Questions linger about sale of Yahoo
SAN FRANCISCO – Yahoo Inc. met expectations when it reported its first-quarter earnings Tuesday, but investors and analysts were focused less on the struggling Internet company’s numbers and more on updates about potential buyers.
Bids for Yahoo and its assets closed Monday, with Verizon still said to be the front-runner to acquire the Sunnyvale, Calif., firm. Other names have recently emerged as interested parties, such as YP Holdings, better known as the Yellow Pages, and private equity firms Bain and TPG.
Yahoo has remained tight-lipped about the bidding process and did not respond to requests for comment about when a decision is likely to be made. In a prepared statement, Yahoo Chief Executive Marissa Mayer said the company has made “substantial progress towards potential strategic alternatives for Yahoo.”
But Mayer said Yahoo was continuing to execute its turnaround plan, which involves cutting costs and improving its advertising business.
The company reported $1.08 billion in revenue in the first quarter of 2016, down from $1.22 billion the previous year. It reported a net loss of $99 million.
Revenue from its mobile and native advertising business, which it refers to as “mavens,” grew 9.4 percent to $390 million, but its non-mavens revenue fell 13.2 percent to $644 million. Its total Web traffic-driven revenue also fell. Revenue from desktop dropped by nearly $100 million.
A potential sale of the company isn’t the only thing that loomed over the company’s earnings call.
Activist investor Starboard Value launched a proxy fight in March to remove Yahoo’s entire board of directors. The hedge fund nominated a slate of nine new directors, on which shareholders will vote at the company’s 2016 annual meeting.
“It’s atypical for these kinds of situations – where you get an entirely new slate of directors – to work out,” said Scott Kessler, equity analyst at S&P Global Market Intelligence. “But guess what? This has been an unusual situation for a decade or so. There’s a lot of pressure right now on Yahoo’s management and board.”
Yahoo’s stock barely budged in after market close, trading at $36.33.