had promised not to integrate Moves user data into Facebook profiles. But when The Wall Street Journal reported that Moves had made changes to its terms of service, many people, including a couple of privacy watchdogs questioned its motives.

Whereas previously Moves expressly stated that it wouldn’t disclose an individual user’s data to third parties without a user’s consent or law enforcement order, it has now made allowances for Facebook in order to "help provide, understand, and improve" services. Facebook says the sharing will be limited to its staff so they can further develop and support Moves, but of course the wording is not so limiting. At any rate, it’s possible that privacy watchdogs Center for Digital Democracy and the Electronic Privacy Center will take the matter to the FTC. 

Is “Win-tel” Giving Way to “Chrome-tel”?

Intel has dived into the Chromebook market, announcing 20 new models that will be using its Bay Trail chip and Celeron brand. The new models will come from Hewlett Packard (HPQ - Free Report) , Dell, Acer, ASUS, Lenovo, LG Electronics and Toshiba. Intel (INTC - Free Report) -powered Chromebooks will now have 11 hours of battery life and be available at a minimum cost of $349. All the models will launch by year-end.

Success in tablets is not evident yet, but Chromebooks are mobile devices with stupendous growth rates (2.5 million units in 2013 to 4.2 million units this year, according to IDC). If most of them have Intel inside, this is indeed good news for the company; particularly since the PC market remains in the doldrums.

Of course Intel will continue to protect the desktop for its higher-end chips and chances are the Wintel combo will continue in the segment. But the problem with the mobile market is cost. Since both Intel and Microsoft have high-end products, they are destined to walk separate ways in this market. Therefore, Microsoft likely will continue to favor cheaper ARM designs while Intel partners with companies that offer free operating systems.


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