Friday, April 22, 2016

Yahoo for Sale - Verizon Considered Most Likely Buyer

You may have heard about Yahoo's plans to "spin off" their core web business. Over the past decade, the company lost the battle for market leadership to Google, which was once their smallest competitor, and has gone through several CEOs, still without any significant growth in sight. So, it makes sense that Yahoo wants to make a last-ditch effort to turn their luck around. However, as Tracey Lien stated in her recent L.A. Times article, Yahoo may have given up their plans to turn the business around. Instead, the web powerhouse could be looking to sell while the company is still worthwhile to potential buyers.

The various chief executives have tried everything to bring the company back to its former glory. Millions of dollars were spent to try to make Yahoo into a leader in media and technology, but that never really panned out, especially since the company largely missed the transition to mobile technology. Yahoo's websites get nearly a billion visitors per month, yet Yahoo has yet to gain the kind of big-money advertisers that Google and other competitors are known for snagging. Yahoo even tried starting a $42 million video program to compete with Netflix and YouTube but canceled it after disappointing results in the first season.

One of the company's most valuable assets, at least to analysts, is its $32 billion stake in Chinese e-commerce company Alibaba. Unfortunately, Yahoo failed to successfully spin off that asset, which just led to more scrutiny by current and potential future investors. According to analysts, Yahoo's changes this month to their employees' severance packages are a telling sign that Yahoo is getting ready for a sale. According to tech analyst Jan Dawson, the only way Yahoo doesn't get sold is if they insist on a price that no one is willing to pay. Even then, Dawson continues, Yahoo could end up looking at a sale again in the near future.

At least 40 potential buyers have done in-depth research into Yahoo's finances, but some companies are looking like more likely buyers than others. Currently, the front-runner in the competition to purchase Yahoo is mobile and broadband company Verizon. Verizon has both means and motive, especially after acquiring AOL last year as part of its attempts to bolster its efforts to become a leader in the media sector. Other potential buyers include Daily Mail, a British tabloid newspaper with similar audiences as Yahoo; Microsoft, which tried to purchase Yahoo in 2008 for $45 billion; and CBS, which could use Yahoo's size to reach a larger audience. There are some rumors that Google could be interested, but Dawson doesn't believe that Google would want to invest a lot of money to gain a business so similar to what they already have.

Some private equity firms could also be interested in purchasing Yahoo, but if they did, it is likely that the company would be broken up and sold off in pieces in the near future. Each asset within the company would be built up, then sold in the right market for greatest potential profitability to the firm. No matter how it goes down, though, it is expected that Yahoo will find itself under new ownership at some point in the next several months. Yahoo has billions of visitors a year, thousands of employees, and has been valued at about $35 billion. Eventually, someone will buy the company. It's just a matter of time.

Find out more about us at Any Questions? Contact our Escrow Expert! Sepulveda Escrow Corporation (818) 838-1831. Follow our company on FacebookTwitterLinkedIn, and Google+.

No comments:

Post a Comment