Yahoo! feels pressure to cheer suitors
Contact The Author
With buyers circling and talk of a breakup looming, Yahoo! is facing added pressure to show a turnaround in its core advertising business.
The Web giant will report third-quarter results today after the close of markets, and investors will be scrutinizing the business for fresh signs of trouble that might turn off potential suitors.
Yahoo! likely saw its core display advertising business remain fairly flat year over year, and revenue is expected to be down 4.1 percent to $1.08 billion, according to Wall Street estimates.
“The company’s adrift,” said Colin Gillis, an analyst with BGC Partners. “It could be closer to a fire sale than getting top dollar.”
In August, Yahoo! fired then-CEO Carol Bartz and formed an exploratory board to consider a sale of all or parts of the company, taking it private and other remedies.
As it stands, private-equity firms such as Silver Lake, Providence Equity Partners and KKR are reportedly interested. Also, Alibaba CEO Jack Ma has said he wants to buy Yahoo!
Ma is concerned, however, that the US government would scrutinize a deal involving his Chinese company and could raise regulatory issues over foreign ownership rules here.
Still, Ma is key to any deal for Yahoo! because he controls one of its most prized assets — a 40 percent stake in his Alibaba Group.
Yesterday, Ma told an audience at an event in China that he already had the financing to buy back a portion of Yahoo’s stake in his company.
A source with knowledge of the situation said Ma was referring to funding he was able to secure last year when he negotiated to buy half of Yahoo’s Alibaba Group holdings. (That deal fell through at the last hour.)
Also, Microsoft is paying close attention to any movement on Yahoo! because of its revenue-sharing search deal with the company, which could be affected by any ownership shifts.
Sources said yesterday Microsoft was not keen on making a bid itself.
A number of sources have said that Yahoo! has not sat down yet for formal sale talks.
Analyst Gillis said next month could determine what the future holds for Yahoo!
“Turkeys get carved up in November,” he said yesterday in an analyst report.