While the candidates have to repurchase Yahoo up on Monday evening to come forward and file a takeover offer, close-up on the situation of the former flagship of the web of the 1990s
How Yahoo come about?
In the 90s, Yahoo! was the most powerful Web business world. It was LA of Internet gateway, allowing both to check his messages, watch the weather and do some research. The arrival of Google and other Facebook was fatal. Yahoo! continued to do everything, without being more leading anything. He missed ultra-strategic acquisitions, such as Google (2002), Facebook (2006) and Youtube (2006).
He invested small amounts in a number of areas where its competitors have focused on their strengths. The result: in 2005, its search engine was dethroned by that of Google. And Facebook became the first social network in the world. Today, Yahoo! remains an extremely powerful enterprise, attracting 1 billion users every month. But advertising revenues fell compared to its rivals.
Is Marissa Mayer’s balance sheet so bad?
The activist investors complain that Marissa Mayer’s lack of boldness. She was not able to pick your battles, refusing to close particular activities to avoid offending customers and employees. “We should have let down our search engine. It pales face of Google , “says such a manager.
Very American, the CEO of Yahoo! has also shown little interest internationally. She closed dozens of foreign offices in Mexico and Dubai in particular – countries yet to strong growth. His record is not void if: upon arrival, she inaugurated a center of “native advertising” (online advertising as editorial content) reported today that hundreds of millions of revenue. She also inflated teams mobile application. Their users grew from 50 million to 600 million since
How financial health is the company today ?
Yahoo! remains a very profitable business. She reached over 4 billion in revenue last year and nearly 1 billion profit. But these figures tend to decline each year. 2016 promises to be catastrophic as this, as evidenced by the “book sale” that management provided the prospective buyers to help them prepare their bid: Yahoo! expects a decline in revenues of almost 15% (3.5 billion) and a fall in profits of over 20%.
Whereas 750 million this year, it will have melted and half in two years. “It’s like a house of Silicon Valley would have been vandalized: we go and we feel overwhelmed by work to do,” has entrusted a candidate for redemption last week to the site Re-Code. “ But we said that there is much more active like that, so we hope to fix things ,” he said.
in case of sale of Internet activities, what will remain of Yahoo?
The Internet activities (search engine, email, Exchange, etc.) represent the Yahoo business of heart !. Their sale would make the company an empty shell, which was satisfied to manage its Asian assets, namely 35% stake in Yahoo! Japan and its 15% stake in the Chinese Alibaba.
The dismantling could be even further if a buyer into his head to buy Yahoo! Japan, in addition to the only Internet activities. One idea that seems to seduce many Verizon today – and that could give it a significant advantage over other candidates. Yahoo! Japan is co-owned by Softbank and Yahoo !. And his health is much better: revenues and profits continue to grow, unlike those of the US group. Its sale would therefore contribute to a more attractive global offer to buyers.
What role does Microsoft in the ongoing negotiations?
Microsoft had offered to buy Yahoo in 2008 for $ 45 billion. There is no question today. But it is not excluded that it has another role: it could help the most likely to serve his interests purchasers by offering financial support. The management of Microsoft would have already met with several private equity funds to develop a possible bid.
Why this approach? Yahoo! and Microsoft share common interests in at least two key areas: advertising and Internet search. Between 2009 and 2015, used exclusively Yahoo! Bing, owned by Microsoft, as a search engine. Google may well be entered into the equation since Microsoft wants to maintain good relations with Yahoo! and, where appropriate, its new owner.
What can be the price sale?
Yahoo! is now valued $ 34.7 billion, including its stakes in Chinese Alibaba (estimated at 30 billion) and its subsidiary Yahoo Japan (8.5 billion). Subtracting these two assets, Yahoo! Stock Exchange in value therefore amounts to less than zero dollars. But this is not how to calculate the value of a company: instead of taking into account market capitalization, analysts used to calculate an amount equivalent to five times the profit before tax (EBITDA), or ultimately about 6 billion.
However, it is unlikely that Yahoo! is content with so little: to believe in the American press, the board does not wish to sell the Internet activities (messaging engine research …) to less than 10 billion. It could also be grafted a share of Yahoo Japan to make the project more attractive.
What future for Marissa Mayer?
Marissa Mayer hopes for a stay at the head of Yahoo !. “I see very well how we can turn the business around,” she launched last month. But its future seems very compromised. If the purchaser of Internet activities is a media group ( “Daily Mail”, “Time”, News Corp., IAC, etc.), it seems almost assume that it will leave the company.
engineer at heart, she never showed great talent in the field of information and entertainment. An investment fund (TPG, KKR, Bain Capital, etc.) would be more tempted to keep it. His best chance would be that Yahoo! is done redeem a technology group (Google, etc.). But even Verizon and its subsidiary AOL said they did not want: “A merger under the leadership of the CEO of AOL would be a very good thing,” recently slipped CEO Verizon, Lowell McAdam
Lucie Robequain
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