iForex Blog - Yahoo Accepted the Final Bid
Who Will Win and How Badly is Yahoo Doing?
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On Monday, Yahoo accepted the final bids for the company’s core business, after an extended auction that began in February. The names of the bidders range from the well-known Verizon Communications, AT&T and TPG, to the less familiar Vector Capital.
As the sale progressed, Yahoo revealed that its revenue in the 2nd quarter of 2016 dropped by 15% and its operating profit dropped by whopping 64%. This sounds horrible, but in fact sales exceeded analysts’ estimates. Interestingly, but perhaps not so surprising, Yahoo admitted Tumblr, the company’s biggest acquisition under Marissa Mayer, was currently worth only about a third of the whopping $1.1 billion Yahoo paid for it back in 2013.
So, now what? Well, Yahoo’s board will need to evaluate the various offers over the following two weeks or so, and ultimately reach a decision on whether or not, after 20 years, Yahoo will cease to be an independent, publicly traded business. Does the board have to accept one of the offers? Of course not. If it chooses to reject them all, it is assumed that Yahoo will move its operating businesses into a different company, and leave its substantial investments in Yahoo Japan and Alibaba behind.
Another question is what will happen with the company’s chief executive, Marissa Mayer. As you may recall, over 6 months ago we’ve wondered if Mayer will soon be removed from office, and while that clearly hasn’t happened, it’s a bit hard to understand why. For four years under Mayer, the company has continued to struggle, failing to face the ever-growing competition. When the Tumblr acquisition was announced, Mayer went as far as promising “not to screw it up”. Well… result speaks for itself.
So, where is Yahoo heading next? Will the company accept any of the bids or will it choose to try and struggle on, and will the shareholders decide that it’s time Mayer and Yahoo go on their separate ways (don’t worry about her too much, she’s expected to receive $55M if she’ll be fired within a year of a sale)? At iFOREX you can invest in the price of Yahoo shares, as well as in the share price of many other tech giants including Google, Apple and Facebook, and potentially benefit from market volatility.
