Yahoo is about to announce the buyer of its core business by the end of the month, as it receives the final bids, which range between 3 and 6 billion dollars. The company is expected to report last earnings of $ 0.14 per share.
The end of Yahoo as we know it may be closer that it appears. The multinational technology company that receives over 7 billion views per month is close to announcing the sale of its core business, including Yahoo Mail, Yahoo Finance, advertising and search, Yahoo Sports and other patents and intellectual properties. A lot of interest and speculation have been shown around Yahoo’s selling process. The buyer or the final cost of the transaction is currently unknown. However, specialists say that the price must be between 3 and 6 billion. Wall Street considers Yahoo will receive $0.14 per share on revenues of $ 1.1 billion.
Yahoo’s stock price closed at $37.72 on Friday. Although 37.72 dollars means they lost 0.63% of their share value, Yahoo’s stock gained 3% of value in the past three months. GC Financial Technology Research Director and analyst, Colin Gillis, said that the sell could surpass the 6 billion dollars but believes Yahoo Board would accept anything higher that 5 billion or so, he also considers that Yahoo sale will exceed Wall Street’s’ expectations. Even if some investors believe Yahoo’s sale process will not be completed, as they think Yahoo’s directors will turn down offers, Gillis says “Yahoo is over in our eyes.”
What happened with Yahoo?
Yahoo board of directors, which is presided by Marissa Meyer, began the sale process back in April 2016, approximately four months ago. The famous network company, valued at 4.96 billion dollars by the end of 2015, started the sale process after quitting on the spin-off of its stake in Alibaba, the Chinese e-commerce company.
The Sunnyvale headquartered company attempted to a spin-off of its 15% Alibaba shares into a smaller Yahoo profitable unit; however it abandoned this project after the U.S Internal Revenue Service refused to give Yahoo’s split project a Tax-free treatment. Because of this, it emerged among its board directors the agreement of selling the company to avoid a battle between them.
Yahoo just made changes that hint it expects to be sold soon https://t.co/LazbaNGnBm #search #tech #yahoo
— Philipp Postrehovsky (@philpostro) April 15, 2016
Who gives the best bid?
There has been a lot of speculation about the future of Yahoo once it’s sold. Among the bidders for Yahoo are Verizon, AT&T, a consortium that includes a Warren Buffett’s firm Berkshire Hathaway, TPG company and other private investment firms.
Some say the most reasonable buyer would be Alibaba. The Chinese Alibaba Group has long desired to expand its market, especially to North America. An easy way for the company to do so would be buying back the 15% stock the Sunnyvale Company has in Alibaba. Besides of this massive buyback from Yahoo, buying Yahoo’s stake in Yahoo Japan would strengthen Alibaba’s relationship with SoftBank, one of the biggest investors in Yahoo Japan and Alibaba itself.
Concerns arise among Yahoo Users
Two weeks ago, at the Yahoo’s annual shareholder meeting, CEO Marissa Mayer said that they had been “very heartened by the level of interest in Yahoo. It validates our business progress as well as or achievements to date”. But what remains uncertain is what will happen with the users and the services Yahoo has had all over its 22 years in the market, after the Californian Company has a new direction.
Little do the 1 billion users of Yahoo care if the company has a good deal, or what Verizon or Alibaba are offering to Yahoo for its main web properties and patents. If they don’t know with certainty if they will be able to use the Yahoo Services as they have been doing, once the sale of the company is completed.
It is clear that if the new buyers of Yahoo -which are hopefully going to be announced by the end of the month- believe that some of the current services are not profitable enough, they might suspend them. According to Robert Peck, Internet equity analyst at SunTrust Robinson Humphrey, Verizon remains the likely winner of the bid, and since it already acquired AOL in May 2015, Verizon could use Yahoo’s content areas to create Yahoo-AOL. “I think there’s a good chance the Yahoo brands lives on,” he said.
Good analysis why #alibaba should buy #yahoo, 'killing three birds with ne stone' issue not touched was regulatory https://t.co/LL1N0vddc6
— Rushdi Siddiqui (@RushdiSiddiqui) July 17, 2016
Though there is no signal that the bidders have a particular interest about dismantling the valuable properties of Yahoo, there is a possibility. Even if they don’t shut down the Yahoo properties, some of them as Yahoo Mail could be redesigned, becoming a big shock among users. A lot of discussion about the subject has been made on the web; however, it is still too early to know the future of Yahoo’s properties, maybe it will all depend on the bidder who makes the best bid to Yahoo.
Source: USA Today