Yahoo fails to find buyer as losses widen

21/07/2016

Yahoo is preparing for a third round of bids for the company, as the embattled web giant sees its losses widen to $440m.

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The company managed to beat Wall Street's limited expectations for revenue in the April-June quarter. But after subtracting commissions paid to its partners, Yahoo said its revenue fell 19 per cent from a year earlier, while its loss widened to $440 million.

Investors are waiting to hear about the company's plans, after Yahoo's board began soliciting bids from prospective buyers earlier this year. Monday was the deadline for final offers.

Much of the speculation about Yahoo's future is centred on Verizon, the telecoms giant that recently bought AOL, another faded internet star.

AT&T and a partnership between Quicken Loans founder Dan Gilbert and billionaire Warren Buffett were also thought to be in contention.

Yahoo could announce a buyer by the end of the month, according to some reports.

Yahoo is reviewing a third and potentially final round of bids for its web properties that is expected to include Verizon Communications and private-equity firm TPG.

Bidders have reportedly expressed concerns about Yahoo’s flagging fortunes.

Once Silicon Valley’s pre-eminent online presence, it has fallen further and further behind Google parent Alphabet and Facebook.

The company announced it would fire 15% of its workforce in February as it tried to recoup money following a series of big-ticket purchases. Mayer could potentially walk away with a $137m payoff if she is fired.

“With the lowest cost structure and headcount in a decade, we continue to make solid progress against our 2016 plan,” said Mayer. “In addition to our efforts to improve the operating business, our board has made great progress on strategic alternatives. We are relentlessly focused on delivering shareholder value.”

Ahead of the results Ross Levinsohn, the company’s interim president whom Mayer beat out for the top job in 2012, was asked what he thought was the future held for his old company. He elected to quote Rocky III: “I think the prediction is pain,” Levinsohn said in a CNBC interview.

In a recent note, BGC analyst Colin Gillis wrote: "We expect any offer in the range of $5-plus billion should be accepted by the Yahoo board to bring the process to a close."

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