Verizon and Google reportedly bidding for troubled Yahoo's web business
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This article titled “Verizon and Google reportedly bidding for troubled Yahoo’s web business” was written by Edward Helmore in New York, for The Guardian on Thursday 7th April 2016 20.23 UTC
US telecoms firm Verizon is reportedly planning to make a first-round bid for Yahoo’s web business next week, Bloomberg has reported, with Googlealso considering bidding for Yahoo’s core business.
The potential bid for the huge but troubled web portal comes hours after it was reported that Yahoo has been circulating financial documents to prospective buyers. Tech news site Re/code reported that the documents showed the “financial situation at the Silicon Valley internet giant is becoming increasingly dire”.
According to the report, Verizon plans to replace Yahoo’s embattled CEO, Marissa Mayer, with the AOL CEO, Tim Armstrong, and Marni Walden, Verizon’s executive vice-president. Should Mayer be ousted in a sale she could land $110m in severance.
Over the past year, Mayer’s turnaround efforts have fallen notably flat, with the company’s stock price declining 20% and the business becoming increasingly vulnerable to activist investors. Last month, Yahoo shareholder Starboard Value said it was fed up with Yahoo’s leadership and called for the board to be completely replaced.
Two separate reports this week have indicated the depth of chaos at Yahoo, which has struggled to successfully redefine its missionunder Mayer. A report in Vanity Fair suggested that big-name hires under Mayer, including Katie Couric, found themselves competing with algorithms that determine which news stories are given critical promotion on its high-traffic home page. Another source told Vanity Fair the company was reverting to its beginnings as “a crap home page for the Midwest”.
Other potential suitors, including AT&T and Comcast have decided against bidding, according to Bloomberg, while Microsoft , which failed with a hostile bid for Yahoo in 2008, will not bid this time.
Private equity funds Bain and TPG may also be planning an offer. First-round bids for the company’s main web assets are due on 11 April. Yahoo reportedly prefers to sell its 35.5% stake in Yahoo Japan, worth about $8.5bn, along with the core business that Verizon values Yahoo’s core business at less than $8bn.
Jim Nail, an analyst with Forrester, said Verizon and Google’s interest in the company shows that Yahoo massive viewership still has real value in the internet age.
“You know how in the real estate business it’s location, location, location?” Nail said. “In the media business it’s audience, audience, audience.”
Nail said he remained skeptical of reports that Google was interested in purchasing Yahoo and suspected that, if true, it might be an attempt by the search giant to block a rival.
Yahoo declined to comment.
Among the forecasts are predictions that revenue, after the cost to acquire traffic (TAC), will drop by 15% this year, to $3.5bn, and earnings will fall by 20% – figures that are broadly in line with Yahoo’s published forecasts.
Yahoo shares fell about 1% to $36.32 as of 3.16pm in New York on Thursday.
guardian.co.uk © Guardian News & Media Limited 2010
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Verizon and Google reportedly bidding for troubled Yahoo's web business
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