×
You will be redirected back to your article in seconds

Yahoo Headed for Fire Sale? Bids May Come in Below $3 Billion (Report)

Yahoo may not get a price tag anywhere close to what the flagging Internet player’s investors are hoping for.

Current Yahoo bidders including Verizon Communications are expected to offer between $2 billion and $3 billion in the next round — far less than the upwards of $8 billion or more the Internet company had been expecting, the Wall Street Journal reported, citing anonymous sources.

Yahoo shares opened 2.6% lower Friday and were down 1% in morning trading, amid gains in the broader market.

That said, the chatter about low-ball bids could just be part of the haggle. Bidders in an auction generally want to underplay what they’d actually be willing to fork over to win the prize. In addition, bids may be structured differently and may not include all pieces of Yahoo’s business, the WSJ report noted.

Yahoo currently has a market cap of $35 billion, but virtually all of that value is tied to its stakes in Alibaba Group and Yahoo Japan (which are not part of the sale). Yahoo’s core advertising business is worth $1.5 billion, while its real-estate holdings are valued at $1 billion and its patent portfolio worth at least another $1 billion, according to estimates by SunTrust analyst Bob Peck.

On Yahoo’s first-quarter 2016 earnings call, CEO Marissa Mayer said the board and management team are making the sales process a “top priority,” often holding several calls and meetings per day. “We have been responsive and engaging,” she said.

Verizon has confirmed it’s evaluating an acquisition of Yahoo, but execs have remained mum on particulars. Last year, the telecom giant acquired AOL for $4.4 billion, a deal in large part driven by the Internet company’s advertising-technology capabilities.

Yahoo has set a deadline of the first week of June for the next round of bids, per the WSJ report. It’s not clear if that will be the auction’s final round or if more could be in store.

Others reported to be in the running for Yahoo are private-equity firm TPG and a consortium that includes Bain Capital, Vista Equity Partners and Ross Levinsohn, the media exec who briefly served as Yahoo’s CEO in 2012 before Mayer was hired.

Earlier this week, investment icon Warren Buffett said Berkshire Hathaway would be a potential financing partner for a Yahoo bid by Dan Gilbert, founder of Quicken Loans.

As part of Yahoo’s restructuring plan announced in February, which included a 15% headcount reduction, the company said it would explore selling “nonstrategic” patents and real estate this year. Through the end of 2016, the company estimated that could generate between $1 billion and $3 billion in cash.

Last month Yahoo avoided a looming proxy fight after by appointing four new board members nominated by activist investor Starboard Value, including Starboard CEO Jeffrey Smith, who has been critical of Mayer’s leadership. Starboard had previously been seeking to oust Mayer and the rest of the Yahoo board with its own slate of candidates.

More Digital

  • Nick Eh 30, StoneMountain64

    CAA Signs Gaming Influencers Nick Eh 30, StoneMountain64

    CAA has signed two popular live-streaming battle royale gamers — Nicholas Amyoony, better known as Nick Eh 30, and David Steinberg, aka StoneMountain64 — for representation. CAA said it will work to create opportunities for Nick Eh 30 (above left) and StoneMountain64 (above right) in all areas, including TV, motion pictures, touring, digital distribution and [...]

  • Amazon Adds NBA League Pass to

    Amazon Adds NBA League Pass Live-Streaming Games to Prime Video Channels

    Amazon is bringing pro hoops action to Prime Video Channels: The ecommerce giant now offers NBA League Pass as part of its lineup of 150-plus subscription options for Prime members in the U.S. It’s the first U.S. live-sports subscription service on Prime Video Channels. Prime members can subscribe to NBA League Pass via Prime Video [...]

  • Fifty Shades of Grey

    International Piracy Ring Stole Over 25,000 Movie and TV Digital Files, U.S. Feds Say

    A five-member international hacking crime ring stole more than 25,000 files for Hollywood movies and TV shows and illegally offered hundreds of them for sale online, according to U.S. law enforcement officials. A federal grand jury in L.A. on Wednesday (Dec. 12) indicted five men, identified as residing in the U.K., India, Dubai and Malaysia, [...]

  • Phil Schiller, Apple's senior vice president

    Apple to Update iPhones in China to Avoid Sales Ban

    Apple is pushing out a software update to iPhones in China to address a recent court order obtained by Qualcomm that banned the sale of certain iPhone models in the country. The update will allow the company to continue selling its phones in China, company representatives told Reuters Friday morning. The Fuzhou Intermediate People’s Court [...]

  • Kevin Reilly Variety Cover

    Kevin Reilly Named Content Chief for WarnerMedia Streaming Service

    Kevin Reilly — a veteran television exec who has led programming at NBC, FX, Fox, and most recently Turner Broadcasting — has been tapped to head content strategy for the still-nascent streaming service that WarnerMedia plans to launch next year. Reilly, who has led programming at Turner brands TNT and TBS since 2015, will serve [...]

  • Apple Culver City

    Apple Expects to Have Over 1,000 Employees in Culver City by 2022

    Apple announced plans to boost its L.A. presence, saying it expects to have more than 1,000 employees in Culver City, Calif., over the next three years, including its growing entertainment team. The move is part of the tech giant’s broader initiative to create 20,000 jobs in the U.S. by 2023 and includes a new $1 [...]

More From Our Brands

Access exclusive content